PALO ALTO, CA — AgriFood venture pioneer Finistere Ventures on Thursday unveiled the latest findings of its continuing AgriFood Tech Investment Review series , confirming that 2020 will be a tremendous year for AgriFood tech investment. According to Finistere, 2020 has already exceeded 2019’s record-breaking totals. As of the end of Q3, AgriFood tech startups raised $11.6B in funding in 2020, bringing the investment total from 2010 through Q3 2020 up to $46.4B.
Mike Hockett/Industrial Distribution“The flow of capital is shifting as the market matures. While more investment dollars pour into advanced crop protection technologies, indoor farming, alternative proteins, food delivery, and supply chain advances, investment in mainstays like digital ag is consolidating as leaders start to emerge. The investment boom in this sector will help drive a healthier, more sustainable food and ag ecosystem,” noted Arama Kukutai, co-founder and partner, Finistere Ventures.
Developed in collaboration with PitchBook, key findings from the report include:
- AgTech investment totaled $3.07B in the first three quarters of 2020 (total capital invested in 2019 was $2.7B)
- FoodTech investment totaled $8.37B in the first three quarters of 2020 (total capital invested in 2019 was $7B)
- Majority of capital invested in both sectors went to later stage deals – demonstrating increasing market maturation
- In the AgTech arena, indoor ag players benefited most from Covid tailwinds tied to supply chain insecurity and demand for fresh produce
- Likewise, in FoodTech, startups in e-commerce delivery and meal kits benefited most from Covid concerns
“With more than $46B of venture capital flowing into ag and food advances over the past decade, AgriFood tech has become a focus of tremendous investor interest.As COVID shone a light on some of our food and agricultural production system fragilities that need strengthening, capital flowed in to support the trend to dine at home,” continued Kukutai. “While substantial progress has been made, there is still a long way to go. The investment trend we are seeing is long overdue in a massive sector that has been under-invested, and there is a lot of room for further growth. Building a sustainable ag and food ecosystem is absolutely critical, and it will take a lot of time and more capital.”
The report also provides a comprehensive look at which sub-sectors (e.g., food delivery, meal kits, alternative proteins, crop protection, indoor ag) earned the most investor interest, highlights the top 2020 AgTech and FoodTech deals thus far, breaks out investment trends by region, and evaluates exit values. Explore the full report findings, methodology and supporting graphics in more detail here.
Commentary from Finistere Ventures Co-Founder and Partner Arama Kukutai:
“With more than $46.4B of venture capital flowing into ag and food advances over the past decade, agrifood tech has become a focus of tremendous investor interest and has attracted a broad base of investors with both complementary and distinct points of view.”
“As COVID shone a light on some of our food and agricultural production system fragilities that need strengthening, capital flowed in to support the trend to dine at home - this year has already toppled the investment record set in 2019.”
“The food space tends to be B2C oriented while ag remains more B2B - it’s a horizontal supply chain so every type of technology you'd see venture investing in elsewhere – biotech, data science, material science, e-commerce, B2B/B2C trading, etc. – is present in the ag and food supply chain.”
“I don't expect a big valuation collapse anytime soon. Valuations will tend to hold up if the companies still have a runway as investors continue to fund their progress. However, 2021 will bring more moments of truth and reckoning as agrifood startups’ timelines to meet critical growth milestones have accelerated and they are forced to prove both their ability to scale to profitability and deliver return on investment. Some sectors, like alternative proteins, will need patient money to succeed.”
“While substantial progress has been made, there is still a long way to go. The investment booms we are finally seeing are long overdue, and there is a lot of room for further investment. Building a sustainable ag and food ecosystem is absolutely critical, and it will take a lot of time and even more money.”