Strong execution key to achieving blockbuster exits

Two recent deals involving Manitoba-based companies in the agriculture (ag) sector have no doubt captured the attention of venture capital firms across the globe.

Manitoba Harvest Hemp Foods, which manufactures a range of branded hemp food products retailed across North America, sold for $132.5 million to Connecticut-based Compass Diversified Holdings. Wolf Trax Inc, an agriculture technology company that’s focused on developing, manufacturing and selling high efficiency fertilizer and seed treatments was acquired by Compass Minerals for $95 million.

Avrio Capital, a Canadian agribusiness venture capital firm, benefitted from both deals – realizing returns of nine times its investment for the Manitoba Harvest Hemp sale and 15.4 times for its exit from Wolf Trax. Avrio is invested in another Manitoba growth company.

The Wolf Trax deal was so significant it garnered Avrio the Canadian Venture Capital & Private Equity Association (CVCA) Deal of the Year Award. The honour recognizes CVCA members with the most significant investment return realized during the calendar year.

What do these kinds of results mean to the Manitoba startup scene?

“These deals show that not only is Manitoba producing world class startups, but also that there is significant risk capital available when the business is hitting its metrics,” said Jan Lederman, President, Innovate Manitoba.

Aki Georgacacos

Aki Georgacacos

Aki Georgacacos, Avrio’s Managing Director, credits both companies success to the strength of their execution approaches which he sees as even more critical than world-leading technology.

“Both Manitoba Harvest Hemp Foods, and Wolf Trax were able to address existing needs with an innovative approach.” Georgacacos said. “Ultimately, it was an overall commitment to superior execution on the part of management that made the difference.”

Avrio also invested in Farmers Edge, another Manitoba company from the ag sector that recently secured an undisclosed investment from U.S. venture capital firm Kleiner Perkins Caufield & Byers (KPCB). The KPCB investment will help finance the expansion of the company’s technology platform and support its growth in international markets.

Outstanding execution is also part of the Farmers Edge success story. “They’re quickly building a world class team in Winnipeg to address a very identifiable and real need, which is to increase the productive capacity of land on a global basis,” Georgacacos said. “They’re leveraging this to their advantage and as a result, they’ve been able to grow that business very significantly over a relatively short time period.

Lederman said that these deals highlight the importance of startups knowing what’s required to grow quickly into a world-class competitor.

“That’s really the focus of Innovate Manitoba’s programs – from Pitch’Day where startups get their first chance to pitch their business idea to an expert panel of judges, to the Launch’Pad Bootcamp where they receive expert coaching to transform their business strategies and prepare investor-friendly business plans. This culminates in Lift’Off where the top startups from Bootcamp get the chance to compete in Venture’Challenge for significant cash and in-kind prize packages and the opportunity to pitch to investors from across North America.”

She added, “We’re extremely proud to see this kind of growth and success by Manitoba companies in the ag-tech sector.”

Georgacacos agreed that Innovate Manitoba is fulfilling a key role for the startup and innovation community. “All great opportunities have to start somewhere. By nurturing these small businesses, early management teams, and technology platforms, Innovate Manitoba is giving them more visibility in the marketplace. Funds like ours and other venture capital firms across North America keep tabs and monitor progress. When these companies are clearly achieving some of the milestones they’ve set for themselves, they become much more viable investment opportunities.”

“By identifying these opportunities for us, Innovate Manitoba is doing a great job in helping these company’s attract capital.”

Georgacacos said that the focus on innovation and technology for the ag sector is a win-win for both investment firms and the startup companies vying for investment dollars.

“As long as that attitude persists, there will be more good opportunities and more great success stories that come out of Manitoba.”

Mike Fata judging Innovate Manitoba's Pitch'Day 2014

Mike Fata judging Innovate Manitoba’s Pitch’Day 2014

Mike Fata, founder and CEO of Manitoba Harvest Hemp Foods, was a judge at Innovate Manitoba’s Pitch’Day 2014.

Wade Barnes, Farmers Edge co-founder and CEO, is a former Venture’Challenge bootcamp participant and was the keynote speaker and panelist at Lift’Off 2014.

Aki Georgacacos was a judge at Venture’Challenge in 2012 and 2013.

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