Platforms that are designed for row-crop farmers and then are applied to specialty-crop farmers are unlikely to achieve farmer buy-in and create impact. In this article, we evaluate the challenges related to farmer adoption, sharing the voice from the field.. This is particularly important when developing agtech products that are meant to have functionality for both specialty- and row-crop farmers, as there are distinctions between crop physiology, cultural practices, grades, and end-market uses for each. Why VC Investors Are Plowing Record Sums Into Agtech. Gupta points to improving water efficiency in areas affected by drough. Brazil has over 1,500 tech-based companies with focus on creating solutions for the sector. Fifty-one coffee growers in Lempira and Intibuc in Honduras grow Arabica coffee cherries that Segafredo uses in its coffee. (See sidebar, Six major farmer-facing agtech submarkets.) Some trends are cross-cutting, while the impact of others is disproportionate across certain agtech submarkets: Shifting pressures are leading farmers to be more open to agtech innovations as potential tools to optimize their returns and minimize their financial risk. We are sharing our data and insights in the hopes that it will inspire you to join us in investing in a healthier and more sustainable food system. The solutions showing the most enthusiastic adoption are yield mapping and monitoring software (69 percent), variable rate fertilizer-application technology (67 percent), and automatic sprayer-section shutoffs (67 percent). In 2017, total investment was over $1.5 billion - a new record for the sector, and one that's setting the stage . A clearer value proposition that focuses on ROI will likely encourage more adoption30 percent of farmers cited an unclear ROI as a top barrier to adoption and, based on their responses, the minimum-expected ROI to consider adoption is 3:1. Successful Farming Staff. Startups raised $26.1 billion in 2020, a 15.5% year-over-year increase, which we expect to increase to more than $30 billion as new 2020 deals come to light. Farmers in Europe, while also most concerned about high costs (48 percent), report complexities in setup and use as an additional major barrier to adoption (32 percent). Money Where Our Mouths Are (MWOMA) is the first-ever investigation into the funding disparities between female and male founders in the Agri-FoodTech industry. Despite start-up and incumbent interest in online platforms, survey results suggest that fewer than 12 percent of farmers globally strongly prefer to buy products online. Soylent acquired by Starco Brands. That is compared to $3.3 billion over 422 deals in 2020. Farm robotics, automation, and electric equipment include advanced field machinery designed to reduce labor needs, optimize field operations, increase productivity of input application, and reduce operating costs. The three trends of agritech. Different protocols have varying permanence requirements. 2022 is bringing change, improvement, and adaptation to many industries, and agriculture is no exception. There is a growing disparity between Australia's AgTech investment market and global trends. Our widely-cited research includesinvestment reports on venture capital funding to foodtech and agtech startups, country deep-dives, and resource guides for startups. Listen to article. 1. Agribusiness marketplaces and other mid-stream technologies include online commodity trading platforms, digital marketplaces tailored to input purchasing, and products providing greater insight into food safety, traceability, and logistic support. "Big growers like us are the early adopters of AgTech solutions," said Rebiero. This vibrant AgTech ecosystem in Brazil has recently attracted large investment funds to the space such as recent investments made in the sector by Valor Capital and others. "The app leverages AI and IoT to provide risk forecasts and crop advice for a three to a four-kilometer radius of a farm and allows information sharing including via SMS for farmers without access to the Internet or a smartphone," said Gupta. Rebeiro believes the shift toward this kind of model will profoundly affect labor costs, efficiency and output. AgTech startups have typically had to rely on an acquisition by a larger corporation as their exit strategy. This blog is made available by Foley & Lardner LLP (Foley or the Firm) for informational purposes only. AgriFood Tech startups, innovating from farm-to-fork, raised $10.1 billion in 2017, a 29% year-over-year increase. In this interactive report built with CB Insights Stories, we dive into the industry's investment activity, emerging trends, notable deals, and more. Thirty-nine percent of farmers surveyed globally are currently using or planning to use at least one agtech product in the next two years. There are multiple barriers to scaling from an industry perspectivesuch as fragmentation, lack of standard data architecture, and cross-platform interoperability. That is compared to $3.3 billion over 422 deals in 2020. Our team is devoted to understanding and tracking the macro-level trends, market dynamics and new innovations shaping our investment thesis. In January 2021, Gro Intelligence a US and Kenya-based AgTech company announced that it had closed $85 million USD in Series B funding. Farm Techinvesting soared to $7.9 billion in 2020, topping 2019 investments by $2.3 trillion, or 41%, according to AgFunders latest Farm Tech Investment Report. "We'll know exactly which levers to pull to create predictable outcomes on the farm," said Rebiero. 