Agrifood tech corporations raised $22.3B in funding in 2020, Finistere Ventures says

Dive Transient:

  • A complete of $22.3 billion was invested in agrifood tech corporations in 2020 — $17.3 billion in meals tech and $5 billion in agricultural tech — in keeping with a brand new report from Finistere Ventures and PitchBook Knowledge. With final 12 months’s numbers included, funding on this realm has elevated at a 50% compound annual progress charge over the past decade. 
  • For meals tech — which incorporates novel components and various proteins, in addition to meal kits and meals supply, e-commerce, consumer-facing tech and the provision chain — 2020 introduced in a 3rd of the entire quantity that has been raised for this sector within the final decade. Meal kits, supply startups and e-commerce noticed the most important proportion of funds. In ag tech, corporations engaged on biotech crops noticed the most important chunk of funds.
  • This report affirms what others have seen: Agriculture and meals tech have been extraordinarily fashionable locations to speculate in the course of the pandemic. Regardless of the financial turbulence, this trade is seen as a dependable place to place cash, each from a monetary and sustainability perspective, since many of those corporations are utilizing expertise to provide extra environment friendly meals.

Dive Perception:

In a press launch accompanying the report, Finistere Ventures Co-Founder and Accomplice Arama Kukutai summed up why 2020 introduced the proper situations for enormous investments in ag and meals tech.

“We noticed worry flip into worry of lacking out (FOMO) with favorable outcomes for startups, notably these in later stage conditions with significant income and robust progress tales,” he mentioned within the launch. “Low rates of interest and a hovering fairness market have offered a backdrop unseen within the comparatively quick historical past of the sector.”

Finistere and PitchBook’s evaluation discovered there have been 8,054 distinctive traders concerned in additional than 9,000 funding transactions in 2020. Company enterprise capital arms participated in 107 funding rounds within the ag tech house, and in 165 in meals tech final 12 months.

Meals tech financing has expanded at a CAGR of 152% within the final decade, in keeping with the report. Finistere and PitchBook famous the investments on this class gave the impression to be made in a approach that responded to shopper wants final 12 months.

Meal supply and e-commerce companies not solely continued growing, however they turned important to tens of millions of shoppers staying near dwelling in the course of the pandemic. Weaknesses within the meals system uncovered by the pandemic — particularly round animal-derived meals akin to meat and dairy — additionally spurred funding in protein alternate options, the report states.

The businesses that obtained the lion’s share of the funds have been late stage — usually companies that had already had a number of financing rounds. The report discovered 83% of meals tech funds and 76.6% of ag tech cash went to late-stage corporations. In an interview final 12 months, Kukutai mentioned this was partially as a result of traders wished to make sure among the corporations they have been obsessed with would have the ability to proceed by way of the pandemic with out monetary battle.

The report says traders seeking to put funds towards corporations that replicate sustainability commitments have helped buoy the late-stage corporations. This surge in investments will assist these corporations additional their sustainability commitments, seemingly resulting in a bigger profit for the Earth as an entire.

“We imagine as this class of traders turns into more and more concerned in late-stage agrifood funding, entry to progress capital to construct corporations that may dominate and actually disrupt incumbents can be central to the event of the agrifood sector, in some ways mirroring what occurred in life sciences when biotech corporations disrupted current oligopolies,” the report says. 

Looking forward to the remainder of 2021, the report predicts extra money being poured into corporations within the food-tech realm. This can come from extra investments, M&A pickups from bigger companies and corporations going public by way of IPOs and particular function acquisition corporations.

Because the begin of 2020, the report estimates there was $46 billion of capital raised by way of market exits, headlined by DoorDash and Deliveroo each going public. Contemplating Oatly has already filed its preliminary incorporation papers with the U.S. Securities and Change Fee, and there’s discuss that Eat Simply and Not possible Meals will go public this 12 months, extra is probably going on the best way.

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