A guide to the financing ecosystem for start-up agri-food projects
This guide was updated in October 2023.
Access to funding is one of the major challenges facing agri-food social innovation initiatives. While numerous opportunities exist in the market, many entrepreneurs still struggle to find the financing they need: patient capital that aligns with the reality of impact-oriented agri-food projects.
This guide provides an overview of the various funding sources currently available to agri-food start-ups, along with a few characteristics of each of these sources. Though not exhaustive, the list serves as a foundation for understanding where to turn for different types of funding.
The following types of funding have fewer requirements for documentation and proof of concept requirements, and are therefore generally easier to access in the pre-start-up and/or start-up phases of a project.
Love money
“Love money” is private capital that is raised by calling on friends and family to help start a business. The contribution is made on the basis of a relationship of closeness and trust, with the primary aim of helping someone develop their business, and less with a view to making a return on the investment.
Competitions and Grants
These are prizes received through participation in competitions, often in the form of pitches to jury members. Each competition has its own criteria, and making an effective pitch requires careful preparation. Examples of competitions:
- Tout pour la relève agricole from the Financière agricole du Québec (FADQ)
- StartupFest
- Défi OSEntreprendre
Private investors
Private investors are individuals who, alone or in groups, invest in businesses at the pre-startup (product design), prototyping (pilot project) or post-startup (commercialization) stages. Anges Québec is the largest network of angel investors in Canada.
The following types of funding generally have more documentation and proof of concept requirements.
Government Funding
Government funding consists of grants and loan guarantees that don’t require financial repayment. The following are the main providers of this type of funding:
Ministère de l'Agriculture, des Pêcheries et de l'Alimentation (MAPAQ)
MAPAQ contributes to the prosperity and diversity of Quebec’s agri-food industry. It offers various programs in three fields of activity:
Funding range : Variable (from $2,000 to $3 million and more)
Financière agricole du Québec (FADQ)
The FADQ’s mission is to support and promote the sustainable development of the agricultural and agri-food sector. It offers several financing programs to support all stages of agri-food business development including loan guarantees, subsidies and payment vacations.
Funding range: $10,000 to $15 million
Key Points
- Properly assess the resources and time that need to be allocated to prepare the request, implement the activities and report.
- Understand that there is no such thing as free money, and that commitments are necessary; be prepared to meet these commitments.
- Be prepared to adapt or adopt accounting and monitoring systems to meet program requirements.
- Be familiar with the programs: objectives, criteria, eligible and ineligible costs, application and evaluation process.
- Most applications take six to twelve months to be approved; someone needs to be responsible for communicating with the program, maintaining contact and promptly responding to requests.
- Be prepared to be transparent.
- Some programs require substantial documentation such as a marketing plan, business plan, budget/financial package, etc.
- Some programs require one or more years of existence to be eligible.
- Make sure that the person writing the application has all the necessary resources for the entire business – finances, technology, etc.
Conventional Financing
These are mainly bank and institutional loans that require regular repayments and, in some cases, personal guarantees.
Financial institutions
Financial institutions (banks and financial cooperatives) offer various financial products such as loans, lines of credit and discounts for various fields of activities, including agri-food:
- Canadian Imperial Bank of Commerce (CIBC)
- Business Development Bank of Canada (BDC
- Laurentian Bank
- National Bank
- Scotiabank
- Royal Bank (RBC)
- Desjardins Caisse d’économie solidaire
- TD Canada Trust
Financing range: : variable, depending on project
Fonds d'investissement pour la relève agricole
The FIRA’s mission is to support young people with start-up, growth or transfer projects in agriculture, in the form of loans, capital and land leases.
Financing range: up to 250 000$
Farm Credit Canada (FCC)
FCC is a federal Crown corporation that offers financial products (mortgage loans, lines of credit, asset-based and cash flow financing, etc.) to Canadian farmers and agri-businesses.
Financing range: up to $1 million
Fonds de transfert d'entreprise du Québec (FTEQ)
The FTEQ is intended for new entrepreneurs who want to start their own business. The FTEQ provides financial support adapted to business transfer situations in all sectors, including agri-food processing. For agricultural production businesses, the Fonds operates through the FIRA (see above).
Financing range: : $50,000 to $1 million
Investissement Québec
Investissement Québec is a Québec government corporation created in 1998 to promote investment in Québec and international businesses. It offers financial products (loans and loan guarantees, quasi-equity financing) for companies in various sectors, including farming. Working in collaboration with the FADQ, only companies that are not eligible for FADQ programs can benefit from Investissement Québec financing.
Financing range: varies according to project
Fonds de solidarité (FTQ)
The largest development capital investment network in the province, the the Fonds de solidarité (FTQ) was created at the initiative of the FTQ, Quebec’s largest trade union. The FTQ supports businesses through various funds (head office, regional and local) in different sectors of activity, including agri-food, offering a range of financial support such as unsecured loans and equity participation.
Financing range: over $5 million
Municipalité régionale de comté/Centre local de développement (MRC/CLD)
The mission of MRC/CLDs is to mobilize all local stakeholders in a common, action-oriented approach to fostering economic development and job creation on their territory through a partnership between the government and the local community. As part of their mission, MRC/CLDs can provide financial support to project leaders through specialized agri-food funds such as the Fonds d’investissement agroalimentaire Nicolet-Yamaska.
