Agrifoodtech Funding Falls: Investors Hit Pause in 2024

The agrifoodtech sector has experienced a notable dip in investment during the first half of 2024, according to preliminary data from AgFunder, the parent company of AgFunderNews. Agrifoodtech startups have raised $7 billion across 427 deals so far this year, marking a significant decline from the $8 billion raised across 934 deals in the first half of 2023. The downturn in both dollar amount and deal count reflects a more cautious investment climate.

A standout in this data is the $700 million Series C raise by NYC-based food delivery startup Wonder, which has somewhat skewed the overall figures for H1 2024. The next-largest deal was a $425 million late-stage fundraising round from midstream company Buyer’s Edge. Despite these significant raises, the broader trend indicates a more conservative approach by investors.

Rob Leclerc, founding partner at AgFunder, was unsurprised by the downturn. “Companies are going to run out of money and not a lot is getting funded,” he remarked. “We need to be very careful about what we invest in unless we want to carry it.” His comments underscore a growing sentiment of caution among investors, who are becoming increasingly selective about where they allocate their funds.

The median deal sizes across various funding stages also reflect this cautious sentiment. For instance, Series A median deal sizes fell from $7.5 million in H1 2023 to $6 million in H1 2024. Series D rounds saw a more dramatic drop, from $47 million to $31 million. Debt financing plummeted from $40 million to just $10 million, indicating a significant pullback in investor confidence at later stages.

In February, AgFunder’s Global AgriFoodTech Investment report had polled several venture capitalists to gauge their predictions for 2024. Among their forecasts, 15% believed alternative protein would attract the most funding, while another 15% bet on biotech and biological inputs. Health- and nutrition-related startups garnered 14% of the vote, and 12% predicted food delivery would be the best-funded category. Only 9% highlighted AI and climate startups.

So far, the funding landscape for 2024 has validated some of these predictions while challenging others. The Ag Biotech category, encompassing both biological inputs and broader biotech innovations, has raised $1.7 billion in H1 2024, nearly matching the total for all of 2023. This indicates a strong performance and investor confidence in biotech solutions.

Innovative Food, largely comprising alternative protein startups, remains a robust category, with $828 million raised so far. Only Ag Biotech and In-Store Retail & Restaurant Tech, which garnered $1 billion, have surpassed it. Bioenergy & Biomaterials is also performing well and is on track to exceed the billion-dollar mark this year.

Conversely, food delivery, which some had predicted to be a top-funded category, has raised $758 million, placing it mid-tier in terms of funding. More concerning is the lack of investment in farmtech categories, such as Ag Marketplaces & Fintech, Farm Robotics, Mechanization & Equipment, and Farm Management Software. The role of enabling technologies like AI in these sectors could be pivotal moving forward, particularly as they become more integrated into farm operations.

Funding to eGrocery and Novel Farming Systems continues to decline, although eGrocery has seen robust interest in markets like India. Notably, nearly 40% of the funding for Novel Farming Systems came from a single raise by vertical farming company Oishii, which has managed to defy the broader negative trends affecting its sector.

As the agrifoodtech industry navigates these turbulent waters, the data underscores the importance of strategic investment and innovation. The evolving landscape will require startups and investors alike to adapt and pivot in response to emerging trends and market demands.

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