London, Ont.-based RHA Ventures has launched 519 Growth Fund II, its second fund, with a $30-million CAD target.
The fund plans to invest in up to 50 companies, holding an even split between pre-seed and seed-stage companies.
519 Growth Fund II will invest in early-stage companies in the agriculture, agri-food and technology enabled sectors. RHA said it has secured a nonbinding term sheet with an undisclosed anchor investor and is currently fundraising toward a first close aimed for March 2024.
“We are excited to launch this new fund due to the market gap in both capital and business support for early-stage companies,” RHA managing partner Nevin McDougall said in a statement. “Looking specifically at the opportunities facing our target sectors, supporting commercialization of innovative technologies is key to addressing economic development, job creation and sustainability.”
RHA calls itself a boutique investment company with a “founders for founders” approach. Its first fund, the 519 Growth Fund, was launched in 2022 to invest in early-stage tech companies with investments ranging between $75,000 and $250,000. Its portfolio includes London-based manufacturing software firm Factory Bucket, farm management software IntelliCulture, and biosecurity management software company Farm Health Guardian.
While 519 Growth Fund II will continue to focus on early-stage companies, RHA said it will also look to make larger investments between $750,000 to $1 million for seed-stage companies. According to its mandate, 10 to 15 percent of its capital is earmarked for pre-seed companies, with the remainder dedicated to seed-stage companies. Between 65 and 75 percent of its portfolio investment is targeted toward agri-food innovations, with the remaining 25 to 35 percent dedicated to tech-enabled companies.
According to a CVCA report last week, agribusinesses are on pace to set new records in both deal volume and investment in 2023, with $232 million raised across 37 deals in the space so far. Conexus Credit Union’s AgTech accelerator echoed a similar sentiment in its own report earlier this month, which said the startups across its two cohorts had raised over $80 million in private capital since January 2022.
RHA said 519 Growth Fund II plans to invest in approximately 40 to 50 companies during its five-year investment period. The firm plans to invest in an equal number of pre-seed and seed-stage companies, 75 percent of which will be Canadian.
Feature image courtesy RHA Ventures via LinkedIn.