Canada’s AgTech community is getting a major infusion of capital from a new Saskatchewan-based venture capital fund.
Conexus Venture Capital Inc. (CVC) announced August 23 a $45 million CAD first close of the newly launched Emmertech fund, which CVC maintains will cross $60 million CAD by the fund’s close at the end of 2021.
“The Canadian venture capital playbook doesn’t work within the AgTech industry as it does other industries.”
– Sean O’Connor
Over the next 10 years, Emmertech will invest in a diversified portfolio of Canadian-based AgTech companies, including those accepted into the recently announced Agtech Accelerator, with a commitment to invest $15 million of the fund specifically into Saskatchewan-based AgTech companies.
Emmertech currently does not have any active investment, but the fund said it is finalizing several investment deals.
Twenty-eight companies, individuals, and agriculturally-centred financial institutions invested in the new fund. They include Connect First Credit Union, The Co-operators Group Limited, Gulf and Fraser Fishermen’s Credit Union, Innovation Credit Union, UNI Financial Cooperation, Interior Savings Credit Union, and Libro Credit Union.
The fund also includes a $15 million investment from Innovation Saskatchewan.
Among the individual investors is Dustin Coupal, the co-founder, and CEO of 54e Dev Studios. While Coupal is currently focused on his remotely-operated robotic gaming app, he initially developed the technology for the app while in the AgTech space.
54e Dev Studios announced August 23 that CVC had led an investment of $1.7 million in new seed funding into the app company.
“The Canadian venture capital playbook doesn’t work within the AgTech industry as it does other industries, so we’ve thrown it out and are building our approach that can create highly reliable technology products ready for commercialization in one of the most important industries in the world,” said Sean O’Connor, managing director of Conexus Venture Capital Inc.
Canada is a country of innovators, but most of Canadian agriculture products are shipped as raw materials, and almost 70 percent of the machinery on Canadian farms comes from other countries, notes a statement on the Emmertech website.
“With lack of capital funding, the entrepreneurs often leave their province to launch high-growth companies elsewhere, taking jobs, wealth and IP along with them,” according to the statement.
“One of the biggest challenges in Canadian AgTech is the lack of private capital that flows into the space, with Canada’s share of global AgTech investments being only 3.4 percent. Additionally, only 11 percent of Canadian agriculture research and development comes from privately funded sources,” said O’Connor.
In 2019, Conexus Credit Union launched its business incubator, Cultivator, to address gaps and barriers faced by local companies. Later that year, the firm launched a $30 million venture fund that has invested in some of the region’s tech darlings, including 7Shifts, Coconut Software, and SalonScale.
CVC’s recently announced Agtech Accelerator will be open to AgTech and foodtech companies across the country. The program will recruit one cohort every fall, and give participating startups mentorship, resources, and programming.
The accelerator is open to AgTech startups spanning a number of verticals, including predictive analytics, robotics, automation, supply chain, animal health, and precision agriculture.
Conexus’ existing incubator brand, Cultivator, will run and manage the accelerator program. Innovation Saskatchewan, the province’s innovation agency, is providing a $300,000 commitment to the program over the next three years.
CVC also announced the addition of Kyle Scott as a managing director. Scott will co-lead the two CVC funds, CVC Fund #1 Emmertech, along with O’Connor. Scott previously worked as a vice president with Clairvest Group Inc. where he led the firm’s agriculture investment strategy.
Scott also served as an engagement manager with McKinsey & Company where he led projects in private equity due diligence, and strategy and operations serving clients across North America and internationally.
In 2018, Saskatchewan companies accounted for just $16 million in venture capital investment out of $3.7 billion raised in Canada overall, according to the CVCA. The following year saw Saskatoon make the top 10 cities for investment, with local companies raising a total of $107 million.
In April, the government announced plans to extend the Saskatchewan Technology Startup Incentive (STSI), its 45 percent tax credit for early-stage tech investors. The STSI is considered one of Canada’s most aggressive tax credit products for investors, and one of the most important support programs for startups in the province.
Feature image courtesy Unsplash.