The Van Trump Report

Agrifoodtech Investment Hits Lowest Levels Since 2017

Venture capitalists seem to have lost their infatuation with the agrifoodtech space. According to AgFunder’s Global AgriFoodTech Investment 2024 report, investment in the space plunged nearly -50% last year compared to 2022 and versus the -35% decline experienced across venture capital markets as a whole.

AgFunder in its report says last year’s decline was a result of fewer and smaller deals. Deal count was down -26% while the median deal size decreased -9% year-over-year. The decline is also global with weakness particularly acute in Asia, which AgFunder says did not recover to pre-Covid levels and raised only $3.8 billion in 2023. Meanwhile, the US saw its share of agrifoodtech funding drop to 30% of global funding versus the typical 40% or more.

While venture funding overall has been on the decline the last couple of years, it’s been more pronounced across the agrifoodtech space. AgFunder notes that many of the venture capital investors that helped fueled billion-dollar-plus valuations in categories like alternative protein and vertical farming just a few years ago are now fleeing the sector. In 2023, agrifoodtech represented just 5.5% of VC dollars across all sectors compared to 6.7% in 2022 and 7.6% in 2021, according to AgFunder. Additionally, funding to agbiotech — the leading upstream investment category in 2022 — dropped -34% to $1.9 billion in 2023.

On the positive side, AgFunder points out hat funding to upstream startups – aka those operating on the farm or in food production –  accounted for 62% of overall dollar investment in 2023, up from 51% in 2022 and 30% in 2021. AgFunder also highlights “encouraging” investment growth in the Bioenergy & Biomaterials category, which it says has never been a huge slice of the agrifoodtech investment pie. But in 2023, investment in the sector increased +20% to $3 billion across 177 deals.

The Farm Robotics, Mechanization & Equipment category also grew in 2023, though at a much slower rate of just +9% year-over-year. Asia led investment in the category dollar wise. However, AgFunder notes that the Americas, which led investment dollars in 2022, saw slightly more deals (37) than Asia (31) in 2023.

Looking ahead, AgFunder anticipates another tough year for agrifoodtech firms looking for funding. AgFunders overall view: “More startups will close their doors, more layoffs will happen, and the town criers of LinkedIn will continue proclaiming the death of certain sectors they once said would save the food system.”

For investors, AgFunder quotes Costa Yiannoulis, co-founder and managing partner at Synthesis Capital: “Investments made during 2024 will provide solid investment returns given that the quality of businesses still standing will be higher on average (than in 2021, for example), and given that valuations will have further corrected from their highs of the past years.” You can download a copy of the free report HERE.

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