AVAC Ltd. is an Alberta-based venture-capital investment company with a strong portfolio of startup firms with long-term growth potential and a proven record of success in the value-added agricultural-business, Information and Communications Technologies (ICT), life sciences and industrial technology sectors. Working in partnership with government and private sector businesses, AVAC Ltd. invests in promising early-stage commercial ventures and support research and development in the Agribusiness value-add sector. Since 1997, AVAC Ltd. has facilitated the commercialization of products and services, which have resulted almost $1 billion in sales to date from its startup companies.
“The only means to meaningful solutions to agricultural challenges is the development, growth and adoption of innovative new technologies and practices based on good science,” Dr. Michael Raymont.
Dr. Michael Raymont is President and CEO of AVAC Ltd. Raymont is an expert on technology commercialization and economic development, holding a B.Sc. (Hons) and Ph.D. in chemistry, and board positions in a number of public and private technology companies.
As his above quote illustrates, there is an acute need for agricultural-based innovations and solutions for feeding a growing global population, and to address issues such as food security and more nutritious, healthy foods. These innovations encompass a wide spectrum, from innovations in plant nutrients and pesticides, through to innovative food processing, with an emphasis on agricultural processing. AVAC Ltd. has a mandate to help emerging businesses in the agricultural arena.
“AVAC Ltd. seeks out companies whose technologies answer a need or provide a solution,” says Raymont. Companies who meet criteria set by AVAC Ltd. including developing innovative approaches technology, answering a need, a proven market, a management team, distribution channels and economic viability are considered for the financial backing required to accelerate their growth into the commercialization phase.
To date, AVAC Ltd. has invested over $100 million in over 115 early-stage commercial businesses based in Alberta, the majority being in the agricultural sector. Of these, 61 have made it to the commercial revenue stage. Some have stayed in the Province and some have been acquired by major corporations in other parts of Canada or in the U.S.
“Some of the entrepreneurs who started companies a number of years ago are now on their 2nd or 3rd venture, and AVAC is proud to back ‘serial entrepreneurs’,” says Raymont. “What they learned from their first venture, even if only a partial success, often makes them much better entrepreneurs the second time, and the third.”
AVAC Ltd.’s influence on Alberta’s agri-business cannot be underestimated. Its roster is full of recognizable names; Baby Gourmet, Kinnikinnick Foods, Highmark Renewables, Decisive Farming and many more. One of its most high-profile companies, Afexa Life Sciences, first received funding from AVAC Ltd. for its Cold FX product. Afexa was purchased in August, 2011, by Quebec Pharmaceutical company, Valeant, for $76 million. Afexa’s Co-founder and Chief Scientific Officer Dr. Jacqueline Shan hopes to repeat her success, and has recently launched Afinix Life Sciences Inc. through a $1.5 million investment from AVAC Ltd. “We’re lucky in Alberta that we have a fertile environment to support entrepreneurs and the life science industry,” Dr. Shan told the Globe and Mail.
Patient Investor for Startups
AVAC Ltd.’s investment style is different from most venture capital companies, in that the group invests cash in early stage companies and, in return, takes a royalty if the products and sales of the company are successful. “AVAC is a more patient investor than the typical private sector, which again is part of our mandate,” says Raymont. “This means we are more flexible in terms of modifying performance criteria and “forgiving partial misses” in terms of accomplishment of milestones. That said, we do need to see meaningful progress by our portfolio companies to keep providing funds. We also spend more time “mentoring” our portfolio, and providing other advice, leads, connections, etc. And finally, we are frequently prepared to invest at a stage which is earlier in the business development cycle than any conventional private sector VC.”
AVAC Ltd. has broadened the spectrum in which it invests since its inception. From 1997 to 2006, its activities were focused 100 per cent on agriculture and value-added agriculture. That mandate expanded to include investments in ITC, clean tech and some other areas of industrial technologies. A third reserve of capital was allotted to invest in other venture funds and to encourage them to have a presence in Alberta.
The Accelerate Fund
In November, 2012, AVAC Ltd. announced new funds under management as a capital source for Alberta-based early-stage technology companies. In partnership with Alberta Enterprise Corporation, AVAC Ltd. now manages The Accelerate Fund, which leverages participation in a network of “angels”, technology investors and entrepreneurs, and “builds successes more quickly than previously possible.”
In an effort to become self-sustainable, AVAC Ltd. will look at some very exciting and high value potential investments in agriculture innovation for purely private sector funds, with provincial or government-related organizations acting as limited partner investors. “In the middle of that transition to move from relying on essentially government funding entirely to being self-reliant and private sector oriented,” says Raymont.
Demand for Agricultural Innovation
The private-sector is motivated to work with agricultural innovative businesses, as the demand for this type of technology is growing in order to deal with increased demands on agriculture.
According to the Food and Agriculture Organization of the United Nations, World population is expected to grow by over a third, or 2.3 billion people, between 2009 and 2050.
“These trends mean that market demand for food would continue to grow. Demand for cereals, for both food and animal feed use is projected to reach some 3 billion tonnes by 2050, up from today’s nearly 2.1 billion tonnes.”
Agriculture in the 21st century faces multiple challenges: it has to produce more food and fibre to feed a growing population with a smaller rural labour force, more feedstocks for a potentially huge bioenergy market, contribute to overall development in the many agriculture-dependent developing countries, adopt more efficient and sustainable production methods, and adapt to climate change. “All of this needs to be accomplished from a global arable land base which will remain basically the same size as it is today, so yields and productivity must increase by 50 per cent or more over the next 35 years or we could see global unrest from food shortages and high prices,” says Raymont. “This presents a huge investment/financial opportunity, while at the same time offering some humanitarian, health and other benefits.”
AVAC Ltd. is committed to a prescient focus on finding tomorrow’s solutions, today. AVAC Ltd. has been Alberta’s most experienced and active early-stage investor for several consecutive years. Matching talent and capital to the prospective investee has allowed AVAC Ltd. to see its startup companies thrive. AVAC has a very solid and recognized reputation for assisting in the growth of early-stage agricultural businesses, and its people are frequently asked to talk at conferences and workshops. Says Raymont, “Our reputation is, of course, a direct result of the success of our portfolio companies and our support for them.