While the headlines in the latest AgFunder Global AgriFoodTech Investment Report 2024 make sobering reading, there are some clear reasons for positivity. Bioenergy and biomaterials, alongside farm robotics, mechanisation and equipment have increased their investment share, and the UK’s deal value ranked second in the world.
AgFunder report provides an annual update on global investment trends in AgriFoodTech. The Global AgriFoodTech Investment Report has become the go-to place to understand the investment landscape into the sector – across geographies, technology categories and deal stage. The type and nature of investment in farm-tech shifted towards innovations to improve on-farm performance and climate tech – with the bioeconomy continuing to attract interest.
Fewer – and smaller – deals
Total investment into AgriFoodTech totalled $15.6bn in 2023, down from $30bn in the year before. This continued the downward trend we have seen in recent years – with a corresponding fall in venture capital investment at 5.5% (down from 6.7% in 2022 and 7.6% in 2021).
The report authors discovered that fewer deals were conducted (down 25% on 2022) across all the investment stages, and the average deal size was also down – by nearly a third. While early-stage investment was reasonably buoyant, this tailed off in the latter part of the year. Finance for growth and late-stage companies – especially those with high capex requirements – also struggled.
A strong climate-tech agenda, but waning interest in farm management tools
As ambitions continue to grow around the global bioeconomy and the move towards net zero GHG emissions, it is reassuring that Bioenergy and Biomaterials continued to pull in investment – representing the biggest category with $3bn of investment (having grown by 20% since 2022).
The other winner – being the only other category to demonstrate growth – was Farm Robotics, Mechanisation and Equipment; this has increased by 9% year-on-year to over $760 m.
Previously well-performing categories such as e-grocery, and innovative foods suffered major declines.
Worryingly, Farm Management (which includes most tools of precision agriculture as well as operations management software), which underwent an almost 50% decline since the previous year.
The UK ranks second globally – but declines for Asia and the Americas
The US continued to dominate the world the ranking in terms of global investment – but even their total of $5.4bn in 2023 represented a nearly 60% decline from 2022. China and India also lost investment share to other markets, with their combined investment dropping from 55% in 2022 to 40%. Israel (usually a strong performer in the Top Five) also didn’t feature in the Top Ten in 2023.
There was, however, more positive news for Europe, where the UK claimed second spot.
Despite a nearly 30% decline as compared with 2022, UK AgriFoodTech businesses collectively still attracted an impressive $1.3bn of investment. Germany was the only country in the Top Five to show growth in investment finance (59%) and Spain and Switzerland also featured in the Top Ten.
Tough times – but readjustments continue and reasons for optimism
The report also sought insights from global investors about their views of the future. Over 96% agreed that the correction that the industry has been seeing is likely to continue into 2024.
Andy Muir, Investment Director at Future Planet Capital Ventures, concurs: “Entrepreneurs must be pragmatic around valuations and we need to understand fully the impact of geo-political volatility, not to mention any changes resulting from investor confidence resulting from the number of elections underway in 2024.”
This is supported by Dr Rob Wylie, Chairman of Cambridge Agritech, commenting: “The ebullience of the past few years has settled down to more realistic levels in terms of valuations, timing for the next follow- on round and what needs to be achieved for this next round. Investments are being made for the right deals.”
He continues: “Some of the downturn in investment reported is due to less capital intensive projects, such as vertical farming, being made but we have noted some VC funds being successfully raised in Europe with Cibus Fund being a notable example, and some cleantech specialist funds recognising the C reduction potential of many Agritech investments so I am still optimistic about the sector.”
There is no doubt that it is harder to raise money, particularly in later stage and in geographies and categories where confidence might be declining.
Interesting, debt funding was the only stage that saw a modest increase in deal numbers in 2023.
Focus on Finance with Agri-TechE
Hear from a range of investors (including Andy Muir and Dr Sean Butler from Cambridge Agritech) across all investment stages at Agri-TechE’s Focus on Finance event on 26th March in Cambridge. We’ll be tackling questions such as:
- How does the British Business Bank feature in the UK investment landscape?
- How can my I showcase my business to a global investor base?
- Can non-dilutive grant finance really de-risk private investment?
To register please click here.