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Avrio Capital prepares Fund III

Hot off its micronutrient company exit last month, the venture capital firm is launching its biggest fundraising yet, targeting $125m.

The firm decided to start fundraising again on the back of Fund I’s $85 million exit from Wolf Trax, a micro-nutrient and plant nutrition manufacturer, last month, according to Michael McGee, a partner at Avrio.

The $99.1 million Fund II is also nearing 100 percent deployment after a $3 million follow-up investment in Hortau, a wireless, web-based irrigation management company in January, and a $5 million commitment to Enterra Feed, an organic fertiliser company in March.

“We are doing a bit of a soft launch as we speak,” McGee told Agri Investor. “Due to the recent Wolf Trax deal and the amount of agtech deals going on in general, we were being approached by several potential buyers from pension funds to private money; they are seeing the ag space grow and are looking for a vehicle to take part.”

Several existing investors are lined up to commit to Fund III including Farm Credit Canada, Avrio’s parent company until it spun out in 2006, Export Development Canada and Alberta Investment Management, a fund manager for institutional investors in Alberta, US.

Fund II closed on $99.2 million in 2011 and will expire in 2021. The $75 million Fund I still has four more investments to be realised that are expected to make returns in the low-to-mid 20s, according to McGee.

The firm has a North American focus although it does venture further afield into Europe on occasion, said McGee.

“To be candid, $125 million is relatively small for a fund so we wouldn’t necessarily hit the radar of some institutions but we are content with the size we are,” said McGee. “If we were bigger we would have to look even further afield for opportunities and that would bring on more challenges such as opening new offices and finding local, likeminded partners. For the time being we are happy with the incremental increases; it is good to be nimble and not have pacing issues when you have to deploy huge amounts of capital.”

“We are also in a position to find those small gems to grow that would not hit the screen of larger players elsewhere.”

Avrio Capital spun out of Farm Credit Canada in 2006 after being established in 2002 when the $50 million FCC Ventures fund was launched. It focuses on identifying and investing in innovative food and agriculture companies that provide solutions to global challenges in health and sustainability, according to its website.