Tall Grass Ventures closes $32-million VC fund for early-stage Canadian AgTech startups

Calgary’s Tall Grass Ventures (TGV) has secured a total of $32 million CAD for its first fund to back early-stage AgTech and foodtech startups across the Prairies, Canada, and beyond.

TGV’s leading limited partners (LPs) include the provincially-funded Manitoba First Fund—which joined as part of Fund I’s final close last week—and Farm Credit Canada (FCC).

Fund I’s other LPs include undisclosed grain and livestock producers, livestock feeders, commodity brokers and traders, financial services firms, private equity investors, tech founders, and leaders from across the agriculture, energy, construction, and marketing industries.

TGV invests “from the fork, all the way back to … the farm and everything in between.”

In an exclusive interview with BetaKit, TGV co-founder and managing partner Wilson Acton said he sees lots of opportunity and “a ton of room to run” for the venture capital (VC) firm as it looks to invest in more companies innovating across the agri-food supply chain.

“There’s very few [VC] firms [across Canada], even globally, that are exclusively focused on agriculture and food,” Acton said. “Why that’s important is it allows us—and forces us—to be deeply knowledgeable about the industry problems and the ways to accelerate.”

TGV is part of a small but growing group of local VC firms focused specifically on AgTech startups. This cohort also includes Regina’s Emmertech, Calgary-based Carrot Ventures and The51 through its Food and AgTech Fund, SVG Ventures Thrive (the Canadian subsidiary of Silicon Valley’s SVG Ventures), and London’s RHA Ventures, among others—many of which are also backed by FCC.

Founded in 2022 by Acton, a lawyer-turned-AgTech entrepreneur-turned-investor, and fellow managing partner Chris Edwards, an energy sector veteran who brings engineering and investment experience to the table, TGV’s thesis covers a broad range.

“We will look all the way up and down the agriculture and food ecosystem and supply chain,” said Acton, who noted that TGV invests “from the fork, all the way back to … the farm and everything in between.”

With all the pressing challenges facing global agriculture and food supply, from climate change to increasing food demand, fragile supply chains, rising prices, and geopolitical tensions, Acton and TGV believe the timing is right to invest in agri-food innovation.

TGV hopes to help grow dominant local AgTech and foodtech players by financing and supporting them at the earliest stages. To aid its efforts on the latter front, TGV has brought on SVG Ventures and Calgary Economic Development alum Marlise Hunter as director of platform.

“Our assessment of the [TGV] team was very positive, with an emphasis on many valued traits such as experience in food and [agriculture], passion, industry connectivity, and a shared view of the foundational importance of agriculture to Canada,” FCC director of investments René Benoit told BetaKit.

Benoit noted that “TGV’s focus on applying technology to large problems like farm automation, crop protection and fertility, risk management, and decarbonization is very aligned with FCC’s priorities.”

In an interview with BetaKit, Manitoba First Fund CEO Ken Ross echoed Benoit’s assessment of TGV. “They’re a very professional group that has the depth of experience to bring more than just the capital to the table, but be able to support their investment through their own expertise and knowledge,” he said.

TGV marks the $100-million Manitoba First Fund’s fourth total investment and first into an early-stage VC fund to date. For his part, Ross noted that agriculture represents an important part of the province’s economy and TGV lines up well with the Manitoba First Fund’s mandate to attract capital to Manitoba. Like the VC firm’s other LPs, Ross sees “a lot of opportunity” for TGV in backing tech startups across the agriculture and food supply chain.

While TGV plans to focus primarily on pre-seed and seed-stage AgTech and foodtech startups based in Canada with applicability to Canadian agriculture—a group it plans to allocate approximately three-quarters of Fund I towards—Acton said the VC firm is taking a global view. “Agriculture and food is a massive crosscut of the global economy,” he said. “It’s very much a global business, and so we need to be looking and thinking [globally].”

Acton claimed that TGV initially set out to raise $10 million to prove what it could do, but upsized the fund on three separate occasions after seeing stronger-than-anticipated appetite from investors. TGV ultimately managed to secure $32 million when many other VC firms have been struggling to fundraise and slashing their targets amid the downturn.

The managing partner attributed this to a few factors, including the level of LP interest in the agriculture space, TGV’s investment approach, and the early track record the VC firm has built since its official launch in August 2022.

Acton groups TGV’s LPs into three buckets: potential customers with an added incentive to lean in and help its portfolio companies, mid-market incumbents, corporations, and strategic players looking to evolve or acquire new technologies, and financial return-focused investors interested in deploying funding into the AgTech and foodtech sector.

TGV has already invested in 11 startups out of a planned 20, and has deployed close to a third of Fund I into companies across Canada and abroad. The VC firm has amassed a portfolio that includes Israel’s GeneNeer, Toronto-based Vivid Machines, Vancouver’s OneCup AI, Fredericton-based Picketa Systems, Regina’s Ground Truth, Kitchener-Waterloo-based IntelliCulture, Calgary’s AgGene and SimpleHedge, US-based Zila, and England’s PheroSyn.

“There’s no reason why Canada can’t be the world leader, certainly around agriculture and food.”

Acton said TGV aims to come in early with its initial cheques because it sees the greatest potential to add value at this level. While TGV’s preference is to lead rounds—Acton said the firm continues to see many who are keen to follow or co-invest—the firm is also happy to support financings if there is a good fit. TGV has reserved approximately half of its capital for follow-on investments in portfolio startups.

As market conditions have deteriorated, Acton noted that many crossover investors with an “and ag” strategy have pulled away from investing in agriculture and food technology. Going forward, he sees room for TGV’s investors to play the role of “translators” and help connect other sources of capital to the space.

“There’s still interest, but because they don’t understand the deep complexity of the space, that means risk, and so they’re a little bit hesitant,” said Acton. “Those are groups that are great for us to work with, because we can help bring that, and we want to leverage their expertise from other domains.”

Acton has big ambitions for the emerging VC. “We’re not building a fund—we’re building a firm, and so we’re going to be here for a while,” he said. “There’s no reason why Canada can’t be the world leader, certainly around agriculture and food, including from a private capital perspective, and that’s where we’re looking to build.”

Feature image courtesy Tall Grass Ventures.