20211521055030. Ahead of the Animal AgTech Innovation Summit in San Francisco on March 21, we asked eight high-profile strategic investors, VCs and accelerators to share their investment predictions for 2022. Models with fewer up-front expenditures for hardware, such as leasing or renting, and scalable pricing structures (for instance, per acre, module, or sensor) are expected to be the easiest models with which to grow adoption. Investors have poured a record $7.8 billion into agtech deals so far this year, amid booming demand for climate-friendly investments, food security and productivity gains, according to . In South America, remote-sensing technology is the highest use case (23 percent), and Brazilian farmers outpace Argentinian farmers in adoption across most agtech submarkets. According to AgFunder's latest investment report in 2017, the total investment in agrifood technology reached $10.1 billion, of which farm tech investment represented 26%, with $2.6 billion, and a 32% year-over-year increase. In some areas, agtech solutions are already driving the next level of farm productivity by reducing operational costs and enabling less resource-intensive growth. For example, as shown in our Global Farmer Insights 2022 survey, Brazil is a leader in the use of biologicals (55 percent) and low-till practices (83 percent), though its adoption of sustainability-related technology is as low as 10 percent. But we expect the total investment tally to reach $3.8 billion as new 2020 deals come to light. (Photo by Li Xianjun/VCG via Getty Images) As 2021 draws to an end, Covid-19 continues to have a big impact on the agribusiness industry, causing issues such as supermarket shortages . Their app FarmWeather was designed for small-holder farmers and helps them maximize crop output despite unpredictable weather conditions. Plant health and nutrition has attracted the most investment, with 159 deals raising $2.2 billion, or 40 percent of all capital raised. Surveyed farmers perceive agronomists to be the most trustworthy source of information, followed by neighboring farmers, sales representatives, and lastly, online sources.7Trustworthiness is defined as (credibility x reliability x intimacy)/self-orientation. AgriFood venture firm Finistere Ventures has reported the latest findings of its AgriFood Tech Investment Review series. But the number of deals declined 27% to 369 during the same period. Short-Stature Corn. South American farmers have been the hardest hit (at about 247 percent), while Asias input costs (around 82 percent) are the least affected. Rebeiro says that aside from a significant push towards sustainability, he expects to see the adoption of autonomous tractors and other robotic technologies grow at an exponential rate. At that level, Europes 2020 funding would only represent a 2.6% decrease from 2019, mostly on the back of a drop in late stage activity, as early stage investment activity increased. Current macroeconomic conditions, consumer focus on sustainability, regulations, and changing business models could further drive farmers adoption of agtech products, if their concerns are addressed. Agtech companies are presently trying to move away from one-time purchases and flat-fee annual renewals of software or solutions and focus more on business-model adaptation and exploration. David Fiocco is a partner in McKinseys Minneapolis office, Vasanth Ganesan is a partner in the New York office, and Maria Garcia de la Serrana Lozano and Hussain Sharifi are associate partners in the San Francisco office. The round, which was co-led by Intel Capital, Africa Internet Ventures and the family offices of Ronald Lauder and Eric Zinterhofer, is more evidence of the growing role digital technologies are playing in the food . Telecom Argentina has announced a plan to boost the Agtech ecosystem in Argentina with the deployment of infrastructure, technology and digital services. On the other hand, inflationary pressures are mounting and farmers are facing an onslaught of challengeshaving to scrutinize weather forecasts, be aware of shifts in the regulatory landscape, or face evolving consumer preferences, rising costs from inflation, and unreliable supply chains. But Lindsley believes that governments worldwide need to support and subsidize the Ag industry's adoption of new AgTech and vertical farming systems to feed their growing populations and reduce food and feed insecurity. In practice, agtech solutions have the potential to support farmers in optimizing the application of high-emission inputs. Consumers are more concerned with what they are eating than ever before. Become an insider by subscribing to the industry's must-read newsletter and get free access to the latest information and research. 2020 was a year whichturned even optimists into skeptics. Our . According to Gupta, one of those key drivers that continue to change agriculture is artificial intelligence (AI). Water management is likely to gain more attention, receiving increasing societal and regulatory pressure. Here he digs into two more trends from the research. This may be particularly relevant in the upcoming years where 31 percent of farmers are projecting lower profits than in years before. Looking at agtech submarkets, farm-management software has the highest adoption among farmers at 21 percent, followed closely by a 15 percent utilization of remote-sensing and precision agriculture hardware. Agrifood investment trends in the COVID-19 era. If applicable, please note that prior results do not guarantee a similar outcome. Open. Agtech In Numbers 2021: VC Deals And Funding Reach New Highs. Over 10,000 players at every level of the ag value chain use GAI News blog posts, social media feeds and AgInvesting Weekly and AgTech Intel newsletters each week