A new report from agrifoodtech investment and intelligence platform AgFunder has revealed the food and agriculture technology market has been hit by a current venture capital downturn. The sector posted a 49 per cent year-over-year decline in funding in 2023.
Investment in global agrifoodtech startups is at its lowest level in six years, representing just 5.5 per cent of all venture capital sector dollars, down from 6.7 per cent in 2022 and 7.6 per cent in 2021. Investments reached $15.6 billion in 2023, with a 49 per cent year-over-year decline on 2022.
Funding to all categories declined except for two: Bioenergy & Biomaterials and Farm Robotics, Mechanization & Equipment. Venture capital funding across all industry segments fell 38 per cent in 2023, which fell 38 per cent in 2023, according to Crunchbase, AgFunder’s main data partner.
The all-round decline was more pronounced in other categories: Novel farming systems -79%, Cloud Retail Infrastructure -75 per cent, eGrocery -60 per cent, Farm Management Software, Sensing & IoT -58 per cent, Online Restaurants & Meal Marketplaces -58 per cent, In-store Retail and Restaurant Tech -57 per cent, Midstream Tech -55 per cent, Home & Cooking Tech -53 per cent, Innovative Food -51 per cent, and Ag Marketplaces & Fintech -48 per cent.
The AgFunder report says the 49 per cent year-over-year funding decline is a result of fewer and smaller deals. The decline in deal activity was less pronounced than dollar investment at 26 per cent year-over-year (and we expect more deals to come to light in the coming months). Average deal sizes were down nearly 30 per cent, year-over-year and 50 per cent on 2021.
That share is at odds with the agrifoodtech sector’s contribution to the global economy, with the food and agriculture industries contributing at least 15 per cent to global GDP, employment of more than half of the world’s workforce, and one-third of greenhouse gas emissions.
Looking globally, in emerging markets, China and India lost market share to other nations taking a combined 40 per cent of funding, down from 55 per cent in 2021. Startups in Indonesia, Saudi Arabia, Israel, Brazil and Singapore all contributed to the top 20 emerging market deals.
Key insights from the AgFunder Global AgriFoodTech Investment Report 2024:
- Agrifoodtech startups raised $15.6 billion globally in 2023, down 49.2 per cent from $30.5 billion in 2022;
- Bioenergy & Biomaterials was the biggest category, raking in $3 billion in 2023, up 20% from 2022;
- investment in Farm Robotics, Mechanization & Equipment continued its steady upward trajectory of the past five years, increasing 9 per cent year-over-year to $760 million;
- funding to upstream startups – those operating on the farm or in food production – accounted for 62 per cent of overall dollar investment in 2023, compared with 51 per cent in 2022 and 30 per cent in 2021;
- no global region was immune to the downturn. Europe felt it less acutely with a 14 per cent year-over-year decline in dollar funding. African investment levels remained higher than 2021 at $260 million in 2023 whereas Asia did not recover its pre-Covid totals with $3.8 billion in 2023;
- the US was particularly badly hit with its share of agrifoodtech funding ($5.4bn) dropping to just over 30 per cent of global funding in 2023; the country usually counts for at least 40 per cent of global totals;
- deal count in 2023 was down 26 per cent, reflecting smaller rounds with one or two exceptions;
- the median deal size decreased 9 per cent year-over-year whereas the average was down 30 per cent on 2022 and 50 per cent on 2021;
- funding to Ag Biotech — the leading upstream investment category in 2022 — dropped 34 per cent to $1.9 billion in 2023.
The report was produced by AgFunder, with support from AgriFutures Australia, and can be found here.