Consult the list of Quebec MRCs here.
Financing range: varies from one CLD or MRC to another
Key Points
- Loans usually require substantial documentation, such as a well-developed business and/or marketing plan that demonstrates the project’s viability.
- Financial institutions may in some cases require a certain duration of existence and volume of activity, supported by annual financial statements and balance sheets.
- Funding bodies in some cases require personal guarantees (collateral and guarantee funds) and real guarantees (mortgages and pledges).
- Borrowing conditions are often strict and require sound financial planning. Good cash management is necessary to avoid the risk of default and/or over-indebtedness.
- In some cases, funding bodies require a minimum shareholding by the project leader.
- Types of funding in the form of equity participation involve the company being open to outside partners as shareholders, who may influence decision-making within the business, or even cause the project leader to cede control.
Other Funding
This section presents the types of funding provided by organizations other than financial and public institutions.
Fonds coopératif d’aide à la relève agricole (FCARA)
This program is administered by the member cooperatives of Sollio Groupe Coopératif. Divided into two components, this three-year program enables young cooperative farmers to benefit from financial support with the collaboration of Desjardins Group, professional support and a range of skill-development opportunities.
Financing range: up to $7,500 per year per agricultural business, member of a local cooperative
Evol (formerly FEMMESSOR)
Evol is dedicated to the development of women entrepreneurs. Its mission is to offer a wide range of support to women-owned businesses, including financial assistance in the form of conventional loans.
Financing range: $10,000 to $150,000
Futurpreneur
Futurpreneur helps aspiring young business owners find financing. It offers start-up loans and mentoring for young people between the ages of 18 and 39.
Financing range: up to $60,000
Réseau d’investissement social du Québec (RISQ)
The RISQ provides loans especially tailored to social economy enterprises that provide financially viable and socially profitable goods and services. Its mission is to provide enterprises in diverse sectors that are structured as NPOs or cooperatives with access to financing adapted to their realities.
Financing range: $1,000 to $1.5 million
MicroEntreprendre
A leader in entrepreneurial microfinancing and a driving force behind social inclusion and economic development in Quebec, MicroEntreprendre provides local support and access to microfinancing, bridge loans and honour loans through its network.
Financing range: variable according to project ($2,000 to $20,000 and more)
Réseau des Sociétés d’aide au développement des collectivités et Centres d’aide aux entreprises (SADC-CAE)
The Réseau SADC-CAE is a group of non-profit organizations dedicated to bring out the best in the regions and promote their economic development. The organizations offer specialized services in the region, from market studies to business plan analysis and financing.
Financing range: up to $250,000
Local employment centres (CLE) can also offer support for self-employed workers to develop a business plan and start up their business.
PME MTL is a business support network in the city of Montreal whose mission is to offer a range of professional services to private and social economy entrepreneurs on the island of Montreal. The network offers a wide range of services including coaching, financing and training. In terms of financing, the network offers several financial tools:
Foundations
Various foundations are involved in funding initiatives related to food, social innovation and the social and solidarity economy.
Here are a few examples:
Sociofinancing or Crowdfunding
Also known as socio-financing, crowdfunding is a way for an individual or a company to raise small sums of money from a large number of people, via the Internet. The aim is to raise sufficient funds to carry out a specific project. There are various types of crowdfunding including donations, pre-sales of products and equity crowdfunding (Autorité des marchés financiers).
There are several socio-financing platforms, such as La Ruche and Ulule which accept projects from different sectors. Ma Belle Terre specializes in the agri-food sector. Although socio-financing offers advantages such as an opportunity for market testing, and access to financing at a relatively low cost, there are a few things to bear in mind before embarking on a campaign.
For one thing, it is important not to overlook the time and resources required to set up an effective socio-financing campaign (preparation, research and analysis, history, counterparts, building a campaign page and creating presentation videos, campaign management, etc.). A campaign also requires strong social media and communication skills. Finally, some platforms require that the amount set as the campaign goal be reached before funding is awarded and the contributors are debited.
Community Bonds
While community bonds are often considered innovative financing tools, they are not actually new but are rarely used in Quebec (TIESS, 2017). According to the TIESS, community bonds are debt instruments accessible to all types of investors but issued only by non-profit organizations. Community bonds can be a good solution for diversifying funding sources while mobilizing community members towards the organization, the project and the values promoted. However, it is important to bear in mind that community bonds represent a debt to be repaid by the issuing organization, and that strategies must be in place to ensure their repayment at maturity. The time and costs involved in issuing these bonds (design, sale and management) should also not be underestimated. Finally, as with most financial commitments, there are disclosure and transparency obligations towards investors.
Shares
Shares are the share capital of cooperatives, comprising all the shares in which the cooperative’s members and community have invested. There are several types of shares (preferred, common, etc.). Funds are necessary for the operation and development prospects of these cooperatives and can be leveraged to access other external financing.
For more information and resources on these last three types of financing, visit:
- TIESS Ampli Tool
- CESIM
- TIESS
- Chantier de l’économie sociale
- PME MTL