The AVAC Group, a multi-faceted venture capital firm has launched a $15 million venture capital fund, Carrot Ventures.
Financial backing for the fund comes from AVAC and Farm Credit Canada, with the goal to offer holders of ag tech intellectual property (IP) a novel option to commercialize their IP, and to offer syndicating AgTech investors a stream of compelling start-ups in which to invest.
Martin Vetter, senior investment manager at AVAC Group, says that Carrot Ventures came about because AVAC knows there are a lot of good technologies in the ag sector in Canada that need to be in the hands of a professional CEO — “somebody who knows what it takes to build, and run, and finance a company,” he says.
“Really what we’re trying to do with Carrot Ventures is find those unique technologies in development in the agriculture sector, that solve a real market problem, recruit and put the technology in the hands of a professional CEO.” explains Vetter. “We then form a brand new company, bring the technology and CEO into that company, set it up properly, and then as an investor, we will be the lead investor in that first round of capital.”
Listen to the full conversation between Vetter and RealAg Radio host Shaun Haney, story continues below player:
Banks aren’t typically in the business of taking on high-risk, whereas venture capitalists don’t expect a cash flow in exchange for the money put into a company, so there is high risk, but Vetter says that they hope the company is doing something that will change the world, which makes the company itself worth more. The return to the equity investor is when the company is acquired by a large organization.
Evaluating a company’s worth, when there aren’t necessarily tangible returns, requires a bit of science, a bit of math, some intuition, and experience, says Vetter. Carrot Ventures is a bit different from other venture capital groups in that it’s looking for technologies that haven’t hit the market yet, without evidence of customers paying for a product, and looks for proof-of-concept.
Currently, Carrot Ventures is seeking out technologies that will support the farm value-chain — productivity and yield of crops, animal health, digital and precision ag technologies, supply-chain and food logistics or food technologies — which is a pretty broad spectrum, but can include new ideas applied to old, like Carrot Ventures’ first company formed that will solve issues in zero-till.
Vetter expects the $15 million will help form six to eight companies over the next five years.
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