Drawing on our long history as venture capital investors, we saw an opportunity to improve the success rate of AgTech startups. We launched a venture studio to fill this need.

The Backstory

At Verdex Capital, we define our mission as Advancing Canadian Agriculture for triple-bottom-line outcomes. We look to invest in ways that achieve strong economic returns with measurable environmental and social impact.

In 1997, we launched as a traditional venture capital firm, focused on financing existing companies.

Over the last 27 years, Verdex (formerly AVAC Group) has invested in well over 100 companies and in 14 venture capital funds. Our portfolio companies have collectively raised over one billion dollars in capital, with dozens of successful exits.

We gained significant experience validating new technologies, learning what angel and institutional investors want and do not want, and the most common reasons new ventures failed to gain traction. We realized many of the primary challenges were addressable at the company formation stage, which is where venture studios focus.

The basic premise of a venture studio is to mitigate risk and accelerate growth by eliminating the most common obstacles to startup success.

Launching an AgTech-focused Venture Studio was a compelling and potentially high-impact way to live into our mission. Carrot Ventures Fund I was born. 

What Are Venture Studios?

Venture Studios offer a compelling way to commercialize promising intellectual property.

One common approach to commercializing an innovation is for the inventor to form a new company dedicated to that opportunity. Typically, the inventor is the startup’s founder and CEO. They take on all the responsibility for building and running the company.

Another common approach is to license or sell the IP to another company with the interest and capability to commercialize the technology.

Despite being the most common approaches, both are fraught with high failure rates.

Venture studios are new company foundries. They purpose-build companies around innovations, experienced leadership, and commercialization strategies. Inventors and IP owners become shareholders in the new companies but responsibility for commercialization and business strategy is transferred to the new Founder/CEO. Inventors and IP owners choose whether to remain involved in a technical capacity. 

Studio-founded companies offer IP owners a compelling option to commercialize their IP while retaining significant ownership and accelerating their upside potential. They offer executive leaders a compelling opportunity to be the Founder and CEO of a vetted opportunity. They offer investors well-qualified investment opportunities. They offer all stakeholders an increased probability of a successful outcome.

Historically, we’ve described venture studios as The Third Option to commercialize IP. Over the years, we‘ve come to appreciate the approach as The Preferred Option for successful venture development.

How Do Venture Studios Work?

With over 900 venture studios operating globally, there are a variety of approaches and strategies at play. At their core, all venture studios are company foundries.

Collectively they:

• source or co-develop novel innovations,
• source the talent needed to lead the venture,
• structure and form new companies,
• provide pre-seed and seed capital and access to other investors, and
• provide governance and support for their fledgling ventures.

A venture studio’s value proposition is to increase the likelihood of success by proactively and professionally building a strong foundation for each company they form.

Many venture studios focus on the same high-growth sectors (disruptive technology, healthcare, and finance) as the rest of the venture finance community.

We believe a sector focus is key to success. Given our experience and mandate as an AgTech investor, we are in a position to add significant value.

We started Carrot Ventures to focus exclusively on starting AgTech companies.

How Do We Define AgTech?

We define AgTech broadly as innovations connected to the production, manufacturing, logistics and distribution of food and agricultural products. Examples include animal health, crop production, digital agriculture, food safety and logistics, food tech and value-added products.

Who Is The Carrot Model Best Suited For?

The Carrot Ventures model is designed for any intellectual property owner with technology relevant to the Canadian Ag and Food sectors. It’s also for executives looking to be a Founder and CEO of a new company, and for investors looking for well-qualified investment opportunities.

Focusing on the IP piece of the puzzle, not everyone wants to be or is ready to be a startup founder. Too often, promising IP gets stranded due to an unclear path to market.

For example:

• IP might be a byproduct of another initiative and not core to the business.
• Great IP might languish in a Tech Transfer catalogue with no champion.
• The IP owners might not have the time, skills, capital, or industry contacts to proceed.
• The value proposition and market potential might be unclear.
• A company founded to launch a technology might have stalled or died.

Venture Studios offer a compelling solution to stranded intellectual property.

Next Steps

If you’re an AgTech or FoodTech IP owner and are unclear how to commercialize your innovation, visit Carrot Venture’s website and consider downloading their ebook to learn more.