Female-led fund raises $51-million to transform Canadian agriculture
Six-year-old Hadley Spoelstra feeds a calf a bottle of milk, on her father’s farm in Hamilton, Ont., on June 7, 2023. The lack of investment in agriculture is especially acute in Canada, where for generations the sector has failed to capture private funding and has been fuelled by public dollars.Chris Young/The Canadian Press
A female-led fund has raised $51-million for companies hoping to transform Canadian agriculture through robotics, automation and biotech.
The51 Food early-stage venture fund raised capital from Farm Credit Canada, and institutional investors National Bank, ATB Financial and Vancity, among others.
“Agriculture is one of Canada’s greatest opportunities,” said Alison Sunstrum, managing partner of The51 Food and AgTech Fund, adding that more capital is needed.
The industry accounts for only 5.5 per cent of global venture capital dollars worldwide. The lack of investment is especially acute in Canada, where for generations the sector has failed to capture private funding and has been fuelled by public dollars.
This shortage means Canada’s food sector is “slipping,” Ms. Sunstrum said.
She hopes the new fund – which understands the sector’s business fundamentals – will be an example of the kind of investor ecosystem needed to turn the tide.
A51 is a female-led fund from Alberta that believes in unlocking credit for women entrepreneurs. Women-founded startups receive only 2.2 per cent of venture capital worldwide, according to the fund’s website.
Female-led agricultural startups receive little capital too, said Ms. Sunstrum, who noted that this is not representative of the industry. Family farms across Canada have always been operated by men and women in tandem, she said.
Six companies have received capital from the A51 fund so far. One of the companies is developing a vaccine that will aim to reduce methane production in cows. A second company is using agricultural biomass to produce plastic.
The fund will focus on companies working in biotech, precision agriculture, robotics and automation. It will also back companies developing new food products through novel techniques such as precision fermentation.
“We are pleased to participate in the final close of The51 Food and AgTech Fund,” Curtis Stange, president and chief executive officer of ATB Financial, said in a statement. “ATB’s investment reflects our steadfast commitment to fostering innovation in agriculture, a sector vital to Alberta’s economy, as well as empowering the next generation of AgTech entrepreneurs.”
Capital that fosters innovation in agriculture is sorely needed. Funding for ag-tech firms has fallen worldwide in recent years, from US$30.5-billion in 2022 to US$15.6-billion in 2023, according to a Global AgriFoodTech Investment 2024 report. In 2023, agrifoodtech accounted for 5.5 per cent of VC capital across all sectors, compared with 7.6 per cent in 2021, the report said.
Ms. Sunstrum blamed the decline on some investors’ limited understanding of the sector’s business fundamentals. Growing food is constrained by biological factors and the return on investment is long. For example, a breeding cycle for livestock can be up to two years.
Margins are also thin, scale is “everything” and risk is high, she said.
She mentioned vertical farms as an example of misplaced investment in agriculture. In 2021 and 2022, generalist investors fuelled high valuations because the concept promised to grow food anywhere, year-round and using less land. But by 2023 venture capital had retreated, and bankruptcies of a number of farms followed. Replicating the sun proved expensive, and energy costs made the product uncompetitive.
This gave agriculture a “black eye,” Ms. Sunstrum said, but she added that investors should not retreat, especially not in Canada. Food is essential, and Canada has a competitive advantage, with huge amounts of arable land, a skilled population and a stable political and economic climate.
Ms. Sunstrum said that investors who understand agriculture stand to gain. And she isn’t the only one to realize this.
In 2024, Farm Credit Canada, the largest investor in Canadian agriculture, launched FCC Capital. Over the next five years, the program will inject $4-billion into “catalyzing innovation in Canada’s food system,” according to its website.
This is the start of a solution to an antiquated industry, Ms. Sunstrum said, adding that Canada needs a “strong venture capital innovation ecosystem” that will in turn create more innovation and more successful Canadian companies.
“I think people will start realizing what an incredible opportunity this is, especially in Canada.”
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