The agrifoodtech investment landscape is currently facing significant challenges, prompting industry experts to question the viability of the venture capital (VC) model for agtech. At the recent World Agri-Tech show in London, attendees expressed a mix of optimism and skepticism regarding the future of VC investment in agriculture technology. With funding levels down and exits from the sector becoming increasingly rare, the conversation has shifted to whether the traditional VC model can adapt to the unique demands of agtech.
Alejandro Trenor, cofounder and CEO of Soil Capital, remains confident in the appropriateness of the VC model for agtech, citing the scalability of technology as a key factor. “Ag in itself requires longer periods of investment and offers lower returns,” he noted. “The tech component is what continues to make it appropriate for venture capital.” Trenor’s perspective highlights the potential for technological advancements to drive growth and profitability within the sector, despite the inherent challenges of agricultural investment.
Thomas Laurent, CEO and cofounder of Micropep, echoed this sentiment, emphasizing the critical role that agtech plays in addressing global challenges such as climate change. “I think it is probably one of the only ways to move things forward,” he remarked, pointing to the increasing interest from climate funds in food and agriculture. With the sector positioned at the intersection of environmental sustainability and food security, Laurent believes that the urgency of these issues will continue to attract investment.
However, the question of whether venture capitalists have the necessary long-term perspective to succeed in agtech remains a contentious topic. Matija Zulj, cofounder and CEO of AGRIVI, raised concerns about the seasonality of agricultural decisions, which can complicate the adoption of new technologies. He suggested that the industry may require additional stakeholders beyond traditional VCs to support its growth. This sentiment was echoed by David Lord, engagement manager at AgriFutures Australia’s growAG, who emphasized the need for a longer investment horizon and more realistic return expectations in the agricultural sector.
The complexities of agriculture, which operates within biological systems and often involves messy hardware, present unique challenges for investors accustomed to quicker returns in other sectors. Jacqueline Heard, CEO of Enko Chem, noted that while the typical venture investment cycle is around seven years, this can be particularly challenging in agtech. She compared the situation to the healthcare sector, where innovation pathways are more established and numerous acquirers are available. In agtech, however, the customer base is considerably smaller, complicating the path to commercialization.
The debate over the suitability of the traditional VC model for agtech was further explored during a panel discussion at the World Agri-Tech event. Anterra Capital managing partner Adam Anders posed the provocative question of whether the traditional VC business model is ill-suited for agtech investing. Responses varied, with some panelists arguing that the statement is true for large parts of the sector, while others contended that the model can still work under certain conditions. Christina Ulardic from Astanor Ventures noted that the agtech ecosystem is not yet mature enough to support large-scale investments, akin to the pharmaceutical industry, which has had decades to integrate innovation within its processes.
Ultimately, the future of venture capital in agtech may hinge on a fundamental understanding of the sector’s unique dynamics. As the industry grapples with longer timelines and the complexities of agricultural systems, investors may need to recalibrate their expectations and strategies. The ongoing dialogue among stakeholders at events like the World Agri-Tech show signals a willingness to explore alternative funding models and collaborative approaches, ensuring that agtech can continue to evolve in the face of pressing global challenges.