FCC to invest $2-billion in agri-food startups
FCC said Friday it would invest $2-billion through to 2030 to advance agtech innovation in the country's agri-food industry. It will invest through an array of vehicles that includes funds, direct investments and other investment structures, providing equity, convertible equity and mezzanine loans to companies ranging from pre-seed startups to later-stage enterprises that serve the sector.
'There is an opportunity to increase the adoption and access to innovation of the primary producers,' said FCC executive vice-president Darren Baccus, who will oversee the program. 'There is a need in this industry for meaningful capital. Canada is so uniquely positioned to be able to do this.'
Despite Canada's status as a global breadbasket, the sector attracts little risk capital. Total venture capital invested in Canadian agribusinesses totalled just $881-million over the past four years combined, according to the Canadian Venture Capital and Private Equity Association (CVCA). That is less than 4 per cent of what Canada's information and communication technology sector raised over the same period.
'It's always surprising, the lack of money that goes into agribusiness venture capital given the predominance we have in food production,' said CVCA president Kim Furlong. 'The market need is there, food security is a real thing and the technologies are there.'
Canada's crop of agtech companies is modest. One of the biggest names, Farmer's Edge Inc., went public in 2021 and its stock crashed after it reported mounting losses. Majority owner Fairfax Financial Holdings Ltd. took the company private at 35 cents a share in 2024.
This tech is helping Canadian farmers grow smarter, not harder
Agtech startups are challenged by high capital expenditures and long timelines, said Marcus Mitchell, chief executive officer of Shire Capital Management. 'There's definitely a funding gap and I see this as an effort to de-risk deals in the sector so more conventional capital allocators have a reason to engage,' he said.
Sean O'Connor, CEO of 4AG Robotics Inc., a B.C. company that is developing mushroom-picking robots, added that varying crops, soil and weather conditions in different markets make it 'challenging to find agtech that has the ability to scale in a similar way everywhere in the world.'
FCC was established in 1959 to replace the Canadian Farm Loan Board as a lender to farmers. It has dabbled in venture capital on the side for years, but VC accounted for just $246-million of its $53.5-billion in total assets in its fiscal year ended March 31, 2024.
Mr. Baccus said FCC's increased shift into VC came after Justine Hendricks joined as CEO in 2023 and began speaking with industry stakeholders. 'We started to hear from industry: You can do more.' he said. 'They said, 'We value what you bring to industry, that your core business is primary production, but there are opportunities for you to provide more capital solutions to this industry.''
How vertical farming can help Canada create a self-reliant food chain in an era of tariffs and climate change
FCC responded by establishing a new arm called FCC Capital in 2024, and it has made nine direct investment deals that total $170-million, investing in three new funds and establishing a new business accelerator.
Mr. Baccus said FCC will not lead deals but look to 'crowd in' private sector investors into domestic agtech companies. 'I think government investment for the time being is essential as we create these success stories and technologies that will help more folks say yes,' said Dana McCauley, CEO of the Canadian Food Innovation Network.
FCC joins Crown agencies Business Development Bank of Canada and Export Development Canada in expanding support recently for domestic startups. Prime Minister Mark Carney has pledged to commit $1-billion in new money to a venture capital funding program begun by Stephen Harper's Conservative government.
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