Finistere Ventures report reveals $ 5 billion invested in Agtech and $ 17.3 billion invested in Foodtech in 2020. Finistere Ventures expects 2021 to dwarf 2020 numbers as capital continues to flood into agtech.
According to Finistere Ventures’ 2020 AgriFood Tech Investment Review, a report developed in collaboration with PitchBook Data, total global investment in agrifood tech companies in 2020 surged to $ 22.3 billion – $ 5B in agtech and $ 17.3B in foodtech – continuing to grow at 50% CAGR (2010-2020); Finistere expects 2021 to exceed this record year based on early investment data.
Fear of missing out
“While 2020 presented some interesting and, at times, surprising outcomes for the agrifood sector, we saw fear turn into fear of missing out (FOMO) with favourable results for startups, particularly those in later stage situations with meaningful revenue and strong growth stories,” said Arama Kukutai, co-founder and partner, Finistere Ventures.
According to Kukutai, low interest rates and a soaring equity market have provided a backdrop unseen in the relatively short history of the sector. “Investors attracted to the potential disruption of massive total addressable markets fueled increases in investment across all stages and segments,” he said.
Race for innovation access is heating up
Based on the report, the race for innovation access is heating up and creating a new level for agrifood investing. A renewed focus on climate change and carbon offsets is gaining momentum, and rising ESG interest is spilling over into venture-backed companies across agrifood.
Involvement from new or non-traditional players – family offices, large pension and sovereign wealth groups, late-stage PE – swelled and the role of CVCs across the space continued to grow. 2020 saw 8054 unique investors participate across over 9000 transactions in the agrifood space.
Key agtech findings include:
- Due to the industry’s successful adaptation in the midst of the pandemic, investment into agtech continued to expand at a staggering pace through the end of 2020, with the $ 5B total capital invested comprising almost one third of the $ 15.9B raised across agtech sectors since 2010
- Late-stage deals and mega-rounds proliferated as investors rallied to support existing portfolio companies and the composition of investors continued to diversify, fueling sustained growth with the median for late-stage deals reaching record heights at $ 67.6M
- CVCs considerably increased activity in the agtech arena in 2020, participating in 107 funding rounds
- Biotech kept its stronghold as the top agtech investment area, attracting $ 1.3B in 2020, and starting off 2021 strong with $ 268.2M secured in the first quarter.
- Interest in indoor ag spiked, driven by supply chain and sustainability factors, as well as growing consumer preference for local, fresh produce with superior taste and quality –reaching $ 1.3B in funding for 2020, more than doubling YoY from $ 601M raised in 2019
- Due in large part to pandemic pressures, animal tech investment exploded in 2020 reaching $ 847.8M after lackluster interest over recent years
- Subsectors including digital technologies, precision agriculture, plant sciences, ag marketplace and fintech also broke investment records in 2020 as stakeholders made their commitment to help growers manage climate change and overcome mounting sustainability pressures clear.
Investments and profits booming
According to Finister Ventures investments and profits are booming. “We expect 2021 to dwarf 2020 numbers as capital continues to flood into the technology categories with absolutely massive disruption potential like indoor ag, supply chain technologies, animal health, novel ingredients and alternative proteins,” said Kukutai.
Substantial consolidation and rise of distinct market leaders
“Valuations, deal totals and market sizes will continue to climb thanks to low interest rates, free-flowing capital and trillions of dollars of pent-up consumer spending power. However, as the market inevitably right sizes and new categories of innovation emerge to meet these monumental shifts, we also expect substantial consolidation and the rise of distinct market leaders.”