climate change and geopolitical instability are wreaking havoc on agriculture. To gauge how venture capitalists are responding to these issues, we spoke to seven investors.
For starters, rising greenhouse gas emissions are causing severe droughts and storms, damaging crops, exacerbating food insecurity and threatening countless livelihoods. At the same time, the Russian invasion of Ukraine is shaking global grain supplies, driving up costs and further straining supply chains.
Even when these and other crises hammer the multimillionaire In the industry, emerging investors see potential for big profits with technology that could boost yields, reduce emissions and mitigate waste.
“There are opportunities to develop [and] adopt new technologies throughout the food value chain that will affect key issues like food safety and emissions,” Adam Anders, managing partner at Anterra Capital, told TechCrunch. Among the areas where he sees the greatest potential impact, the investor cited improving plant genetics, increasing the shelf life of more products and putting digital tools in the hands of farmers.
Consumer behavior is another piece of the proverbial puzzle, as climate literacy increasingly alters the way people shop.
“In recent years, we have seen an increasing interest in sustainability from consumers and food brands, and awareness of the negative impacts of agriculture continues to grow,” said Ting-Ting Liu, an investor at Prosus. Ventures. “People are not only paying more attention to emissions related to agriculture, but also to the amount of land and water that is required to support the global food supply and the amount of runoff that is generated,” he said.
Liu argued that this demand is creating strong tailwinds for companies striving to address the environmental impact of agriculture, ultimately generating more capital in everything from cellular agriculture to methane reduction solutions for the livestock.
Still, agtech is not immune to some of the broader trends in business.
While the value of agtech venture capital offerings rose to $11.4 billion in 2021 from $6.5 billion in 2020, multiple investors told TechCrunch they noticed a decelerate in agtech deals this year amid broad 2022 tech recession.
“2021 was a record year for venture capital across the board. In 2022, venture capital investments overall are about 30% lower year over year, and I would expect a similar slowdown for agtech,” Monica Varman, a partner at G2 Venture Partners, told TechCrunch. “However, in the medium to long term, I expect agtech venture capital funding to increase, given supply chain challenges, traceability concerns, and advances in enabling technologies in synthetic biology and robotics,” she added.
Agtech investors also continue to heavily fund men. Of the nearly $11 billion invested in agtech in 2021, 78% went to companies with all-male founders, according to PitchBook. The disparity has only gotten worse so far in 2022, rising to 81% (of nearly $7.3 billion) as of September 14, according to the data firm.
To assess if (and how) venture capitalists are responding to these issues and more, we contacted:
- Brett BrohlManaging Director, From farm to table Techstarsand managing partner, Bread and butter companies
- Monica Vermanco-worker, G2 Venture Partners
- jinesh shahpartner director, Omnivore
- adam anderspartner director, Anterra Capital
- Ting Ting Liuinvestor and ashitosh sharmaindian head, prosu companies
- Camilla Petignatco-worker, The performance lab
Brett Brohl, Managing Director, Techstars Farm to Fork, and Managing Partner, Bread and Butter Ventures
Agtech Venture Capital Offering Value it skyrocketed from $6.5 billion in 2020 to $11.4 billion in 2021. Will this kind of growth continue?
It’s not going to continue in the short term largely because of macroeconomic factors that you’re just not looking at, for example, a lot of late-stage deals are going through recently, so in the short term, definitely not.
In the long term, the sector has a lot of opportunity and room for innovation, so over time it will see continued growth and investor focus on agricultural technology.
Agriculture is responsible for approximately quarter of global GHG emissions. How has the climate crisis changed the way of investing?
It’s a big reason deal value soared in 2020 and 2021. Investors understand that this challenge creates opportunity. Agtech is not as conventional as many other sectors, so we need more attention and capital. If you are making the food system more effective and efficient, you are making it more sustainable.
We’re not a big enough fund to fund a startup forever, and we rely on later-stage investors, so this attention and the resulting inflow of capital helps de-risk some of our portfolio.
