Key Insights:
- Historical Low: According to AgFunder’s Global AgriFoodTech Investment 2024 report, investment in agrifoodtech startups declined nearly 50% from 2022, marking a six-year low.
- Sector Withdrawal: The exit of generalist investors has reduced the agrifoodtech share of global VC dollars to 5.5% from 7.6% in 2021.
- Regional Downturn: Investment declines are particularly notable in Asia and the US, with Asia not recovering pre-COVID levels and the US share falling significantly.
- Growth Areas: Despite overall downturns, segments like Upstream startups, Bioenergy & Biomaterials, and Farm Robotics, Mechanization & Equipment experienced growth.
- Future Outlook: The current market conditions are seen as an opportunity for high-quality investments due to a correction in valuations.
Report Overview
According to AgFunder’s latest report, agrifoodtech startups globally faced a stark decrease in investment, falling by nearly half from the previous year. This reduction is more severe than the 35% year-over-year drop seen across all venture capital markets, based on data from Crunchbase.
Investment Trends and Shifts
The report highlights a strategic withdrawal by generalist investors who had previously driven up valuations in agrifoodtech sectors such as alternative proteins and vertical farming. This shift contributed to agrifoodtech comprising just 5.5% of all venture capital dollars in 2023, a decline from 6.7% in 2022 and 7.6% in 2021.
“Generalist investors are reallocating their portfolios away from agrifoodtech, impacting both valuations and the volume of deals in the sector,” notes AgFunder’s analysis.
Regional Impacts
The downturn in investment has been global, with specific impacts on key regions. “Asia, for instance, raised only $3.8 billion, not reaching its pre-Covid totals, while the US saw its global funding share drop to just 30%,” the report states, highlighting the widespread nature of the investment pullback.
Resilient Segments
Despite the broader negative trends, certain agrifoodtech segments have shown resilience. Investment in upstream startups increased significantly, representing 62% of total dollar investment in 2023. The Bioenergy & Biomaterials sector also saw a notable uptick, with a 20% increase in investment to $3 billion across 177 deals, driven in part by significant rounds like the $830 million raised by US-based Footprint.
Furthermore, the Farm Robotics, Mechanization & Equipment category continued its upward trajectory with a 9% increase year-over-year to $769 million, underpinned by major investments such as the $200 million Series D round for Indonesia’s eFishery.
Investor Perspectives
Despite the downturn, some investors remain optimistic about future opportunities in the sector. Costa Yiannoulis, co-founder and managing partner at Synthesis Capital, stated in AFN’s VC survey, “Investments made during 2024 will provide solid investment returns given the quality of businesses still standing will be higher on average, and valuations will have further corrected from their highs of the past years.”
Read the complete Global Agrifoodtech Investment report here.
Photo by Teo Sticea on Unsplash
