Finistere Ventures released its “2019 AgriFood Tech Investment Review,” which found that agtech deals continued to climb and reached an all-time high in 2019, while later-stage VC valuations across the agtech and foodtech ecosystem rose dramatically.
Venture capital investment in agtech startups totaled $2.7 billion across nearly 300 deals around the globe in 2019. In contrast, foodtech investment decreased significantly in 2019 – down to $7 billion from its high of nearly $9 billion in 2018.
“The flow of money is shifting as the market matures. While more money pours into advanced crop protection technologies, indoor farming, alternative proteins, ingredient refinement, and supply chain advances, investment in mainstays like digital ag is beginning to drop as leaders start to emerge,” says Arama Kukutai,co-founder and partner at Finistere Ventures. “Likewise, those investment reallocations will help drive a healthier, more sustainable food and ag ecosystem where fundamental value has to be demonstrated.”
Developed in collaboration with PitchBook, the report provides in-depth analysis of global financing activity across the agtech and foodtech industries, a breakdown of regional variations, an evaluation of the investor universe, a ranking of top startups across the agtech and foodtech ecosystems, and an infographic of top 2019 trends and takeaways.
Key agtech findings include:
- Continued maturation of the agtech investment sector with increasing capital deployment in later-stage companies and bigger valuations as startups start to scale
- From a global perspective, while the United States continues to take the leadership role in agtech investments, Europe is closing the gap and doubled capital deployed into agtech deals in comparison to 2018 – ending the year at $500 million
- Reaching a high of $920.9 million in 2019, crop inputs continued to be the leading segment in agtech investment
- Precision ag investment continued to fall since its peak in 2016 with an expected shakeout ahead as best-of-breed innovators position themselves to claim leadership positions through consolidation and showing market adoption
- With longer lifecycle investments, plant sciences investments dropped 20 percent from 2018 but will likely climb again in years ahead given the need for pipeline by Ag majors
- Capital deployed into later stage venture financings increased by 50 percent, while exits remained anemic, with only eight ventured-backed exits in agtech and 16 M&A transactions in 2019
Key foodtech findings include:
- Foodtech investment continues to outpace that of agtech, with $7 billion in capital deployed within the sector in 2019
- While angel/seed and early stage valuations in the space have stagnated, later-stage VC valuations have skyrocketed in recent years, reaching an incredible high of $233.4M in 2019
- From a global perspective, while the United States continues to take the leadership role in agtech investments, Europe is closing the gap and doubled capital deployed into agtech deals in comparison to 2018 – ending the year at $1.2 billion
- Foodtech may be the first agrifood sector impacted by the U.S./China trade wars; there was a dramatic decline in investment from Asia (nearly half as much in 2019 as in 2018)
“As the growing call for action on issues from climate change, to clean water and plastics reduction from both consumers and regulators pushes beyond the cleantech sector to become table stakes for both CPG food majors and farmers, the focus on sustainability will intensify across the agrifood ecosystem in 2020,” added Kukutai.