Amidst the broader downturn in agrifoodtech funding, the Bioenergy & Biomaterials sector has emerged as a beacon of resilience and growth. According to the latest insights from AgFunderNews, backed by data from AgFunder, this category has experienced a significant uptick in venture capital investment, marking a 20% increase from the previous year. This surge stands in stark contrast to the overall 49% decline in agrifoodtech investments, underscoring a growing investor confidence in bio-based alternatives and sustainable innovations.
The uptrend in the Bioenergy & Biomaterials sector is not a standalone event but part of a consistent pattern of growth over the past decade. Initially focused on bioenergy, the sector has since expanded and diversified due to the fluctuating appeal of bioenergy in the face of cheap fossil fuels. Companies within this space have pivoted or emerged with a broader array of biomaterials, including leather and plastic alternatives, which have seen increased demand from industries ranging from fashion to food service.
Venture capital investment in the sector has been on a general upswing over the last five years, following a brief dip between 2015 and 2016. The year 2023 alone saw Bioenergy & Biomaterials startups attract $3 billion in funding, albeit with a slight decrease in the number of deals compared to the previous year. This suggests that while there may be fewer deals being made, the deals that are completed are of higher value, reflecting a maturation within the sector and a focus on scaling proven technologies.
The diversity of the sector is exemplified by companies like Modern Meadow and Bolt Threads, which have both made headlines with their innovative approaches to biomaterials. Bolt Threads, in particular, caught the public’s eye with its mycelium-based material used in a version of Adidas’ Stan Smith sneakers. The push for sustainable alternatives is not limited to niche markets, as evidenced by the presence of US-based Footprint, a company that has made significant strides in plant-fiber technology to combat the plastic packaging crisis. Footprint’s technology has not only earned it three of the top deals in the sector over the last decade but has also positioned it as the leading dealmaker of 2023 with a staggering $830 million funding round.
While alternative materials have stolen much of the spotlight, bioenergy continues to play a crucial role in the sector’s growth. LanzaTech’s $500 million funding round in 2022 is a testament to the ongoing potential and investor interest in converting waste carbon into biofuels. The company’s success and subsequent public listing via SPAC underscore the commercial viability and scalability of bioenergy solutions.
The geographical distribution of top deals over the past decade, and particularly in 2023, indicates a concentration of activity in North America and Asia, with European startups also making their mark. This reflects a global recognition of the importance of sustainable solutions and the willingness of investors to back such innovations across different regions.
The growth of Bioenergy & Biomaterials is a clear signal of the agrifoodtech sector’s evolving priorities. As the world grapples with the urgent need for sustainable practices, investors are channeling their funds into technologies that promise to reduce our reliance on non-renewable resources and mitigate environmental impact. The sector’s ability to attract significant investment, even in a year of overall decline for agrifoodtech, speaks volumes about its potential and the critical role it will play in shaping a more sustainable future.