Which emerging technologies, such as cellular agriculture and AI-powered robots, have the greatest potential to affect key issues like food security and emissions in the next decade?
We believe 100% in cellular agriculture and are also big fans of the robotics space, especially robotics that solve very specific pain points and have low BOMs.
“Automation and computer vision will be transformative for agriculture over the next decade, particularly as food production moves closer to the point of consumption due to food safety concerns.” Monica Varman, Partner, G2 Venture Partners
We also love the packaging space – a lot of packaging is used for transporting and moving food. We are also excited about anything to do with logistics, manufacturing or transportation that makes the food chain more sustainable.
When investing in an agtech startup, what green flags do you look for? Are you open to backing founders who don’t have industry experience?
Investing in agtech startups is no different from any other company. A great team can take a C idea, pivot, iterate, and make it work. But a C founder will execute any idea, no matter how good it is.
While fitting into the founder market can be a benefit to a company, great entrepreneurs are smart, have a great work ethic, are coachable, and know how to surround themselves with people who make up for their weaknesses. Therefore, experience in the industry is not a requirement for us.
What areas of agtech have received the most attention from early-stage founders in recent years? In which areas would you like to see more work done or investments?
The obvious answer is alternative proteins. So much capital has been invested and so many founders are building cool things in the space.
I would love to see more attention paid to things a little lower down the line, like manufacturing, logistics, and the future of food retail. In recent years, you’ve seen traditional agtech investors move their thesis further down the line, because of what’s happening.
What are you doing to fund underrepresented founders in agtech?
We actively seek investors, forums, and networks that support underrepresented founders and invest or work with entrepreneurs that are at an earlier stage than where we invest. We also maintain a diverse investment team: 75% of our fund are women.
Finally, we hold open office hours for anyone every week and provide free public education through multiple channels to help founders level up.
Before the invasion, Russia and Ukraine represented about 28% of wheat Y 15% corn exports worldwide. How has the Russian invasion of Ukraine affected agtech venture capital trading given its impact on the global supply chain and world grain supply?
I don’t think it’s done much for early-stage agtech founders or venture capital. The macroeconomic effect of the war has been, at least in part, a tightening of the money supply, which will trickle down to early-stage startups. However, the impact has not yet been significant in the early stages.
Bayer bought Monsanto for $63 billion in 2018, and a year earlier, ChemChina acquired Syngenta for $43 billion. Today, Bayer’s market capitalization is less than the value of that deal, and China’s ambassador to Switzerland has said that the acquisition of Syngenta a bad deal for Beijing. Have the results of these deals affected investors’ hopes for explosive late-stage exits?
I wouldn’t call these acquisitions of agtech companies “modern.” Monsanto has been around for over 100 years, and Syngenta was formed over 20 years ago, and even then it was a spin-off. Furthermore, this happened in 2017 and 2018. Agtech investment has skyrocketed since then, indicating that the market does not believe that these two acquisitions are indicative of low-return risky investments.
The results of companies like Upside Foods, FBN and Indigo Ag will be much more important for the agtech ecosystem. Unfortunately, it’s a very tough market for late-stage companies right now, and that will delay exits and depress ROI on many venture investments, not just agtech deals.
How do you prefer to receive releases? What is the most important thing a founder should know before calling you?
I am open to warm introductions, cool thoughtful emails, or pitches during my office hours. If you’re throwing me on a call, the first thing is to be yourself.
Anything else you want to comment on?
I think the blurred lines between food technology and agricultural technology are really interesting. What is agtech? It is not just about agricultural inputs; there is so much more and that, to me, is exciting.
Monica Varman, Partner, G2 Venture Partners
Agtech VC deal value soared from $6.5 billion in 2020 to $11.4 billion in 2021. Will this kind of growth continue?
2021 was a record year for VC. In 2022, venture capital investments overall are about 30% lower, and I’d expect a similar slowdown for agtech.
However, in the medium to long term, I expect agtech VC funding to increase due to supply chain challenges, traceability concerns, and advances in enabling technologies in synbio and robotics.