There is some good that has come out of the global health and economic crises, even though the epidemic has been so disastrous: investment in strengthening global food systems has skyrocketed. Back in February, we validated the magnitude of the boost that investors provided to entrepreneurs throughout the foodtech and agtech industries. To be exact, this boost was 34.5 percent higher year-over-year.
And while we saw an increase in investor confidence in “upstream” technologies, which operate relatively close to the farm and in food production (for example, alternative proteins), we now have figures showing specific investor confidence in technologies for farmers. It is because farmers are the ones who will be directly using these technologies.
According to AgFunder’s 2021 Farm Tech Investment Report, which was produced in partnership with Upstream Ag Insights, “Farm Tech” investing reached an all-time high of $7.9 billion in 2020, surpassing 2019 investment by $2.3 trillion, or 41 percent.
To put this into perspective, the growth of farm tech was approximately six percentage points greater than the growth of agrifoodtech as a whole, which includes both foodtech & farm tech combined, and 37 percentage points greater than the growth of global venture capital from the previous year in 2020. (which Crunchbase pegged at just 4 percent)
Two industries, namely agricultural biotechnology and novel farming systems, were the primary drivers of investment activity (mostly the indoor farming of crops and insects). Each sector received an investment of more than $1.5 billion from financial backers. Investors showed a special interest in Ag Biotech firms, resulting in the closing of 173 agreements, a gain of 58 percent compared to 2019. The number of transactions involving Novel Farming Systems increased by 47% compared to the previous year.
The pandemic appears to have bolstered Farm Tech because it “revealed vulnerabilities in the industrial agriculture system,” notably the fragility of the food supply chain, according to Infarm’s CEO Erez Galonza, who was quoted in the paper. As challenging as the year 2020 was on a global scale (and 2021 has not been nice in many world areas), the pandemic appears to have boosted Farm Tech. The German hyper-local vertical farming firm acquired $170 million from investors in the previous year. The modular modules that the venture produces may be found in grocery shops across Europe.
SPACs for the Farm Technology category with the most funding
AppHarvest, a high-tech greenhouse operator located in the United States, was perhaps the company that benefited the most from this development. In September of 2016, the business made public its intention to do so by forming a special purpose acquisition firm, or SPAC. In January, it was specifically recognized on the Nasdaq NDAQ -1.7 percent stock exchange, just weeks after shipping its first harvest. It resulted in the company raising $475 million, which enabled it to procure robotics startup Root AI shortly after that to strengthen its in-house technological capabilities.
AppHarvest was the first company to start a SPAC trend for firms working in farm technology and Novel Farming projects. Since then, we have witnessed the announcement of plans to go public via SPACs by four other agrifoodtech businesses. These include the agbiotech companies Benson Hill & Gingko Bioworks and the new farming enterprises AeroFarms *Local Bounti.
It is intriguing to see public listings activity taking place in the two agrifoodtech sectors that soared the most in terms of transaction activity in the previous year; it is a sign that there might be more to come at some point if the process appears to be effective for these initial case studies. For the time being, it is unquestionably presenting an exit option to early agtech enterprises that bet on fundamental technologies that require considerable periods (and unquestionably substantial commitments of money) to become revenue-generating, far less lucrative.
The expanding agtech industry has reached a critical milestone with this accomplishment in and of itself.
There is more to it than just ag biotech and innovative farming systems; the agribusiness marketplace saw the most significant transactions in 2020. The previous year saw Indigo Ag, located in Boston, raise a combined $535 million through two investment rounds. In contrast, Farmers Business Network, located in San Carlos, California, brought in $250 million.
The leadership team told us of Indigo Ag that the firm experienced an instant shock from the pandemic because it works directly with the food supply chain.
According to what they highlighted in the study, “the worldwide epidemic required us to react instantly.” This was about the need to ensure that both the company’s customers and staff were supported.
The organization developed a transport assistance hotline for grain farmers, transporters, and shippers so that the grain supply could continue to flow as quickly and effectively as it could. Additionally, it concentrated on building pricing tools, providing access to grain marketing experts, and even producing a podcast to assist producers in coping with the market instability caused by the epidemic.
Indigo Ag is not a novice when venturing into uncharted territory in the commercial world. The corporation has strategically positioned itself in the centre of the complex and undefined carbon markets. According to the Indigo Ag team, “With new companies reaching the carbon space practically daily – many adopting less demanding methods to authentication and measurement – Indigo has stayed steadfastly focused on helping farmers to make wise decisions as to when, how, and why to engage in the carbon market.” “With new players accessing the carbon sector regularly – many using less comprehensive approaches to authentication and assessment,”
The sustainable development of food
Verifying carbon-capture accounting is receiving a greater lot of awareness and inspection. Along with the general sustainability of the food chain, it is one of AgFunder’s important topics to watch in 2021. It is anticipated to be a central topic in the agricultural sector.
“We can develop a new, sustainable food economy,” the executive team behind the French insect farming company Ynsect claimed in the study. “We can offer services worldwide through biodiversity and fighting any environmental change.”
The Ynsect team argued in an interview that was included in the report that insects have the potential to improve food security and be a part of the solution to food shortages because of their excellent nutrition, low demands for land and water, low greenhouse effect, and the high efficiency with which they can transform feed into food.
Investors appear to agree: To construct an industrial-scale farm for its Molitor mealworms close to the city of Amiens, Ynsect raised $222 million in 2020, bringing its total Series C financing to $372 million. It made Ynsect the recipient of the greatest money in the innovative farming industry in 2020. After that, in April of this year, Ynsect completed the acquisition of the Dutch insect farming business Protifarm.
There is still some scepticism among a significant number of the world’s consumers regarding the viability of insects as a source of protein. However, a shift in consumer consciousness and an increase in the demand for foods that are both of high quality and have a low impact on the environment is undoubtedly a trend influencing the development of farm technology. It can be seen in the variety of startups that received funding in 2020.
Benson Hill, GreenLight Biosciences, and Pivot Bio are just a few examples of ag biotech startups that have received financial funding to diversify crop input technologies away from ecologically hazardous synthetic pesticides.
Novel Methods of cultivating fresh foods that are low in resource use and extremely efficient are being developed by agricultural businesses.
Farm Management Software, Sensing & Internet of Things firms like ICEYE, Aclima, and Cervest are shedding light on the effects of climate change and assisting businesses in their efforts to foresee and forecast disturbances connected to the environment.
Food preservation technologies such as those developed by Apeel Sciences are helping to reduce food waste, as are online grocery shopping services such as Misfits Market and Imperfect Foods. These businesses sell “ugly produce” that would otherwise be thrown away as part of their fresh food and grocery product selections.
Through the manufacturing of biofuels, businesses such as Celtic Renewables are recycling the byproducts of agricultural operations into a useful resource.
According to the team at Indigo Ag, “the possibility for agriculture to serve as a climate solution will only become more evident as firms make ever more promises to minimize their environmental effect and governments at all levels establish legislation to support climate-smart agriculture.”