"Agtech Sector Blooms As More Dollars and Startups Rush In"

A deep dive from Crunchbase News, August 20:

Farming has been around for thousands of years, but investments and startup activity in agricultural technology, commonly known as “agtech” or “agritech,” have only exploded over the past five years.
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In fact, in each of the last two years, venture capitalists invested $4 billion in startups in the agtech space, according to Crunchbase data. Based on the $2.6 billion already given out as of Aug. 14 of this year, 2020 is poised to repeat or even exceed the previous years.

Better Food Ventures Partner Seana Day began tracking agtech startups more than five years ago. She said that farming is an area that isn’t typically tech-enabled. In fact, COVID-19 reminded the world about the food supply chain, she added.

“There was a disconnect between demand signals and supply, which is why you saw empty grocery shelves,” she said. “At the same time, the dairy farmers were dumping milk because they didn’t have a process in place to massively produce small consumer packaging.”

Day estimates that global food and agriculture fund managers have about $130 billion in assets under management, which is driving a surge in investments as well as a shift in thinking.
Farmers have historically been resistant to change, Day said, but at the end of the day, they are rational business people. That means that if a startup can show a farmer a product or service that will boost the return on investment—increasing revenue or decreasing costs—the company will have a better chance of making the sale.

The challenge comes in for tech companies that offer apps meant to save time and increase job productivity, areas that aren’t necessarily needed for farmers, she added.

There is also a shift in legacy food companies thinking digitally. Day points to Tyson Foods as an example. The meat producer earlier this month promoted Dean Banks to CEO. He joined Tyson as president last December from Alphabet’s high-tech incubator X.

“That is a huge signal from a company making bold moves, saying ‘we want to be a leader in this space,’” Day added.

New investments
This year has been particularly busy for the agtech innovation sector, as startups secured both big and small investments.

One of the largest went to Farmers Business Network, which raised $250 million in Series F funding earlier this month. Day said the San Carlos, California-based company was one of the pioneers in e-commerce models, helping farmers optimize their financial performances by finding demand for supply.

Meanwhile, Berkeley-based Pivot Bio announced a $100 million funding round in April, led by Breakthrough Energy Ventures and Temasek, to scale its microbial nitrogen technology. The company said the technology increases crop yields, and in turn, farmers’ revenues. Biodesign startup Geltor brought in $91.3 million in a Series B round in July, led by CPT Capital, to make proteins, such as collagen and elastin, but without animals. The startup’s products are used in beauty, and food and beverage products....

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