Agri-Food Tech Startups Raise $20 Billion in 2019, Report Shows

AgFunder, a venture capital firm focused on foodtech and agtech, today released a new report on 2019 investments in foodtech and agtech industry. According to the report, the sector has experienced 250% in funding growth over the last five years.

Investments in foodtech and agtech startups raised $19.8bn in venture funding across 1858 deals. Following on from a record-breaking 2018, that’s a 4.8% decline year-over-year in dollar terms and 15% by number of deals. But there were some clear bright spots with a 1.3% increase in funding to startups operating upstream — on the farm and in the supply chain — as they raised $7.6bn, posting the highest levels of record during any H2 on record.

2019 was a year of ups and downs for agri-foodtech, largely reflecting the performance of the overall VC market where funding levels dropped 16% from 2018’s record-breaking levels, albeit with various bright spots, according to VenturePulse report.

“Food delivery startups led the downward trend raising 56% less year-over-year; I’m sure many of you will be relieved and not surprised to see that overheated category lose some of its shine as the leading players exert their dominance over the space, backed by ever-increasing late-stage funding rounds,” Rob Leclerc, said in an email

The bright spot came further up the value chain as investment in upstream startups continued to grow, closing $7.6 billion in investment, a 1.3% year-over-year climb including the best performing H2 on record. These gains were driven by a doubling in investment in Innovative Food startups — mostly alternative meat & dairy groups — to $1 billion, and a 38% increase year-over-year increase for Novel Farming Systems to $745 million with three vertical and insect farming deals worth $100 million or more each.

Investment in Europe and Latin America also continued to gather pace.

Here are the highlights:

• The sector raised a total of $19.8 billion in 2019, across 1858 deals and 2344 unique investors. While that’s a 4.8% drop in funding and 15% decline in deal activity year-over-year, it represents 250% growth in 5 years.
• Strong growth for some categories: In a break from general VC trends of 2019, investment in several categories of agri-foodtech grew significantly, including meat alternatives, indoor farming, robotic food delivery, and cloud kitchens.
• Upstream startups post strongest H2 on record: investment in startups operating upstream, closer to the farmer and before the retailer, increased 1.3% YoY, accelerating in the second half with the highest numbers for H2 on record. Alternative proteins and vertical farming drove much of this.
• Oversaturated meal delivery space: investment in consumer food delivery declined substantially – 56% YoY – as the more mature players extended their dominance in an over-saturated marketplace. Meanwhile, investment grew in enabling, white-label technologies for retailers to create their own delivery options.
• European funding nearly doubled: led by the UK, the region continued to strengthen its VC industry across sectors resulting in 94% more funding for agri-foodtech than in 2018.
• Latin America had a breakout year, raising $1.4bn in agri-foodtech, which is more than the region’s whole VC industry raised in 2017.
• Increasingly mainstream investor base: Agri-foodtech’s investors are diversifying with more generalist, big global players and corps participating inc. SoftBank, Temasek, Amazon, Microsoft, KKR, Sequoia, T. Rowe Price, and investing across borders.
• California dominates US ecosystem: California startups raised more than all other US states combined as Silicon Valley remains the hot spot for an otherwise globally-diverse market.

You can read and download the full report here.

AgFunder is a venture capital firm focused on foodtech and agtech. It is one of the world’s most active agri-foodtech investors, publishing industry-leading news and research. With an ecosystem of 75,000+ members and subscribers globally, and proprietary technology to support the investment team, AgFunder has privileged access to the industry’s top deal flow with unique resources to help grow and scale its portfolio companies. This report is our love letter to the industry.