Toronto-headquartered venture capital firm InvestEco Capital closed its third sustainable food focused fund on $100 million, drawing the majority of its commitments from Canadian institutions.
Managing partner Andrew Heintzman told Agri Investor the majority of investors in InvestEco Sustainable Food Fund III are Canadian institutions, many of which have a specific interest in supporting export-oriented domestic food businesses. He confirmed that the firm does count US family offices among its LPs.
“There are not many Canadian funds that are active in the US and there’s not that many US funds that are active in Canada,” Heintzman said. “Our position – in that we are in Canada and the US – is attractive to some of the Canadian investors because it gives us credibility to be investors in Canadian export-orientated food companies, because we have the knowledge of the US market.”
Founded in 2002 with a broad sustainability focus, InvestEco has focused exclusively on sustainable and healthy food-focused businesses since raising its first dedicated fund in 2012. That $11 million vehicle backed six expansion-stage businesses before a second fund, InvestEco Sustainable Food Fund II, was raised and closed on $26.2 million in 2015, said Heintzman.
InvestEco Sustainable Food Fund III secured commitments from Farm Credit Canada, the Business Development Bank of Canada, Export Development Canada and The Co-operators, an insurance company, among others.
It is the first of InvestEco’s vehicles to be raised mostly from institutions, as opposed to family office and high-net-worth investors, said Heintzman. InvestEco’s investor base now includes institutions interested in both fund investment and opportunities to invest directly.
“If there is a deal that is too big for us, or if we need something else that is not equity, we have other relationships that are very valuable,” added Heintzman, declining to specify which LPs are most interested in co-investments.
InvestEco III aims to achieve annual IRRs of more than 20 percent when measured over the 10-year life of the fund. It will make investments of between $2 million and $5 million in companies with annual revenue ranging from $5 million to $50 million, according to Heintzman.
He added that InvestEco focuses its investments on CPG companies with innovative supply chains linking producers with consumers. Examples include grass-fed organic dairy producer Maple Hill Creamery, ‘pasture-raised’ eggs provider Vital Farms and Kuli Kuli, which offers snacks derived from moringa.
“It [innovative supply chains] makes the brands unique, allows them to tell a story to consumers and ultimately the story is about a healthier product and a more sustainably-grown product,” said Heintzman.