Green Acre Capital is targeting C$75 million for its second venture capital fund aimed at the Canadian cannabis space, just a year after kicking off its debut investment pool.
Tyler Stuart, managing director of Green Acre, told Real Money that Green Acre Capital Fund II will target a 30% IRR (internal rate of return), or a 3x return within seven years.
Thus far, the Toronto- and Calgary-based firm's IRR for the C$25 million Fund I is about 160% on the capital deployed in its first year, he said.
The new fund will take a slightly more international focus as countries around the world move toward legalizing cannabis for medical use.
"It'll be fairly similar to the first fund which was focused on private opportunities in the ancillary space for cannabis -- mostly picks and shovels," Stuart said. "Canadian investments
accounted for about 80% in the first fund, so you might see that percentage drop a bit in the second fund."
Potential investment themes under study for Fund II include smaller craft cannabis producers, privately operated stores in Ontario and hemp processing, he said.
Thus far, Green Acre Capital has drawn more than C$35 million in commitments to Fund II from lead investment commitments totaling over C$35 million from Aphria Inc. (APHQF) , York Plains Investment Corp., W. Brett Wilson, E. Craig Lothian, and several other high-net-worth investors, according to a statement from the firm.
Among its recent exits, Green Acre Capital was a backer of smoke cannabis owner Hiku Brands, which was purchased by Canada's Canopy Growth Corp. (CGC) for about C$250 million in a deal announced in July. Green Acre made a 7x return for the firm, Stuart said.
Green Acre is looking at a 2x return in six months on the sale of cannabis testing firm Anandia Labs to Stocks Under $10 holding Aurora Cannabis (ACBFF) for C$115 million in stock, Stuart said. The deal was announced in June.
Among its recent investments, Green Acre Capital in July teamed up with Osmington Inc. to purchase a stake in cannabis software provider Ample Organics Inc.
for an undisclosed amount.
In June, Green Acre invested alongside Canopy Rivers into Solo Growth Corp., a cannabis retailer based in Alberta. The management team has an outstanding track record of operating over 60 liquor stores in the province and will be using that experience to pivot into cannabis retailing.
In March, Green Acre Capital and Casa Verde Capital, the venture capital firm of U.S. rapper Snoop Dogg, led a C$4.3 million seed stage financing in Green Tank Technologies, a Toronto-based maker of vaporization hardware for the cannabis industry.
The firm is working with Toronto law firm Chitiz Pathak on the fund. It is not using a placement agent.