Latest news with #CVCA
Globe and Mail
6 days ago
- Business
- Globe and Mail
FCC to invest $2-billion in agri-food startups
Ottawa has loaned money to Canadian farmers for nearly a century. Now Crown agency Farm Credit Canada is looking to use some of its vast resources to back innovative startups that serve the agri-food business. 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.
Calgary Herald
14-05-2025
- Business
- Calgary Herald
Smaller deals dominate Canadian private equity in first quarter, report finds
Article content Small deals were the focal point of Canada's private equity market in the first quarter of 2025, with a total of $18.2 billion invested across 141 transactions, according to a new report from the Canadian Venture Capital Association. Article content While one mega-deal — the $14 billion recapitalization of Montreal-based GardaWorld Security — accounted for the bulk of the total dollar value, the vast majority of the deals were valued at under $25 million. Article content 'Even with elevated market uncertainty, private equity continues to act as a value-creation lever for Canadian businesses,' said CVCA chief executive Kim Furlong. 'Behind the headline mega-deal, we're seeing consistent interest in mid-market opportunities, with firms focused on long-term growth and acquisition-led strategies,' she added. Article content Article content Smaller deals dominated during the quarter: 80 per cent of all transactions were valued below $25 million and the quarter's average deal size was slightly under $12 million, excluding the mega-deal. That is on par with levels seen in the Canadian PE landscape over the last few years. Article content Canada's venture capital (VC) market meanwhile recorded significantly fewer deals this quarter with $1.26 billion across 116 deals, compared to 146 deals in Q1 2024 and 187 in Q1 2023. The trend toward larger deal sizes — the average climbed to $10.89 million this quarter from $8.94 million a year ago — highlights the continued focus on a smaller number of high-value deals with later-stage companies raking in the bulk of the capital. The numbers 'reflect a recalibration across the ecosystem,' the report said. Article content Article content Furlong warned about the 'persistent slowdown' in deal volume, particularly for pre-seed and seed-stage investments, which has plummeted to levels not seen since 2020. '(It) is a signal we cannot ignore. These early investments are the pipeline for future growth. A weakening at the foundation threatens the innovation economy we've worked hard to build.' Article content Article content The industrial and manufacturing sectors took the top spot in PE deal count, with 37 transactions totalling $1.6 billion. The financial services sector recorded $1.2 billion in investments, while the information, communication, and technology (ICT) sector saw the second-highest deal count at 33 deals worth $460 million. Article content The ICT sector dominated VC activity in Q1 2025, raking in $807 million, or more than half of all VC investment, across 58 deals. Life sciences came in second, recording $218 million across 23 deals, followed by cleantech, which attracted $128 million across 12 deals.
Calgary Herald
25-04-2025
- Business
- Calgary Herald
What the tech sector wants from the federal election as Canada faces 'perfect storm' for foreign takeovers
Article content Canada's innovation and productivity woes are no secret. A report by The Conference Board of Canada found the country placed 15th out of 20 advanced economies when it comes to innovation performance in 2024, while a report the same year from a TD Economics report noted business sector productivity has failed to grow at all since 2019. Both the Liberal and Conservative parties have promised a combination of smarter investment and tax policy and more efficient government as ways of helping the country improve its economic performance, but what does the technology sector itself want? Here's what they say is needed to establish Canada as a force in the digital age. Article content Article content Article content Article content The belief that Canada's tax system needs to be more competitive, overall, to spur investment in innovation is widely held in the tech sector. Article content After the Liberals proposed a capital gains tax hike in 2022, Canada's tech industry vocally campaigned Ottawa to scrap the idea. High tax rates and complex regulations 'deter investment, drive businesses to relocate, and stifle innovation,' said the Canadian Venture Capital Association (CVCA), a private capital sector lobby group that represents over 350 firms. In one of his early moves after taking over as prime minister, Mark Carney cancelled the unpopular increase ahead of the federal election. Article content The CVCA is proposing further measures. It recommends that Ottawa temporarily reduce the capital gains tax inclusion rate from 50 per cent to 25 per cent for investments into eligible Canadian businesses for a period of three to five years to stimulate 'productive private investment,' it said in an April 2025 white paper. Article content Article content Certain programs, such as Canada's Scientific Research and Experimental Development (SR&ED) tax credit, designed to incentivize businesses to conduct R&D in Canada, should be modernized 'to reward innovation and commercialization of Canadian ideas' and support Canadian companies, the Canadian Council of Innovators (CCI), a tech lobby group that represents 150 Canadian companies. The CVCA suggest this could be achieved by raising annual expenditure limits and taxable capital thresholds. Article content Article content Some tech executives and advocacy groups have endorsed shedding underperforming government programs and streamlining agencies. Article content In February, a coalition of tech founders and leaders launched Build Canada — a platform for publishing policy proposals. In one memo, Daniel Eberhard, the founder and CEO of fintech Koho Financial Inc., advocated for a leaner and more effective federal civil service that would slash 110,000 public sector jobs and mandate and publish 'department performance metrics and targets for all federal civil services.' A number of business leaders supported the idea, including Shopify Inc.'s head of engineering, Farhan Thawar; WIND Mobile co-founder Brice Scheschuk; and CIBC's head of innovation banking, Mark McQueen.