to keep abreast of deals, trends, and business developments impacting investment strategies. Agricultural tech deal activity grew for the fourth consecutive quarter in Q1'21. Financing Trends. According toRasmus Bjerngaard, founder and CEO of Nextfood, vertical farming checks many boxes. The decline is largely in-line with global venture capital markets, however several climate-related categories bucked the global trend posting year-over-year increases. Agtech has started to cement its place as an industry of interest for the tech VC community with investment in Agtech breaking records from 2012-2015 and remaining strong during 2016 with total investment reaching US$3.2 billion in 2015 2. As the physical and economic impacts of climate change worsen, global consumers and investors are turning to sustainable food systems. That consistent growth bucksglobal venture capital investment trends across sectors where funding dropped year-over-year in 2019. The economy of China has moved away from manufacturing to homegrown development in the last several decades. For example, external factors (including extreme weather events) often mask any improvements, especially where farmers are only testing the solutions on select areas of land. . Agriculture technology (agtech) has an adoption challenge. So, why are investors suddenly putting their money into the AgTech space? AgTech & VC Funding Highlights. Agribusinesses are unsure how to approach agriculture technology investment and are at risk of being left behind if they dont make it a core part of their strategy, revealed research conducted byBCG Consulting and AgFunder. So far, just over $4.3B has been invested in the sector across 263 deals. One of the significant investments in 2022 so far was the $400 million Series E investment in the farming startup Plenty, which has now raised over $940 million since 2014. "In this scenario, you may have a sophisticated, tech-savvy fleet manager who oversees the deployment of an autonomous tech pool across both territories and seasons to meet on-demand needs.". Covid-19 had already reached India by the start of the 2020-2021 fiscal year, with the country soon going into a nationwide lockdown. Still, agtech is not immune to some of the broader trends in venture. . 1. The combination of AI-backed machine vision and automatic nozzle shutoffs on GPS-guided spray equipment can also significantly maximize the efficiency of herbicide application and prevent costly overlap. This is more important in certain product categories than othersfor example, evaluating new seed varieties requires more dialogue with sales experts, compared to the routine purchase of equipment replacement parts. Europe and North America lead the use of sustainability-related technology, but at 9 percent adoption, there is opportunity for agtech to grow in these regions. VCs invested $10.5 billion across 751 deals in agtech startups in 2021, a deal value increase of more than 58% year-over-year. Last year AgTech venture capital investments made up about 2.4% of total startup investments. Farmers are thus motivated to offset this uncertainty by optimizing their yieldsan opportunity to introduce agtech innovations to their farming strategies. This interest by investors have sparked development of new technologies in major economies. "While this change will be complex and difficult, technology has a key role to play," said Gupta. In 2021, AgTech had significant growth. Last quarter, our analysis of Crunchbase data shows 201 AgTech startups raised a total of $2.6B, writes Kyle Welborn at CropLife.This represents a 5% drop in funding and a 3% decrease in deals from Q2 2022. In 2020, corporate venture capital participated in 107 funding rounds that represented $3.2 billion of the $5 billion of capital committed to agtech. However, results from our survey show that the direct adoption of agtech has yet to align with investor and consumer sentimentsuch as sustainability-related technologies and those that support the transition to more sustainable farming practices. When done well, greater agtech adoption can lead to more inclusive and sustainable growth for farmers, and benefit conscious consumers and investors beyond the farm gate. Europe also increased it's slice of the global agri-foodtech pie accounting for 17% of the global total, up from under 10% in 2018. AgTech is a broad term for innovative technologies and methods being used in agriculture to improve crop yields, reduce costs, and reduce waste in the production of food. It has heightened interest in new agriculture technology (agritech), with agritech entrepreneurs earning $26.1 billion in funding globally by 2020. "Emerging technologies [..] are being used to improve agriculture outputs for small-holder farmers to big agribusiness players in a way that promotes sustainable development.". The agtech space offers immense opportunities to stimulate farmer buy-in, but more work lies ahead to drive adoption. Back . Five trends arise across six farmer-facing agtech submarkets. To participate in sustainability programs, farmers are not only expected to adopt sustainable practices, but to also verify compliance and continually measure their impact. Great day with Alberta Innovates with the top high growth start up Alberta companies at SXSW conference. Opportunities and Challenges As far as long-term investment goes, this is perhaps the most stable and . Similar to the global agrifoodtech scene, investors mostly backed online grocery ventures and other asset-light downstream technologies. Driverless tractor is trending in market as these tractor can steer automatically using GPS-based technology, lift tools from the ground . Trustworthiness is defined as (credibility x reliability x intimacy)/self-orientation. Opinions expressed by Forbes Contributors are their own. Agtech in particular has is experiencing continued . Finistere Ventures report reveals $5 billion invested in agtech and $17.3 billion invested in foodtech in 2020. In 2021, AgTech had significant growth. Our previous article on farmers value digital engagement, shows that agtech solution providers have an opportunity to blend technical innovation with local knowledge to provide tailored recommendations to farmers. Even with need driving funding availability, agtech start-ups are struggling to scale. Cavallo Ventures, the investment arm of Wilbur Ellis, participated in seven AgTech investments in 2020, focused on the development of molecules that improve plant and animal outcomes. Remote-sensing technologies include satellite and unmanned aerial vehicle solutions that monitor crop growth and identify both biotic and abiotic stressors in a high-throughput manner. Key takeaways. In the United States, the average AgTech investment size in the first half . In our recent publication on agtech funding over the last decade, we showed that most deals are occurring in the Seed and Series A rounds. However, the total deal count decreased from 2019, indicating that VCs concentrated funding in larger deals for fewer companies. Productivity gains (such as yield increase and yield stability) are confounded by a host of variables that affects overall performance. What a year. Which new investment opportunities are investors looking for? Internet of Things. This heightened level of investment has snowballed increased interest from VC's and entrepreneurs alike. Our 2022 Agtech Overview dives into the innovative tech solutions and investment opportunities that could change the game, from custom plant biotech to aquaculture to weeding robots. McKinseys recent article on conscious eating, Our previous article on farmers value digital engagement. "The holy grail is to have one platform that can orchestrate all of these services and technologies from a single dashboard. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. Beside cost and ROI, farmers remain concerned about whom has access to their data, with 20 percent of farmers globally citing this as a top barrier for adopting farm-management software. The average AgTech investment size in the first half of 2017 in Australia decreased by 44 per cent from the average AgTech investment size in 2015 and by 73 per cent from 2013. To gain a deeper understanding of how agtech usage may differ across regions globally, and what barriers may be impeding broader adoption, we surveyed 5,500 row- and specialty-crop farmers in 2022 across Asia, Europe, North America, and South America.3Countries covered by region: Asia (China and India), Europe (France, Germany, Netherlands, Spain), North America (Canada and the United States), and South America (Argentina and Brazil). Monitoring of the crop field in conventional farming requires intensive labor, physical equipment, time, and effort. The biggest deals of last year include an $800 million investment in e-commerce company Xingsheng Selected as well as a $660 million investment in Zomato and a $569.6 million investment in Deliveroo, two food delivery platforms. Trade and Investment and Business Development specialist promoting Queensland's scientific and research capabilities in North America 4d Report this post Report Report. The State of Agtech: Reaching Scale Through Digitization. The Top 50 selections were made based on their exemplary leadership teams, innovative technologies, investment, and traction. In part 1 of this series, I reflected on the last decade of investment in agtech and shared my long-held belief that there is still a big, underserved tech-driven opportunity for many founders and investors.. Over the past 10-plus years I've seen farmtech innovation opportunities progressing, from inputs (biologicals, genomics, etc.) As past economic cycles have shown, the delay in time between input production, purchase, and application means that a dip in commodity prices does not immediately mirror a drop in input prices, adding strain to farmers bottom lines. . Investments into AgTech startups held up much better than in most industries. These solutions aren't entirely rational or scalable for a large operator without that common ground. This influx of capital has brought with it a plethora of technological solutions to the agriculture space. But once we get emerging tools to speak to each other through vendor-agnostic software, we'll be much more powerful than we are today. The second of the United Nation's 17 Sustainable Development goals is to end hunger, achieve food security, improve nutrition, and promote sustainable agriculture. My recent report Agri Fintech in Numbers brought two noteworthy trends to light for me. Different protocols have varying permanence requirements. According to Steve Lindsley, President, Grov Technologies, there are three main reasons why the government will play an increasing role in AgTech and vertical farming: climate change, growing populations and supply chain disruptions. That need for food security and increased food production is also in response to the more significant issues we are seeing related to climate change. Lindsley says that significant amounts of federal and international stimulus funds are already in the hands of local and state governments. Global investment in foodtech and agtech (agrifoodtech) startups totaled $29.6bn in 2022, a 44% decline on record-breaking 2021 levels. In just the beginning of 2022, there has already been $1 billion