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The AgTech Industry May Be Growing Upqrcode

Mar. 12, 2019

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Mar. 12, 2019
The AgTech industry is continuing to mature, at least according to AgFunder’s latest AgriFood Tech Investing Report published on March 7. This “record breaking year” for the industry included $16.9 billion in funding spread across 1,450 investments. In 2018, AgTech witnessed bigger deals, growth in late stage investments and more exit opportunities for investors.
Most investments are still based in the U.S.—California, of course—but investments in India increased by a surprising 280% with the largest deal of the year—$1 billion—going to Swiggy, an online restaurant marketplace.
According to Rob Leclerc, founding partner of AgFunder, “while investment in agrifood tech has typically been dominated by downstream startups—especially in the food delivery space—this year we saw record-breaking growth upstream as the sector continued to mature...This really represents the new guard of AgTech companies.”

An employee checks lettuce grown in an indoor farm at a Spread Co. plant in Kameoka, Kyoto Prefecture, Japan, on Tuesday, Oct. 2, 2018. Photographer: Tomohiro Ohsumi/Bloomberg© 2018 BLOOMBERG FINANCE LP
AgFunder points to a number of signs that show the AgTech industry is maturing, at least for the venture capitalists, beginning with an increase in late stage investments in companies like Instacart and the Indian tech company Swiggy.
Over 60% of mergers and acquisitions last year offered an exit to investors, the report also cites. Some of the multinational corporations making big deals last year include Syngenta, Bayer, DuPont, Land O’Lakes and Merck.
The median deal size was largest in the areas of agricultural biotech and innovative food companies, however, which reflects the high costs of agricultural research and development, as well as the significant challenges required to bring something like cultured meat ever closer to market.

Attendees take pictures of the Scientific Cal Ag Gen 6 prototype drone during the World Agriculture Expo in Tulare, California, U.S., on Wednesday, Feb. 13, 2019. Photographer: Patrick T. Fallon/Bloomberg© 2019 BLOOMBERG FINANCE LP
The industry witnessed significant growth in early stage investing in startups focused “upstream”— that is, from the farm to companies that precede the retailer—including robotic technology and biotech companies.
Investing in “downstream” or more consumer-facing companies increased at similar rates, but mostly in the form of late stage investments to a few outliers: consumer food and online grocery companies based in India and China. The largest deal of the year, $1 billion dollars, went to Swiggy, an online restaurant marketplace based in India. High consumer demand for these convenience platforms drove much of the investments in this sector, according to AgFunder.
A number of areas across the AgTech industry experienced growth. Online restaurant marketplaces experienced the most with 91 deals totaling $3.9 billion, boosted primarily by top dollar investments in Siggy, Brazil’s iFood and the U.S.’s DoorDash. Online grocers followed closely behind, with 153 deals totaling $3.6 billion. Other areas experiencing growth include in-store and restaurant technology ($1.7 billion), agricultural biotech companies ($1.5 billion) and midstream technologies which include food safety and traceability technologies ($1.3 billion).
Some of the higher investment earners include Zymergen, a microbe engineering firm, Indigo Ag, a microbial crop input startup and Impossible Foods. Other significant investments went to a cannabis grower, a French mealworm grower and a robotic pizzeria.

A post-harvest tech manicures finished buds at a cannabis production facility in Canada. Photographer: Galit Rodan/Bloomberg© 2018 BLOOMBERG FINANCE LP
Says Sanjeev Krishnan, managing partner at the venture capital fund S2G Ventures, “consumer changes, low commodity prices and significant technological developments...are providing opportunities for entrepreneurs and investors to re-invent the food system to feed this changing consumer.”
Yet “this changing consumer” may be tough to pin down, since AgTech is a global industry. Geographically, most of the deals were located in the U.S. with 567 deals totaling $7.9 billion, followed by China with 184 deals totaling $3.5 billion, India at 2.4 billion and Brazil at $700 million.
Within the United States, most deals were overwhelmingly located in California at $5 billion, followed by Massachusetts at $799 million and New York at $539 million. The highest dollar U.S. deals went to Instacart, DoorDash, microbe manufacturer Zymergen and ZUME, a robotic pizzeria.
There are new countries entering the AgTech investment fold this year, as AgFunder cites investments for the first time in Albania, Romania, Serbia and Zambia. The report sums um 2018 as a “vintage to be celebrated.”
Source: Forbes

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