TGV sees scope to act as a “translator” and connect other investors to the AgTech sector.
Calgary-based Tall Grass Ventures (TGV) has secured a total of C$32 million for its inaugural fund to support early-stage AgTech and FoodTech startups in the Prairie region, Canada and beyond.
TGV’s lead limited partners (LPs) include provincially funded Manitoba First Fund and Farm Credit Canada (FCC), which joined Fund I at its final closing last week.
Other LPs in Fund I include privately held grain and livestock producers, livestock breeders, commodity brokers and traders, financial services companies, private equity investors, technology founders, and leaders in the agriculture, energy, construction and marketing industries.
TGV will invest “from fork to farm and everything in between.”
In an exclusive interview with Betakit, Wilson Acton, co-founder and managing partner at TGV, said there are many opportunities and “a lot of room to grow” for venture capital (VC) firms looking to invest in companies innovating across the agri-food supply chain.
“Very few [VC] Enterprise [across Canada]”There are very few companies globally that are focused solely on agriculture and food,” Acton said. “And that’s important because it allows us, and forces us, to gain deep knowledge of the industry’s problems and how to accelerate them.”
TGV is part of a small but growing group of local venture capital firms focused on agtech startups, including Regina’s Emmertech, Calgary-based Carrot Ventures, The51 (via its Food and AgTech Fund), SVG Ventures Thrive (the Canadian subsidiary of Silicon Valley’s SVG Ventures) and London’s RHA Ventures, many of which are backed by the FCC.
Founded in 2022 by Acton, a lawyer-turned-agriculture-tech entrepreneur and investor, and co-managing partner Chris Edwards, an energy sector veteran with engineering and investment experience, TGV’s thesis is broad-based.
“We look at the agriculture and food ecosystem and supply chain from end to end,” Acton said, noting that TGV is investing “from fork to farm and everything in between.”
Given 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 now is the perfect time to invest in agri-food innovation.
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TGV wants to help grow leading local agtech and foodtech companies by providing funding and support at an early stage, and to support its efforts in the latter area, TGV has hired SVG Ventures and Calgary Economic Development alumna Marlise Hunter as platform director.
“Our assessment is [TGV] The team was very positive and valued many valuable attributes, including experience in food and the food industry. [agriculture]”In Canada, there is passion, industry connections and a shared understanding that agriculture is fundamentally important to Canada,” René Benoit, director of investments at FCC, told BetaKit.
“TGV’s focus on applying technology to big problems such as farm automation, crop protection and fertility, risk management and decarbonization is very much aligned with FCC’s priorities,” Benoit noted.
In an interview with Betakit, Manitoba First Fund CEO Ken Ross echoed Benoit’s assessment of TGV: “They’re a very professional group, with a lot of experience and able to support investments not just with capital but through their own expertise and knowledge,” Ross said.
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TGV marks the $100-million Manitoba First Fund’s fourth investment and its first in an early-stage VC fund. Ross noted that agriculture is a key part of the province’s economy, and TGV aligns with Manitoba First Fund’s mission to attract capital to Manitoba. Like the VC firm’s other LPs, Ross sees “a lot of opportunity” for TGV to back tech startups across the agriculture and food supply chain.
TGV plans to focus primarily on Canadian-based pre-seed and seed-stage agtech and foodtech startups with applications to Canadian agriculture, allocating about three-quarters of Fund I, but Acton said the VC firm is taking a global view. “Agriculture and food is a big intersection of the global economy,” he said. “It’s a very global business, so we have to look and think. [globally].”
Acton claims that TGV initially aimed to raise $10 million to prove itself, but investor expectations were stronger than expected, leading to the decision to raise three rounds of funding. While many other venture capital firms struggled to raise capital in the economic downturn and drastically reduced their funding targets, TGV ultimately managed to secure $32 million.
The managing partner cited several factors for this, including the high level of LP interest in the agriculture sector, TGV’s investment approach, and the early track record the VC firm has built since its official launch in August 2022.
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Acton categorizes TGV’s LPs into three groups: potential clients with additional incentives to back portfolio companies, mid-market incumbents, enterprises, strategic players looking to evolve or acquire new technologies, and financial return-driven investors interested in putting capital into the AgTech and FoodTech sectors.
TGV has already invested in 11 of the planned 20 companies, putting nearly a third of Fund I into companies in Canada and abroad. The venture capital firm has amassed a portfolio that includes Israel’s GeneNeer, Toronto-based Vivid Machines, Vancouver’s OneCup AI, Fredericton’s Picketa Systems, Regina’s Ground Truth, Kitchener-Waterloo-based IntelliCulture, Calgary’s AgGene and SimpleHedge, the U.S.’s Zila and the U.K.’s PheroSyn.
“There is no reason why Canada can’t be a world leader in agriculture and food.”
Acton said TGV aims to start making early investments because it believes that this level has the most potential to add value. While TGV prefers to lead rounds (Acton said the company has a number of companies eager to follow or co-invest), he said it is also happy to help raise capital if the terms are right. TGV has set aside about half of its capital for follow-on investments in startups in its portfolio.
Acton noted that many crossover investors with “and ag” strategies have pulled out of agriculture and food tech as market conditions have worsened. Going forward, he sees room for TGV investors to act as “translators” and help connect other sources of capital to the sector.
“There’s still interest, but they’re a little hesitant because they don’t understand the deep complexities of this field and it’s risky,” Acton said. “They’re a great group for us to work with because we can help make it happen and we want to leverage their expertise from other fields.”
Acton has big ambitions for the emerging venture capital firm. “We’re not starting a fund, we’re starting a company, so we expect to be here for a while,” he says. “There’s no reason why Canada can’t be a world leader, particularly in terms of private capital, in the agriculture and food sector, and we’re looking to grow in that space.”
Feature image courtesy of Tall Grass Ventures.
