Agtech continues to deliver big fundraising and exit values

Fundraising in Q1 2022 rose to $3.3bn from $2.6bn in the previous quarter, as the sector built on a record year in 2021.

By all accounts, agtech investing scaled unprecedented new heights in 2021 as the venture capital segment continued to attract new and stalwart investors.

According to data from AgFunder whose figures cover both upstream and downstream businesses across areas such as biotechnology, farm management software, eGrocery and online restaurants and mealkits, the agtech space recorded total financings of $51.7 billion in 2021, up from $27.8 billion in 2020 – an 86 percent increase.

And according to data from PitchBook, which has a narrower focus and concentrates on areas such as precision ag, indoor farming, biotech, animal ag, and agrifinance and e-commerce, agtech took $10.5 billion across the 2021 year, up from $6.6 billion in 2020 – a 59 percent rise.

PitchBook has released its Q1 2022 figures, and across the agtech market areas the data and research company tracks, total fundraising hit $3.3 billion for the quarter, up from $2.6 billion in Q4 2021.

Senior analyst for emerging technology Alex Frederick told Agri Investor that while the figures for 2021 were something of a surprise, given the impact of significant macro events such as Russia’s invasion of Ukraine and high inflation rates, agtech’s continued attractiveness to investors makes sense.

“I don’t see the need for investment in agtech to be slowing down at all,” said Frederick. “The need for food is here and I think the pain is coming – I’m not sure what the timeline is but wheat production is historically low globally right now. I don’t think Europe will be hit first – countries in Northern Africa and the Middle East are always food insecure and there’s wars fought in those regions over food insecurity and they’re the ones that would be hit first.

“Agtech is going to be a key to increasing supply or making up for lost productivity. At the same time, we’re seeing global population growth and that’s increasing the global demand long-term. It’s going to take many different interventions to be able to increase the supply but agtech is absolutely going to be a critical component to helping companies and countries improve or increase their food supply and food security.”

The other tailwinds propelling agtech fundraising revolve around longstanding trends such as the need for tech disruption across the supply chain, consumer demand for nutritious products as food’s role in delivering health benefits grows more prominent, and the global effort to reduce agriculture’s greenhouse gas emissions.

Another noteworthy data point is the value of exits being recorded across the agtech space, with 2021 proving to be a record year, according to PitchBook data. With exists valued at $2.8 billion in 2020 across 26 deals, the sector saw exit value climb dramatically to $23.6 billion in 2021 across 53 deals.

Exits in Q1 2022 had a value of $1.6 billion, which is higher than the exit value of each calendar year between 2012 to 2018, when the figure hovered between $100 million and $1.4 billion before rising to $4 billion in 2019.

Frederick says this speaks to the growing maturity of the agtech space as it has started delivering on its promise of returning capital to investors as well as inspiring strategic acquisitions among competitors.

The agtech fundraising figures for Q2 and beyond will make for very interesting reading then, because according to both AgFunder and PitchBook data, the sector has been on a relentless upward trajectory since 2017.

Can it sustain this trend and deliver another record year in 2022?