Final November’s Thrive World Affect Summit introduced collectively a number of hundred entrepreneurs, traders, and senior executives in Silicon Valley for a day of debate round urgent points within the agrifoodtech area.
Whereas a plethora of well timed matters have been up for dialogue, this text will zoom in on one of many key themes that stood out for me from throughout the entire day’s panels: the evolving funding panorama round agtech options, and the way corporates and different strategic traders are central to scaling them.
Bear Market?
As reported in Cleantech Group’s just lately printed 2025 World Cleantech 100 report, local weather start-ups in Agriculture & Meals raised a complete of $3.7B in enterprise funding in 2024, down from the earlier 12 months’s $4.6B and a considerable discount from $8.7B in 2022.
Agriculture and Meals Enterprise Funding 2019 – 2024
Nonetheless, deal numbers have been down solely barely from 2023, hinting that choose traders nonetheless see alternative in backing applied sciences that may future-proof meals manufacturing.
Whereas enterprise capital funds undoubtedly have a task to play in rising promising agtech and foodtech companies, they aren’t all the time set as much as align with the slower adoption timeframes and seasonal nature of agriculture. Many innovators on this space are actually dealing with a scaling-up hole, and extra affected person capital can be required to take them to the following degree.
Panelist Will Kaplan, director at agri-food-focused personal fairness agency Paine Schwartz Companions, advised attendees that his crew “sees an increasing number of curiosity on this sector” from a wide range of traders, although “aggressiveness across the tempo of adoption curve has created some out-of-whack dynamics.”
EcoTech Capital’s Adam Bergman agreed that there was unrealistic expectation-setting. “Primarily based on my expertise in broader cleantech, historical past tells you a lot of the new entrants aren’t going to [become] massive public corporations,” he stated.
At Cleantech Group, we imagine that the extra probably path to exit for agrifoodtech start-ups can be by deep partnerships and eventual consolidation with incumbent corporates, who have already got brand-name recognition amongst farmers and established market distribution networks constructed over many a long time.
Different sorts of traders, with longer-term views and extra targeted theses, can even have an more and more vital function to play in scaling up agrifoodtech innovation.
“They not solely perceive the markets, but in addition the adoption timelines. That’s one of many challenges; lots of the [generalist VC] traders don’t know that,” Bergman stated. “So, the capital goes to come back from corporations, from philanthropists, from pensions and sovereigns.”
The Strategic(s) Benefit
The concept of getting corporates concerned as traders from early on will go in opposition to the start-up instincts of many tech entrepreneurs and VCs, who typically default to viewing themselves as disruptors in competitors with incumbents, relatively than their companions.
However a strategic investor is probably going the perfect probability for agtech innovators get their options into the arms of their goal finish customers. Panelist Jason Trusley, chief technique officer at Land O’ Lakes, identified that his co-op works with about 300,000 farmers throughout the U.S.; a quantity far past the attain of a typical start-up, even with substantial time, effort, and spending.
“Generally you don’t desire a strategic in your cap desk — however you may’t afford to not,” added Hadar Sutovksy, vp of company investments at fertilizer and chemical compounds firm ICL. “Corporates truly create a win-win for start-ups, when it comes to entry to information, to services, and go-to-market… We perceive the trade as a result of we’re a part of the trade,” she stated.
PJ Amini, senior director of enterprise investments at Bayer’s company VC unit, Leaps By Bayer, went a step additional, telling the viewers that “the one factor higher than having a strategic in your cap desk is having a couple of.”
Not solely does this improve the truth examine that traders present for entrepreneurs, by providing extra views; it additionally has a multiplier impact resulting in additional alternatives for partnering and innovating.
A latest instance is the three-way collaboration between start-up Innerplant, crop inputs incumbent Syngenta, and ag tools maker John Deere, which can be an Innerplant shareholder. This partnership has seen Innerplant’s soybeans, which have been gene-edited to sign when they’re at biotic danger, handled with optimized crop safety merchandise from Syngenta utilized by John Deere’s smart-spraying expertise.
Opening Minds & Scaling Up
Incumbents nonetheless face their very own boundaries with regards to investing in, or partnering with, agri-food entrepreneurs – in addition to one another.
Once more, one such barrier is introduced by the ‘Silicon Valley mindset’: an extreme give attention to speedy development and the nitty-gritty of expertise, on the expense of setting upon a enterprise mannequin and go-to-market technique that may truly work in agriculture.
Panellist Scott Komar, senior vp of world R&D at berry producer Driscoll’s, urged early-stage innovators to assume forward and attempt to anticipate their potential prospects’ wants. “How are they going to scale doing simply what they’re doing already? So that you’ve made three of those… how are you going to make 300?,” he requested.
“The opposite factor is scaling throughout. You made this actually neat answer for managing powdered mildew on strawberries. What’s your plan for the way this’ll work with desk grapes, with tomatoes? We’re a worldwide firm. If we discover one thing we like, we’d like that to work in all places,” he stated.
Past the excessive interest-rate setting and drive to chop spending throughout the board, structural points round inner communication and firm tradition may decelerate company funding into agri-food innovation.
“Internally, should you don’t have alignment, if there’s not good inner collaboration, then you definately received’t have good exterior collaboration,” stated Todd Stucke of tractor producer Kubota. ‘Not-invented-here syndrome’ – a fear to have interaction with exterior innovation from start-ups, analysis establishments, or different corporates – was additionally pinpointed as a prevalent drawback by Bayer Crop Science’s Dan Ruzicka.
An 80-year-old agency providing irrigation and windmill tools, Valmont Industries was concerned in one in every of agtech’s greatest exits thus far with its $300M buyout of crop monitoring start-up Prospera Applied sciences in Might 2021. Vp Trevor Mecham was on stage to supply insights for fellow corporates trying to make investments or purchase within the area.
“It’s an fascinating place to be in, notably as an infrastructure firm; you construct one thing that’s going to be there for the following 25 to 30 years. How do you adapt an outdated firm from a machine store to evolve right into a tech supplier? Whereas there may be consolidation [in agri-food tech], it’s additionally upon us as incumbents to collaborate and produce that collectively,” he stated.