AgFunder’s sixth annual investment report — rather flirtatiously described by the research team as “our love letter to the industry” — is now officially published; it can be downloaded right here, right now.
There’s more maths behind this romantic agri-foodtech gesture than quills by moonlight: “Utilizing new advanced machine-learning algorithms and artificial intelligence to help identify and categorize agri-foodtech startups, our knowledgebase has grown to over 29,939 companies, with new startups and historical data being added each day,” the AgFunder research team writes, describing a “painstaking” process of data curation where investments are tracked and verified over the course of months. The means the dataset “represents the most comprehensive and curated knowledgebase of agrifoodtech companies globally.”
For anyone delaying reading the full report till a Bill Gates-inspired “think week” or something, AFN can share a few choice morsels to whet your appetites. First off, the world’s agri-foodtech startups raised a total of $19.8 billion in 2019, across 1858 deals and 2344 unique investors.
As the graph above illustrates, there are a few ways to interpret this $19.8 billion figure. Though it signals a 4.8% drop in funding and 15% decline in deal activity year-over-year, it also represents a staggering 250% growth in five years, and proves that the huge scale of investments in 2018 was no freak outlier. In some respects, as AgFunder’s research head Louisa Burwood-Taylor notes in the report, a meeker 2019 also chimes with a wider pullback seen across the VC space, as highlighted by recent KPMG research in the VenturePulse report.
“Venture capital investment across all sectors dropped 16% in 2019 against a backdrop of global uncertainty related to the US-China trade war, Brexit, and a weakening Chinese economy,” writes Burwood-Taylor. “It was the same for agri-foodtech, particularly affecting the US and China, but not to quite the same extent.”
The report shows how much of the pullback in agrifoodtech funding came from the increasingly competitive area of innovation downstream in the food supply chain. “The drop in funding overall was largely a result of a 56% decrease in investment to consumer food delivery apps as the more mature players extended their dominance in an over-saturated marketplace with ever-larger fundraisings.” (Meanwhile, investment grew in enabling, white-label technologies for retailers to create their own delivery options.)
To call it a lean year for food delivery services, eGrocery and their ilk, is to get carried away. In fact, the largest agri-foodtech deal of the year turned out to be a massive SoftBank-led $1 billion Series E round for Rappi, Latin America’s biggest on-demand delivery startup. Total funding for companies like Rappi in a category the AgFunder research team now calls Cloud Retail Infrastructure — still reached 16% of total agri-foodtech funding in 2019, as seen in this pie chart below.
Upstream startups — early stage companies providing farm-facing and supply chain innovations — reached new heights in 2019. Upstream startups posted their strongest H2 on record with funding overall reaching $7.6 billion, a 1.3% year-over-year increase. Alternative proteins and vertical farming drove much of the upstream uptick. Investment in the “Innovative Food” category, which is mostly alt protein plays, doubled year-over-year to $1 billion, bolstered by Impossible Foods’ $300 million bridge round and a 17% increase in the number of deals; no doubt a sizzling IPO by Beyond Meat helped whet investor appetites.
With vertical farming, two huge deals landed on the doors of two contrasting approaches with Germany’s Infarm and New Jersey’s Aerofarms both each securing over $100 million in their respective rounds. Their success, alongside the robotic insect farm Ynsect, drove a 38% increase in the Novel Farming Systems category, despite 16% fewer deals.