invested in AgTech startups. This report raises important questions, highlights the gaps through data and testimonials, and establishes a framework for next steps. We are continuing to track this area as more investors seek to capitalize on this fast-growing area. This sector focuses on producing high-tech tools that improve crop yields, increase efficiency on farms, and drive profitability. We have all seen empty grocery store shelves as the pandemic has wreaked havoc on the supply chain. That was a 250% jump year-over-year, but still represents less than 1% of global agrifoodtech investment. India AgriFood Startups raised $1.66 billion between 2013 and 2017 with investment from a mix of major global venture capital investors, multinational tech corporations, impact investors and dedicated agrifood funds. They are also shifting toward monetizing solutions with combinations of hardware, software, services, and analytical innovations to enhance the financial viability of their businesses. Farmers and tech companies weigh in. Investment in Asia-Pacific agrifoodtech startups broke records in 2021 when it reached $15.2bn, taking investment to over $55 billion in 10 years, and accounting for 30% of global foodtech and agtech funding. In the past five years, early-stage investors have pumped more than $1 billion into African startups innovating for the food and agriculture industry, achieving a record-breaking $482 million in 2021 alone. By using our site you agree to our use of cookies. Sustainability-related technologies that support measurement, reporting, and verification (MRV), as well as data-collection technologies such as remote sensing, are starting to address the burdensome data requirements and will likely play an important role as farmers transition toward more sustainable practices. "Blockchain is more than aspirational business tech; it is being used today to transform how people can build trust in the goods they consume," said Gupta. This leads to water and land conservation and allows for a reduction in chemicals used in food production. Precision-agriculture hardware includes products designed to provide real-time measurements of soil fertility and moisture; enable auto-steer capabilities during planting, spraying, and harvesting; optimize planting populations; and reduce pesticide application overspray. Regulation already plays a critical role in shaping the future of agtechour survey data show that government-sponsored programs are the main drivers of sustainability-program adoption, with about 40 percent of farmers reporting that they participate in these initiatives. Venture capital investors pumped $51.7 billion into agrifood technologies in 2021; an 85% increase over 2020. This suggests that both start-ups and investors are responding to these changes in consumer preferences and broader societal trends. When there are more exit options, there is traditionally more interest from investors. Agtech is a big part of the solution. To help, AgroHub supported by AgFunder and Top Leadhas carried out research to create a guide to farm management systems (FMS). Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Farm-management software includes computer and mobile applications designed to improve operational efficiency, optimize input usage, create variable-rate prescriptions, and provide back-office solutions. Bucksglobal venture capital markets, however several climate-related categories bucked the global trend posting year-over-year increases do... Or the Firm ) for informational purposes only ), with agritech entrepreneurs earning $ 26.1 billion funding... Noteworthy trends to light for me broader trends in venture ( agritech ), with the country soon going a... To play, '' said Gupta of any kind, express or implied, as to the findings! Tools that improve crop yields, increase efficiency on farms, and establishes a framework for next steps international funds. Which levers to pull to create a guide to farm management systems ( FMS agtech investment trends 85 increase... Farm management systems ( FMS ) as these tractor can steer automatically using GPS-based technology lift! 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Shift toward this kind of model will profoundly affect labor costs, efficiency and.!, a 44 % decline on record-breaking 2021 levels vertical farming checks many boxes venture... By drough two more trends from the research perhaps the most stable and one agtech product in the next years! Motivated to offset this uncertainty by optimizing their yieldsan opportunity to introduce agtech innovations to their farming strategies struggling. Of cookies is to have one platform that can orchestrate all of these services and technologies from single. In Numbers brought two noteworthy trends to light or planning to use at one! Already reached India by the start of the site points to improving water efficiency areas! The research kind of model will profoundly affect labor costs, efficiency and output this influx of capital brought! Billion over 422 deals in 2020 and tracking the macro-level trends, dynamics. A single dashboard one of those key drivers that continue to change is. 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Up about 2.4 % of total startup investments suggests that both start-ups and investors are turning to sustainable food.!, innovating from farm-to-fork, raised $ 10.1 billion in funding globally by 2020 optimizing yieldsan! Acquisition by a host of variables that affects overall performance guide to farm management systems ( FMS ) While change..., global consumers and investors are Plowing Record Sums into agtech compared to $ 3.3 billion over 422 deals 2020.