New report: Agrifoodtech startup investment drops 50%, accounts for just 5.5% of global VC dollars

By Jennifer Marston, AgFunderNews

Investment in agrifoodtech startups has hit its lowest point in six years, declining nearly 50% from 2022 to 2023 as a result of fewer and smaller deals, according to AgFunder’s just-released Global AgriFoodTech Investment 2024 report. That’s lower than the 35% year-over-year drop experienced across venture capital markets, according to AgFunder’s main data partner Crunchbase.

Agrifoodtech funding declined as an overall portion of global venture capital as generalist investors — many of whom fueled billion-dollar-plus valuations in categories like alternative protein and vertical farming just a few years ago — are now fleeing the sector. In 2023, agrifoodtech represented just 5.5% of VC dollars across all sectors in 2023 compared to 6.7% in 2022 and 7.6% in 2021.

Elsewhere, some of the first specialist agrifoodtech VC firms have failed to raise follow-on funds and will likely soon close their doors.

The decline is global, particularly for Asia, which did not recover its pre-Covid totals and raised only $3.8 billion, and the US, which saw its share of agrifoodtech funding drop to just 30% of global funding when it usually accounts for at least 40%.

There are a few bright spots in the report.

Funding to upstream startups – those operating on the farm or in food production – accounted for 62% of overall dollar investment in 2023, up from 51% in 2022 and 30% in 2021. This matters because upstream tends to include the sectors innovating in the fights against climate change, metabolic illness, food insecurity, and agrifood system inequalities.

Another encouraging point in the report is the growth in investment in the Bioenergy & Biomaterials category, which has never been a huge slice of the agrifoodtech investment pie. In 2023, investment in this sector increased 20% to $3 billion across 177 deals.

The Farm Robotics, Mechanization & Equipment category, which includes much more than weeding ‘bots and autonomous tractors, also grew in 2023, albeit more incrementally. The category continued the steady upward trajectory it’s been climbing for some time now, increasing 9% year-over-year to $769 million. 

To read the entire report click here.