Finding investors for agriculture technology

Agriculture hasn’t attracted the venture capital in Canada to help move local companies to global status, but that could be changing

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There’s been a lack of investors willing to be patient with agriculture technology companies.

Malcolm Campbell, vice president of research at the University of Guelph says that’s true especially around the early development stage. University of Guelph’s Gryphon’s LAAIR program helps researchers get to the start-up stage, but he says it could use 10 times the funding it has now.

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In Israel he says each university he visited on a trip had a technology incubator, with $50 million in start-up funding.

“If we think farming is worthy of innovation, we have to do it locally,” says Tyler Whale, president of Ontario Agrifood Technologies.

Campbell says he worries that global agriculture technology investors could send Canadian-incubated companies off shore if they aren’t committed to maintaining them here.

There are plenty of new investors interested in agriculture technology. According to AgFunder, a publication that looks at venture capital investment in agriculture, there was $17 billion invested globally last year in agriculture and food technology. That’s more than was invested in blockchain technology, says San Eng, one of the experienced venture capitalists looking at agriculture and agri-food in Canada.

Eng, who comes from China, now calls Ontario home after living in 12 countries around the world. He’s managed private equity and venture capital funds.

The company he’s founded to invest in agriculture and agri-food is called Umai and although it still has a ways to go before Eng is comfortable pitching the fund to the large Asian partners that were involved in his other funds, he has become a fresh face in the Guelph-Toronto agriculture funding sphere.

In fact, that sphere is quite small, as local venture capital funds have been few and far between in agriculture and agri-food.

There are some, such as the recently rebranded Rio Investment Partners, a successor to Avrio Capital, which aims to invest $150 million in agriculture and agri-food. Rio Investment Partners will have offices in Calgary and Montreal. Avrio has been an active investor in Canadian agriculture startups, led by its managing director Aki Georgacacos, but it is based outside of Ontario.

Eng chose Canada as his home, and after examining various sectors, decided that there is significant potential in Canadian agriculture and agri-food. He is excited by discussions he had with Evan Fraser, Canada Research Chair in Global Food Security and director of the Arrell Food Institute at the University of Guelph. Fraser is listed as an advisor to Umai.

Eng, who admits he is just learning about agriculture and agri-food technology, says Canada has intellectual property (IP), research, lots of talent and there’s not much competition, which he says is attractive. He also sees the potential for companies set up a North American base for sales and research and development in Canada.

Canada has limitations in growing other technologies, he says. There are regulatory issues that will hold back “fintech” (technology for finance), and sources of data just aren’t large enough for Canada to be a leader in mature artificial intelligence technologies.

“Agriculture is different,” he says. Canada is already the sixth largest exporter of agriculture products in the world and “the whole Golden Horseshoe area, there is so much stuff we can work with.”

He uses a distinctly Asian example to describe the direction Canadian government policy could go in agri-food, with the advantages already present.

South Korea looked at how it could compete in Asia against much larger technology players like Japan and Asia and it decided that culture and music was an area it could do well. The government invested and provided incentives for investment in creating music that would sell well and could be exported around the world. That’s how music groups like seven-member boy band BTS, one of the most popular in the world, were formed. It’s been a success and is known as K-Pop.

Similarly, investing in Canada as the best place in the world to develop agri-food could be a strategic and focused play — with the base already set for it to happen. K-Pop attracted people in music and entertainment to Korea. A similar strategy could do the same for agri-food startups and talent in Canada.

Eng aims to create a $50-million fund to start that will invest in “nurturing entrepreneurs in the agri-food innovation space, specifically helping to develop scalable sustainable food.”

About the author

Editor

John Greig has spent his career in agriculture journalism and communications. He lives on a farm near Ailsa Craig, Ontario. Contact John at [email protected] or follow him on Twitter @jgreig

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