October 20, 2015

By Lynda Kiernan

The AgTech sector continues to heat up in the nation's tech centers as Silicon Valley saw a doubling in agtech deals in the first half of 2015.

Agtech startups raised $2.06 billion through 228 venture capital deals in the first two quarters of 2015. This activity approaches the $2.36 billion committed by investors in the agtech space in all of 2014, according to AgFunder. This level of interest in Silicon Valley’s agtech space by a widening spectrum of investors was evident at GAI’s AgTech Week – Global AgInvesting’s agtech investment conference in San Francisco this past June, which included sovereign wealth funds, private equity, Big Ag companies and venture capitalists, as well as a diverse field of speakers, including U.S. Agriculture Secretary, Tom Vilsack.

The UN Food and Agriculture Organization estimates that global agriculture needs to increase output by 70% by 2050 in order to feed the world’s growing population. However, persistent yield gaps between developed and developing producers and an historic drought in California entering its fourth year are indications that the industry needs to become more innovative in its solutions to increasing productivity, while conserving natural resources.

Indeed, Global AgInvesting recently reported that the rate of global agricultural productivity has stagnated according to the recently released 6^th annual Global Agricultural Productivity Report (2015 GAP Report: Building Sustainable Breadbaskets) released by Global Harvest Initiative (GHI) indicating that the need for the integration of technology and agriculture for the goal of producing more with less is more critical than ever.

Not surprisingly, investments in water conservation technologies were at the fore. This past June, Tel Aviv and San Francisco-based irrigation management startup, CropX, raised $9 million in a Series A round of fundraising led by Finistere Ventures and including  Innovation Endeavors, GreenSoil Investments, and early CropX backer, OurCrowd, and  San Luis Obispo, California-based Hortau Corp., a leading precision irrigation management firm, secured a $5 million investment from the $154.5 million USDA-licensed, Rural Business Investment Company (RBIC), Advantage Capital Agribusiness Partners LP (ACAP). 

Agtech startup, PowWow, which uses data including aerial imaging and water usage history to track the functioning of agricultural water systems, then texting the farmer if it detects leaks or unusually heavy water usage, raised $3 million through a combination of commitments from the University of California, Davis, the University of California, Santa Barbara and angel investors.

Other notable agtech investments in the first half of 2015 include St. Louis-based agtech startup, Arvegenix, securing a $2.5 million investment from a group of investors including Monsanto, Cultivation Capital, the St. Louis Arch Angels, and the Biogenerator, and leading global precision ag and independent data management solutions provider, Farmers Edge, announcing the securing of a key investment from Mitsui & Co., Ltd.

In addition, San Francisco-based Granular, an agtech company that provides analytics tools and farm management software, raised $18.7 million in Series B funding led by Tao Capital Partners, and included Google Ventures, Khosla Ventures, Adreessen Horowitz, Fall Line Capital, H. Barton Asset Management, and Emory Investment Management, and vertical farming startup, AeroFarm, closed on a $30 million deal with RBH Group and its partners, Goldman Sachs Urban Investment Group, Prudential Financial Inc., the City of Newark, and the New Jersey Economic Development Authority in May of this year for the funding of what will be the world’s largest vertical farm.

It is becoming evident that agtech investments are no longer for the fringe element. The field of investors is expanding to include not only angel investors and venture capitalists, but both large scale private and public investment vehicles, and the commitments are becoming larger as investors across the spectrum recognize the untapped potential for increased production, increased sustainability, and return on investment that agtech startups can provide.