AgFunder new report: Agrifoodtech ventures raised record $52 billion in 2021, nearly doubling previous year’s total

By Jack Ellis

Venture capital investors pumped $51.7 billion into agrifoodtech startups worldwide in 2021, according to the latest edition of the annual AgFunder Agrifoodtech Investment Report.

That represents an 85% increase over 2020’s $27.8 billion total, indicating the accelerating — and increasingly urgent — demand from investors and consumers for technologies that can enable more sustainable and resilient food systems.

Here are a few of the AgFunder Agrifoodtech Investment Report’s headline findings:

• $51.7 billion raised in total

• 85% year-on-year growth in funding

• 3,155 discrete deals

• 4,570 investors

• Largest deal: $3 billion, Furong Xingsheng (China, eGrocery)
  

Startups in upstream categories — covering farming and food production technologies and solutions between the farm or the lab and the retail level — secured a total of $18.2 billion across 1,846 deals. Meanwhile, downstream ventures — those that have a direct touchpoint with consumers — netted $32.1 billion across 1,241 deals, according to the AgFunder Agrifoodtech Investment Report.

Digging down, it was agrifoodtech categories that took off in response to the Covid-19 pandemic that remained the most popular with investors; in many cases, they saw an uptick in dealmaking activity.

• Investments into eGrocery ventures grew an astounding 188% year-on-year, laying claim to more than a third of all agrifoodtech funding. The category was fueled by companies raising multiple eight, nine, and 10-digit US dollar rounds as the trend towards ‘contactless’ shopping and convenience continued.

• Cloud Retail Infrastructure — including on-demand enabling tech, dark kitchens, and delivery robots, among others — saw its investment grew 97.5% year-on-year to hit $4.8 billion, accounting for more than 9% of all investment activity.

• Innovative Food — including alt-protein — witnessed 103% growth last year over 2020 to also reach $4.8 billion in investment. Familiar names such as Impossible Foods, NotCo, Perfect Day, Future Meat, and Nature’s Fynd were behind the category’s biggest rounds (Impossible Foods was the only upstream startup to close a round above $500 million in 2021.)

In geographical terms, the US remains the world’s single largest market for agrifoodtech venture funding, with US-based startups raising 41% of all invested capital and accounting for 34% of global deals in 2021.

• US deals were split roughly 50-50 between upstream and downstream categories; given the generally longer time horizons, perceived higher risks, and ‘deep tech’ nature of upstream solutions, this points to the relative maturity of the US market compared to its peers elsewhere.

• Agrifoodtech investment in the rest of the world remains largely focused on the downstream. Non-US companies raised $30.7 billion in 2021, 70% of which went to downstream ventures; with 44% going to eGrocery companies, compared to 24% in the US.

• Case in point: Of the $7.3 billion raised in total by Chinese agrifoodtech ventures during 2021, three-quarters went to eGrocery businesses.

• Over in Europe, a seeming lack of growth- and late-stage deals may suggest that many of the continent’s agrifoodtech startups are struggling to grow and scale; while a small handful of players secure the big bucks. Several European countries are ‘one-deal markets.’ In the Netherlands, for example, eGrocery venture Picnic’s single late-stage round accounted for 77% of the country’s $916 million in total investment capital. It was a similar story in Finland, Germany, and Spain.