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Avrio Fund III lands C$108m final close

An executive with the Canadian VC firm expects aggressive deployment after the late-stage agtech fund closed short of its C$125m target.

Canadian venture capital firm Avrio Capital has reached a final close on C$108 million ($77.53 million, €69.2 million) for its third food and agtech focused fund, short of its C$125 million target.

Avrio general partner Aki Georgacacos told Agri Investor the firm closed Avrio Ventures Limited Partnership Fund III short of the target set in 2014 because the investing environment is now stronger than the fundraising environment for agtech funds.

New investors to the fund include HarbourVest Canada Growth Fund LP, Quebec development corporation le Fonds de développement de la Confédération des syndicats nationaux pour la coopération et t’emploi and a number of family offices.

Canadian agriculture lender Farm Credit Canada, and the Export Development Bank of Canada were cornerstone investors. Both lenders had invested in Avrio’s previous two funds. Other existing investors who re-uped to Fund III include BDC Capital and Alberta Enterprise Corporation. Avrio spun out from Farm Credit Canada in 2006.

Like its two predecessors, Fund III will focus on late-stage Canadian foodtech and agtech companies.

“We believe that market conditions are now very conducive to making investments aggressively. So we’ll be looking to make a number of investments over the course of the coming quarters,” said Georgacacos.

“We could have elected to continue [fundraising] to reach the target. But we felt that given the investors we had around the table, and given the investing environment in our space right now, it was sensible to stop […] and get on with the hard work of making good investments.”

Georgacacos described target returns for the fund of at least 2x net to LPs, similar to those of Avrio’s previous two funds.

“All of our businesses will likely utilise technology to drive their basis of differentiation and their competitive advantage in the market place and therefore the return portfolio that we expect from our businesses and our investees is similar in many extents to the type of a return profile that you would see in a traditional venture fund,” he said.

Avrio’s Fund II is fully deployed, but maintains some capacity for follow-on investments, said Georgacacos. It recently invested in precision irrigation system Hortau. The fund closed on $91 million, shy of its $100 million target, in 2011, according to PEI Research and Analytics. Fund I closed on $75 million in 2006.

The firm has deployed more than C$200 million across 50 portfolio companies, according to its website.