Precision Ag startups were big winners in Q2 2025, with fundraising climbing nearly +72% over the previous quarter, according to data from PitchBook. It also marks the first time since 2017 that investors have favored precision ag startups over companies in the ag biotech space, signaling “a notable shift in investor priorities,” according to PitchBook’s Q2 2025 “Agtech VC Trends”.
Overall, PitchBook shows VC activity slowed across the entire Agtech landscape. Total deal value was down -22.8% to $1.5 billion, while deal count was down -22.9% at 117. PitchBook notes, “Like almost all sectors, the steady contraction in deal volume has persisted since the market’s high in Q1 2022.”
Despite the decline in overall activity, deal sizes in Q2 jumped to a median $5 million from $3.1 million in Q1 2025. PitchBook says this is may be an indication that the number of newly created startups has declined and investors are concentrating their resources into fewer but higher-quality companies. There is also evidence of this in pre-money valuations, which soared from $15.1 million to $24 million YTD. Alex Frederick, senior research analyst at PitchBook, says the “flight to quality” is expected to continue.
PitchBook calls precision ag startups the “quarter’s biggest story,” after outraising ag biotech firms for the first time since 2017, and by a considerable amount. Precision ag raised $580.2 million across 36 deals versus $270.6 million in funding for 35 ag biotech deals. The totals for precision ag reflect a +71.2% increase in total capital raised, but a -12.2% decrease in deal count
The key trend driving investor interest in precision ag is the agriculture industry’s deepening labor shortage. Frederick points out that changing US immigration and trade policies have put a spotlight on the issue of labor challenges in agriculture.
As the report authors note, US agriculture’s labor shortage is a long-term trend, so they expect VCs to continue directing significant capital to the precision ag sector. It may even accelerate as advancements in artificial intelligence technology filter into ag applications.
Meanwhile, the $270.6 million raised by ag biotech startups in Q2 2025 represented a steep -72.5% decline from the first quarter. PitchBook says the shift may represent “growing frustration over the gap between the lofty promises of ag biotech and the practical outcomes achieved so far.”
Indoor ag companies are among those facing the greatest funding headwinds, with the sector raising just $476.3 million across 7 deals. That’s after raising almost $8 billion globally between 2018 and 2022. However, between 2022 and 2024, total funding for indoor farming companies plunged to less than $1 billion.
Another segment that may be experiencing investor frustration is biostimulants, where funding dropped by 86% last year compared to 2023. That’s according to AgFunder, which also notes that the decline reflects broader trends across multiple industries and is no doubt partially due to ongoing uncertainties in trade and the political arena. At the same time, the biostimulants sector is incredibly crowded, and AgFunder notes that consolidation is an ongoing trend, especially as big ag companies try to gain a foothold in the space. Learn more at AgFunder HERE.
