Arlene Dickinson’s new venture capital fund, Velocity Agri-Capital, is targeting $500 million to invest in Canada’s agriculture and agri-food sector, with a focus on helping established companies scale and expand into Asian markets.

“We’re looking to raise $500 million — of which FCC (Farm Credit Canada) is the lead investor with $150 million — and we’ll be looking to get behind companies that have a proven product market fit and have grown,” Dickinson said.

“The agriculture and agri-food space has really been underserved in terms of the commercialization, the funding, and growth, and the opportunity that it represents,” Dickinson, general partner with Velocity Agri-Capital, told FoodNX in an interview.

“So this fund is focused on helping companies scale and grow and export into, in our case, Asian markets.”

The fund, which has teams in Canada and Singapore, received an initial investment from FCC and is seeking additional investors to reach its $500-million target.

Expanding into Asian markets

It is part of FCC’s $1-billion Agri-food Project Finance Fund, which was announced in June as part of the National Food Security Strategy. Overall, FCC has promised to invest $2 billion by 2030.

Velocity will focus on southeast Asia, as well as Japan, which offers many promising reasons for success, she said.

“Because it’s a big market, it’s many middle-class people in that marketplace, and they are nations and areas and regions that can’t create enough food to feed themselves, given the size of their population.”

“We also have a great trade relationship with them, and good trade agreements, so it made sense to come up with a fund where there was an opportunity to help Canadian companies that are doing well and starting to scale, get some growth capital, and be able to get into new markets and new trade opportunities,” Dickinson said.

For Velocity, the recent food strategy announcement shows that there is great interest and impetus to move the industry forward with funding. “I think the focus on agriculture is, its time is now.”

“From an investor perspective, you have to be able to demonstrate that you can grow capital and then of course, just in terms of making sure that we continue to add processing, manufacturing, and the ability for our country to help with that last mile of commercialization, I think it fits in well with that strategy,” she said.

Cheques up to $50 million

Velocity will target “mid-market companies” that are looking to take the next big step.

“So, companies that are already proven successes but are looking for growth capital to expand, and can take cheque sizes of $15 to $25 million, up to $50 million,” Dickinson said.

By investing in more of those companies, it will aim to fix a “fairly fragmented sector.”

“Capital has been hard to get for this sector. I think just drawing the line between growing of crops and what our great producers do with what the farmers do, and connecting it more effectively and efficiently to an end product that a consumer buys on the shelf. The more we make that a more seamless integration, the better we are,” Dickinson said.

Some of the sectors that deserve more attention, according to Dickinson, are packaged goods and manufacturing facilities.

Investing in ‘ignored’ industry

That attention has largely been focused on technology firms in the past. “It’s much more appealing to go after that big unicorn,” such as AI, defence and aerospace, but hopefully now more of an emphasis will be given to agri-tech, she said.

“I just think food has been something that we have perhaps taken for granted that it was always going to be there. If COVID taught us anything, supply chains are fragile, and we’re seeing that with disruption happening now with fertilizers and with energy and gas.”

“Canada grows significantly more food than it can eat and consume, and so we can be a global supplier of food to other countries beyond commodities,” Dickinson said.

Instead of chasing the so-called unicorns, “having steady-state good businesses that are throwing off cash flow and making money and always will have a market to serve, because people always have to eat and drink,” she said.

“I think it’s being ignored simply because it was not as sexy but it’s actually a more critical one in my mind.”

For Velocity, the opportunity to tap into world markets apart from the U.S. is appealing and will help Canada diversify its economic output even more.

“This isn’t just one fund. This is a platform for growth, and it really is meant to help utilize the trade corridors that are being developed around the world. I think we have 51 trade agreements now, so whether it’s Asia, or whether we move to Europe, or whether we move to Australia, how do we help companies grow and scale across the world to markets that are ready and wanting our product?”