Asia-Pacific’s agrifoodtech sector continues to thrive despite a decline in funding, according to a new report from AgFunder in collaboration with the Bill & Melinda Gates Foundation, Omnivore, and AgriFutures Australia. The report reveals that investment in Asia-Pacific agrifoodtech startups reached $6.5 billion in 2022, a 58% decrease compared to the previous year. However, the number of deals closed in the first half of 2023 remains consistent with the previous year, indicating an active ecosystem.
One of the most interesting trends in the region’s agrifoodtech sector is the rise of upstream technologies, which are technologies that are closer to the farm or lab. This includes agricultural biotechnology, alternative proteins, farm management software, sensing & IoT, farm robotics, and novel farming systems. Investment in ag biotechnology, in particular, surged from $142 million in 2021 to $813 million in 2022, making it the top upstream category for the year. Preliminary data for 2023 suggests that this momentum will continue.
The emergence of these upstream categories is driven by various factors unique to the Asia-Pacific region. With a large population and a significant number of smallholder farmers, the region faces challenges related to climate change, including rising temperatures, extreme weather events, and water scarcity. Additionally, government ambitions for food sovereignty have spurred innovation in the agrifoodtech sector to address these issues.
In terms of specific countries, India overtook China as the top country for agrifoodtech investment in 2022, with $2.3 billion raised. However, in the first half of 2023, Chinese startups raised the most funding, with $861 million. Other notable countries in the region include Indonesia, South Korea, Hong Kong, Australia, and Japan, all of which have seen significant investment in their agrifoodtech sectors.
The report also highlights a shift in investor focus away from downstream categories like food delivery and eGrocery, which were popular during the pandemic. As the world begins to recover from the effects of the pandemic and inflation increases, demand for quick food delivery services has slowed. Instead, investors are now turning their attention to upstream technologies that address long-term challenges in the agrifood sector.
Overall, the report indicates a promising future for the Asia-Pacific agrifoodtech ecosystem, with growing investment in upstream technologies and increased early-stage deal activity. The region’s unique challenges and government support for food sovereignty have created a fertile ground for innovation in the sector. As the world continues to grapple with climate change and the need for sustainable food production, Asia-Pacific is poised to be a leader in agrifoodtech innovation.
To access the full report, click here.