Climate change, Covid-19, the War in Ukraine, all of these overlapping crises are forming the backdrop of surging investments in agrifood technologies. Alternative investments are no doubt appealing when global markets are in flux. But an investment in agrifood tech is an investment to secure one of our most basic human needs. According to AgFunder’s 2022 AgriFoodTech Investment Report which I recommend you read in its entirety HERE, capital investors pumped $51.7B into agrifood technologies in 2021, an impressive +85% increase over 2020. It seems the theme of the year was doubling, tripling, and in some cases quadrupling-down.
Agrifood tech sectors that took off in response to the Covid-19 pandemic not only remained the most popular investment categories, but they also exploded with new deals and their capital is still mostly garnered from the US. The startups here raised $21 billion in 2021 across 1,062 deals, accounting for 41% of the investment capital in the space.
At the state level, it’s no surprise that California’s investment continues to dominate, thanks to both its agricultural and Silicon Valley venture capital roots. Startups in the Golden State raised $9.7 billion in deals in 2021, up from $5.6 billion in 2020. Notable names in agrifood tech, from alt-protein companies like Impossible Foods and Perfect Day to ag biotech startup Pivot Bio, call California home and were among the top agrifood tech investment deals in 2021.
Top deals overall in the US were dominated by eGrocery, specifically GoPuff’s $2+ billion raise in 2021, along with smaller rounds from Weee! and JOKR. However, eGrocery has lost a lot of its steam since AgFunder’s report was first published, and in the current downturn, more investors are putting their faith in climate tech, which largely includes upstream technologies closer to the farm and lab.
Clearly, all these categories within the agrifood tech sector will have varying effects on our operations as well as how we choose to move them forward, so it’s definitely a good practice to stay aware of where the money is being put to work. Below are some of the highlights from the report but there’s a lot more great insights and details in the full report HERE. (Source:AgFunder)
Downstream Investments… increased 124% YOY to $32.1bn, while deal activity increased 68%. Multiple billion-dollar rounds in the eGrocery sector are largely responsible for the change.
eGrocery… investment surged 188% YOY, accounting for 35% of all investment activity in 2021.
All Categories… posted investment gains with the fastest growing outside of eGrocery being Innovative Food with a 103% YOY, Online Restaurants & Mealkits 102%, and Cloud Retail Infrastructure 97.5%.
Year of Mega-Deal… Four rounds topped the $1bn mark, all of them in the eGrocery space, with China’s Furong Xingsheng closing the biggest single round at $3bn while the US’s goPuff raised two billion-dollar rounds. There were 13 additional $500M+ deals last year compared to just seven in 2020. Only one upstream venture, Impossible Foods raised $500M+
Global Insights… A lack of growth and late-stage deals in Europe may suggest that many of the continent’s agrifood tech startups are struggling to grow and scale as many European countries seem to be one-deal markets only. In fact, Netherlands, eGrocery venture Picnic’s single late-stage round accounted for 77% of the market’s $916m in total investment capital.
Agribusiness Marketplaces were the slowest-growing category globally in 2021 but emerging markets saw strong investor interest. Most notably because in South Asia, SubSaharan Africa, and elsewhere, supply chains are heavily fragmented and agtech ventures tend towards vertical integration to gain market traction.