Final November’s Thrive International Affect Summit introduced collectively a number of hundred entrepreneurs, traders, and senior executives in Silicon Valley for a day of debate round urgent points within the agrifoodtech area.
Whereas a plethora of well timed subjects have been up for dialogue, this text will zoom in on one of many key themes that stood out for me from throughout the entire day’s panels: the evolving funding panorama round agtech options, and the way corporates and different strategic traders are central to scaling them.
Bear Market?
As reported in Cleantech Group’s just lately printed 2025 International Cleantech 100 report, local weather start-ups in Agriculture & Meals raised a complete of $3.7B in enterprise funding in 2024, down from the earlier yr’s $4.6B and a considerable discount from $8.7B in 2022.
Agriculture and Meals Enterprise Funding 2019 – 2024
However, deal numbers have been down solely barely from 2023, hinting that choose traders nonetheless see alternative in backing applied sciences that may future-proof meals manufacturing.
Whereas enterprise capital funds undoubtedly have a job to play in rising promising agtech and foodtech companies, they don’t seem to be at all times set as much as align with the slower adoption timeframes and seasonal nature of agriculture. Many innovators on this space are actually going through a scaling-up hole, and extra affected person capital will likely be required to take them to the subsequent degree.
Panelist Will Kaplan, director at agri-food-focused personal fairness agency Paine Schwartz Companions, advised attendees that his crew “sees increasingly more curiosity on this sector” from a wide range of traders, although “aggressiveness across the tempo of adoption curve has created some out-of-whack dynamics.”
EcoTech Capital’s Adam Bergman agreed that there was unrealistic expectation-setting. “Based mostly on my expertise in broader cleantech, historical past tells you a lot of the new entrants aren’t going to [become] massive public corporations,” he stated.
At Cleantech Group, we consider that the extra seemingly path to exit for agrifoodtech start-ups will likely be via deep partnerships and eventual consolidation with incumbent corporates, who have already got brand-name recognition amongst farmers and established market distribution networks constructed over many a long time.
Different sorts of traders, with longer-term views and extra targeted theses, may even have an more and more essential function to play in scaling up agrifoodtech innovation.
“They not solely perceive the markets, but in addition the adoption timelines. That’s one of many challenges; lots of the [generalist VC] traders don’t know that,” Bergman stated. “So, the capital goes to come back from corporations, from philanthropists, from pensions and sovereigns.”
The Strategic(s) Benefit
The thought of getting corporates concerned as traders from early on will go towards the start-up instincts of many tech entrepreneurs and VCs, who typically default to viewing themselves as disruptors in competitors with incumbents, quite than their companions.
However a strategic investor is probably going the most effective likelihood for agtech innovators get their options into the arms of their goal finish customers. Panelist Jason Trusley, chief technique officer at Land O’ Lakes, identified that his co-op works with about 300,000 farmers throughout the U.S.; a quantity far past the attain of a typical start-up, even with substantial time, effort, and spending.
“Typically you don’t desire a strategic in your cap desk — however you may’t afford to not,” added Hadar Sutovksy, vice chairman of company investments at fertilizer and chemical substances firm ICL. “Corporates truly create a win-win for start-ups, when it comes to entry to data, to amenities, and go-to-market… We perceive the trade as a result of we’re a part of the trade,” she stated.
PJ Amini, senior director of enterprise investments at Bayer’s company VC unit, Leaps By Bayer, went a step additional, telling the viewers that “the one factor higher than having a strategic in your cap desk is having multiple.”
Not solely does this improve the fact verify that traders present for entrepreneurs, by providing further views; it additionally has a multiplier impact resulting in additional alternatives for partnering and innovating.
A current instance is the three-way collaboration between start-up Innerplant, crop inputs incumbent Syngenta, and ag tools maker John Deere, which can be an Innerplant shareholder. This partnership has seen Innerplant’s soybeans, which have been gene-edited to sign when they’re at biotic danger, handled with optimized crop safety merchandise from Syngenta utilized by John Deere’s smart-spraying expertise.
Opening Minds & Scaling Up
Incumbents nonetheless face their very own boundaries on the subject of investing in, or partnering with, agri-food entrepreneurs – in addition to one another.
Once more, one such barrier is introduced by the ‘Silicon Valley mindset’: an extreme give attention to speedy progress and the nitty-gritty of expertise, on the expense of setting upon a enterprise mannequin and go-to-market technique that may truly work in agriculture.
Panellist Scott Komar, senior vice chairman of worldwide R&D at berry producer Driscoll’s, urged early-stage innovators to suppose forward and attempt to anticipate their potential clients’ wants. “How are they going to scale doing simply what they’re doing already? So that you’ve made three of those… how are you going to make 300?,” he requested.
“The opposite factor is scaling throughout. You made this actually neat resolution for managing powdered mildew on strawberries. What’s your plan for the way this’ll work with desk grapes, with tomatoes? We’re a worldwide firm. If we discover one thing we like, we’d like that to work all over the place,” he stated.
Past the excessive interest-rate atmosphere and drive to chop spending throughout the board, structural points round inside communication and firm tradition may also decelerate company funding into agri-food innovation.
“Internally, if you happen to don’t have alignment, if there’s not good inside collaboration, then you definately received’t have good exterior collaboration,” stated Todd Stucke of tractor producer Kubota. ‘Not-invented-here syndrome’ – a fear to have interaction with exterior innovation from start-ups, analysis establishments, or different corporates – was additionally pinpointed as a prevalent downside by Bayer Crop Science’s Dan Ruzicka.
An 80-year-old agency providing irrigation and windmill tools, Valmont Industries was concerned in one among agtech’s largest exits thus far with its $300M buyout of crop monitoring start-up Prospera Applied sciences in Could 2021. Vp Trevor Mecham was on stage to supply insights for fellow corporates trying to make investments or purchase within the area.
“It’s an attention-grabbing place to be in, significantly as an infrastructure firm; you construct one thing that’s going to be there for the subsequent 25 to 30 years. How do you adapt an previous firm from a machine store to evolve right into a tech supplier? Whereas there may be consolidation [in agri-food tech], it’s additionally upon us as incumbents to collaborate and produce that collectively,” he stated.
