As of the third quarter of 2018 $?1.6 billion has been invested in agtech globally. Agtech deals are on track to meet or exceed $?2 billion, according to a report by Finistere Ventures.
The report, developed by Finistere Ventures in collaboration with PitchBook, with additional input from DLA Piper, EY and Wells Fargo, found that $ 1.6 billion has been invested in agtech globally in 2018 as of Q3 2018. With agtech deals on track to meet or exceed $ 2 billion, median deal size rose to $ 10 million as shifting consumer preferences drove a funding surge in burgeoning investments areas such as alternative proteins.
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The fact that investments in agtech keep growing, does not come as a surprise, according to Arama Kukutai, Managing Partner at Finistere Ventures: “The need for innovation in agriculture has never been greater. Agribusinesses across the value chain increasingly face pressures from rising costs of inputs such as seed, fertilizer, chemistry and labor; changing land use priorities; and consumer demands for transparency and sustainability. As commodity prices continue to stagnate with no signs of reprieve, there is intensifying recognition that new solutions are needed to provide relief for these pressures.”
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The last 10 years have seen remarkable growth in agtech investment, with $ 6.7 billion invested in the last 5 years and $ 1.9 billion in the last year alone, per the PitchBook Platform. Arama Kukutai: “This outpouring of investment and hunger for innovation can be attributed to a number of industry and technological tailwinds. Firstly, cost reductions across life sciences, imagery, computation and automation technologies have enabled previously cost-prohibitive toolsets to be applied to agricultural problems. Secondly, redundancies stemming from M&A at the top levels of the industry have improved access to experienced ag talent for startups. As financing activity has grown, so have the number of new companies in the ecosystem.”
The need for innovation in agriculture has never been greater
According to the report, Agtech startups are on pace for another record year of financings in 2018. Thanks to a record haul in Q3, which brought in $ 895 million, the agtech sector is a mere $ 132 million off of the record high in financings in 2017.
“If current financing trends continue, 2018 will surpass 2017 in both total capital invested and number of deals transacted. Helping bolster this year’s numbers is an upswing in late-stage activity, where median deal size is trending at $ 10 million (up from $ 9 million last year),” the report says.
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Although the US enjoys the advantage of the most robust venture scene globally, investors across the world are dialing up their agtech investing pace, with Europe and Asia emerging as heavyweights especially in the past few years, the report states.
“Not only is there plenty of capital within venture and increased interest in agtech in general, but enough of both to keep funding even fledgling startups with their first institutional round of financing. All in all, agtech is scaling sustainably, with multiple companies across the lifecycle raising successfully.”
Key findings from the report: