Investment in agrifoodtech in Australia fell almost 25 per cent to US$317 million last year, but fared better than the APAC region, which dropped 58 points, a new report by agrifoodtech venture capital firm AgFunder found. Globally the fall was 44 per cent.
AgFunder pointed out that the regional drop of 58 per cent to US$6.5 billion was from a record-breaking 2021 of US$15.2 billion.
And while the Innovative Food category, which includes alternative protein, experienced a 30 per cent year-over-year decline in funding, it was still the largest, bringing in nearly US$100 million, buoyed by a US$50m round for cultivated meat start-up Vow, at one of the worst times in fundraising history.
Precision fermentation specialist, Nourish Ingredients, also had a sizeable Series A round in the second half of 2022, securing US$29 million.
On a regional level, despite fewer deals, dollar investment in 2022 increased year-over-year in Innovative Foods; Ag Biotech; Farm Management, Software Sensing & IoT; Novel Farming Systems; and Farm Robotics.
Source: AgFunder's Asia-Pacific Agrifoodtech Investment Report 2023
Across the region, downstream food delivery and restaurant start-ups, which previously fuelled tens of billions of investment dollars, have lost their appeal, AgFunder said.
The new favourite in the ecosystem is upstream innovation.
“A mega US$73 million Series B for Australian biologicals start-up Loam Bio at the start of 2023 is a great example. The company which makes seed coatings that supercharge plants’ ability to capture and store carbon in the soil gathered high profile investors Lowercarbon Capital and Acre Ventures,” it said.
Blue - upstream, Darker Green - midstream, Lighter Greens - downstream.
Source: AgFunder's Asia-Pacific Agrifoodtech Investment Report 2023.
And investment in start-ups that are operating upstream increased by 24 per cent year-over-year – an increase preliminary 2023 data showed was continuing.
“This is good news for the 450 million smallholder farmers producing about 80 per cent of the region’s food.
“For the first time in years, upstream funding, which provides technologies to farmers and primary food producers, overtook downstream investment. The former raised US$3.2 billion in 2022 versus the latter’s US$2.7 million,” said the report.
AgFunder said bright spots for Australia in 2022 were Bioenergy and Biomaterials, Farm Robotics and Mechanisation, and Midstream Technologies, which all recorded small increases.
Midstream Technologies was the next biggest category raising over US$37 million as another global leader AgriDigital closed a US$17.8 million round in May to take its digital grain management platform to the US.
Other Australian highlights
- Australian agrifoodtech start-ups closed 38 deals in 2022, totalling US$316 million in investment;
- in H1 2023, the country closed US$146 million in agrifoodtech funding;
- Australia is in fifth place behind India, China, Indonesia, and South Korea regarding investments by country; and
- the most active agrifooodtech categories in Australia in 2022 were:
- Innovative Food (US$98m);
- Novel Farming Systems (US$39m);
- Farm Management Software, Sensing & IoT (US$26m).
Source: AgFunder's Asia-Pacific Agrifoodtech Investment Report 2023
Regional key insights
- Ag Biotechnology was the biggest upstream category in 2022, raising US$813 million. China’s Zhongxin Breeding, a startup in this category, secured the year’s largest deal with its US$327 million seed round;
- Downstream’s biggest category was once again eGrocery, which raised US$1.6 billion in funding;
- India eGrocery start-up Blinkit’s US$150 million raise was the largest downstream deal;
- start-ups in Midstream Technologies raised US$620 million in 2022, with big checks going to India’s Waycool and China’s Mojia Biotech;
- India (US$2.3 billion) overtook China (US$1.3 billion) in 2022 as the region’s top country for agrifoodtech investment, followed by Indonesia (US$716 million) and South Korea (US$461 million);
- South-East Asia start-ups funding reached $1.7 billion;
- in H1 2023, Chinese start-ups have raised the most funding, with US$861 million. India (US$712 million) is next, followed by Hong Kong (US$400 million), and Australia (US$146 million); and
- debt, early and growth-stage deals numbers have increased steadily since 2018; late-stage funding declined from 2021.
The report was prepared by AgFunder in collaboration with the Bill & Melinda Gates Foundation, Omnivore, and AgriFutures Australia.
