In a recent episode of Ag Tech Talk, AgriBusiness Global, a sister brand of the Global Ag Tech Initiative, engaged in a conversation with Bob Trogele, CEO of Verdelis Investments / ProAgInvest LLC and President of AMAG Farms LLLP and Trogele Energy and Consultancy LLC. The discussion centered on the current landscape of agricultural technology investments, with a particular focus on innovations driving interest in the crop input sector.
Trogele highlighted that ag tech investment has experienced both growth and recent contraction. Currently, ag tech accounts for approximately 2.5% of all venture deals and a mere 1.64% of total venture capital dollars. This underscores the challenging nature of the sector, with roughly 14 investments made for every one exit. In the second quarter alone, 149 ag tech startups raised around $1.55 billion, marking a 16% drop from the first quarter of 2025 and a 20% decline in the number of deals. The majority of the 11 exits were through acquisitions, indicating a more cautious market approach.
The investment landscape is shifting towards smaller deals, bolt-on acquisitions, joint ventures, and collaborations between large and small players. Larger companies are seeking to diversify through technology to move away from low-margin, commodity-heavy models, particularly in fertilizers and chemicals. However, the pressure on startups has intensified, with investors expecting profitability sooner. This is a significant challenge in agriculture, where technology adoption can be a lengthy process.
Trogele emphasized that investors are now demanding more financial discipline, with venture capitalists, especially strategic ones, becoming increasingly risk-averse. They prefer to invest once there is evidence of profitability, strong working capital, and demonstrated on-farm adoption.
Regarding regenerative agriculture, Trogele noted that while interest is growing, farmer behavior is primarily driven by economics. Profit and yield remain the top priorities, followed by cost savings. If a regenerative solution delivers these benefits, farmers are likely to adopt it. For instance, the implementation of connectivity technology at Terranova Farms in California saved them $65,000 annually and reduced water use by 30%, addressing yield, cost efficiency, and sustainability.
In summary, while investment in ag tech has not entirely plateaued, it has become more selective. There is still capital available, but the bar for success is higher. Momentum exists, but it is tempered by caution, reflecting the evolving and maturing nature of the ag tech investment landscape.
The implications of these trends are significant for both investors and ag tech startups. For investors, the focus on profitability and financial discipline means that due diligence and careful selection of investment targets will be crucial. For startups, the need to demonstrate clear paths to profitability and on-farm adoption will be paramount. This environment may foster more robust and sustainable innovations in the long run, as only those technologies that can truly deliver value to farmers will secure funding and succeed in the market.