By Lynda Kiernan, Global AgInvesting Media

Research being conducted by Finistere in partnership with PitchBook examining global financing activity across both the agtech and foodtech sectors finds that agrifood investment continues to go from strength to strength so far in 2020. 

This year has seen more than its share of economic and socio-political turmoil. And despite the pandemic, or perhaps, even because of it, the latest report issued in partnership between Finistere and Pitchbook, AgriFood Investment Trends in the COVID-19 Era, concludes that 2020 is already a record-breaking year for agrifood investment. 

“As COVID shone a light on some of our food and agricultural production system fragilities that need strengthening, capital flowed in to support the trend to dine at home – this year has already toppled the investment record set in 2019,” said Arama Kukutai, co-founder and partner, Finistere Ventures.

“The flow of capital is shifting as the market matures,” continued Kukkutai. “While more investment dollars pour into advanced crop protection technologies, indoor farming, alternative proteins, ingredient refinement, and supply chain advances, investment in mainstays like digital ag is beginning to dry up as leaders start to emerge. Likewise, those investment booms will help drive a healthier, more sustainable food and ag ecosystem.”

 

 

Key take-aways from the report include:

~ Total investments in the agrifood space from 2010 through Q3 2020 have reached $46.4 billion, with the sector gaining $11.6 billion in funding so far in 2020 – already surpassing the records broken in 2019.

~ In the first three quarters of this year investments in agtech totaled $3.07 billion, surpassing total investments for last year of $2.7 billion.

~ In the first three quarters of this year investments in foodtech totaled $8.37 billion, surpassing total investments for last year of $7 billion.

~ The bulk of the capital invested this year so far was allocated to later-stage deals, reflective of greater market maturation.

~ Within agtech, indoor ag benefitted the most from COVID due to the pandemic’s disruption of food supply chains.

~ For foodtech, startups in the e-commerce, meal kit, and delivery categories benefited the most from the pandemic.

 

Additionally, the report notes that in regard to the flow of investment year-to-date, and also for the months ahead, we are seeing a reversal for the first time since 1994 of consumers spending more money to eat at home than dining out, according to the National Restaurant Association. 

Driven by these contributing factors, Finistere also compiled the top deals in 2020 to-date, organizing a comprehensive list by sub-sector such as alternative proteins, meal kits, indoor ag, or crop protection, etc. outlining the most investor interest, investment trends by region, and exit values.

“The food space tends to be B2C oriented while ag remains more B2B,” said Kukutai, “…it’s a horizontal supply chain so every type of technology you’d see venture investing in elsewhere – biotech, data science, material science, e-commerce, B2B/B2C trading, etc. – is present in the ag and food supply chain.”

But with agrifood continuing to break funding records, even during a global pandemic, does Finistere see this as a bubble? And how much elasticity is there for even more growth to come?

Kukutai said, “I don’t expect a big valuation collapse anytime soon. Valuations will tend to hold up if the companies still have a runway as investors continue to fund their progress. However, 2021 will bring more moments of truth and reckoning as agrifood startups’ timelines to meet critical growth milestones have accelerated and they are forced to prove both their ability to scale to profitability and deliver return on investment. Some sectors, like alternative proteins, will need patient money to succeed.”

 “While substantial progress has been made, there is still a long way to go. The investment booms we are finally seeing are long overdue, and there is a lot of room for further investment. Building a sustainable ag and food ecosystem is absolutely critical, and it will take a lot of time and even more money.”

 

 

 

 

Lynda Kiernan is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, and HighQuest Group’s Oilseed & Grain News. She is also a contributor to the GAI Gazette. She can be reached at lkiernan@globalaginvesting.com.