Agriculture technology investment continued to pick up momentum during the first quarter of 2015 as companies in the sector raised $1.04 billion. This represents nearly half the $2.36 billion total raised in 2014, according to the Q1 Agtech Summary from agri fundraising platform AgFunder.
The total raised in Q1 came from 79 deals, and three sectors attracted the most capital: bioenergy, decision support technologies, and drones and robotics, which raised $155.6 million, $112.5 million and $97.7 million respectively.
Zachary Bogue, co-managing partner of Data Collective, a venture capital firm active in agtech, said that any technologies related to efficient land and water use are also popular among investors.
Early-stage agtech companies raising seed or Series A capital were the most popular; seed rounds attracted $12 million across 35 deals whereas investors commited $150 million to 24 Series A deals.
E-commerce, cannabis start-ups, and data-analytics systems led the early-stage rounds. These include Eaze, a cannabis delivery service, that last week closed a Series A on $10 million with venture capital firms DCM Ventures, Fresh VC, 500 Startups and rapper Snoop Dogg investing.
“Early-stage tech companies are attractive because a lot of them are coming out of universities,” Keith Wilson, managing partner of Cranberry Capital, told Agri Investor. “The challenge for investors in the seed or Series A round is how they are going to help commercialise a great idea into a growing business.” New York-based Cranberry Capital recently invested in the Series A round of Sweetwater Energy, a sugar-for-fuel company.
Two of the largest Series A investments were a $27 million commitment from York Capital Management into waste-to-energy company Blue Sphere and the $21.2 million investment into Pulse Aerosapce, an unmanned aerial vehicle-helicopter developer. Customised food supplement company Soylent also raised $20m according to the report.
3D Robotics, a company pioneering advanced and easy-to-use consumer drone technology, is one of several drone companies that have raised capital in recent months and proved the sub-sector’s maturity after raising $50 million in Series C funding in March.
When investing in agtech companies, investors are looking for three characteristics, Jeff Calvier, founder and managing partner of SoftTech VC, told Agri Investor. They include ambition from the founders, the uniqueness of the products or technology and how marketable a company is. SoftTech VC is an early-stage venture capital firm based in San Francisco and Palo Alto in California.
“We look for the passion from the founders of the agtech companies, whether the company can differentiate itself from the rest in the market and whether we can turn an early-stage company into a business that can receive hundreds of millions in revenue and multi-million dollar in yield,” Calvier said.