- A total of $22.3 billion was invested in agrifood tech companies in 2020 — $17.3 billion in food tech and $5 billion in agricultural tech — according to a new report from Finistere Ventures and PitchBook Data. With last year's numbers included, investment in this realm has increased at a 50% compound annual growth rate during the last decade.
- For food tech — which includes novel ingredients and alternative proteins, as well as meal kits and food delivery, e-commerce, consumer-facing tech and the supply chain — 2020 brought in a third of the total amount that has been raised for this sector in the last decade. Meal kits, delivery startups and e-commerce saw the largest proportion of funds. In ag tech, companies working on biotech crops saw the biggest chunk of funds.
- This report affirms what others have seen: Agriculture and food tech were extremely popular places to invest during the pandemic. Despite the economic turbulence, this industry is seen as a reliable place to put money, both from a financial and sustainability perspective, since many of these companies are using technology to produce more efficient food.
In a press release accompanying the report, Finistere Ventures Co-Founder and Partner Arama Kukutai summed up why 2020 presented the perfect conditions for huge investments in ag and food tech.
"We saw fear turn into fear of missing out (FOMO) with favorable results for startups, particularly those in later stage situations with meaningful revenue and strong growth stories," he said in the release. "Low interest rates and a soaring equity market have provided a backdrop unseen in the relatively short history of the sector."
Finistere and PitchBook's analysis found there were 8,054 unique investors involved in more than 9,000 investment transactions in 2020. Corporate venture capital arms participated in 107 funding rounds in the ag tech space, and 165 in food tech last year.
Food tech financing has expanded at a CAGR of 152% in the last decade, according to the report. Finistere and PitchBook noted the investments in this category seemed to be made in a way that responded to consumer needs.
Meal delivery and e-commerce services not only continued developing, but they became vital to millions of consumers staying close to home during the pandemic. Weaknesses in the food system exposed by the pandemic — especially around animal-derived foods such as meat and dairy — also spurred investment in protein alternatives, the report states.
The companies that received the lion's share of the funds were late stage — typically businesses that already had several financing rounds. The report found 83% of food tech funds and 76.6% of ag tech money went to late-stage companies. In an interview last year, Kukutai said this was partially because investors wanted to ensure some of the companies they were passionate about would be able to continue through the pandemic without financial struggle.
The report says investors looking to put funds toward companies that reflect sustainability commitments have helped buoy the late-stage companies. This surge in investments will help those companies further their sustainability commitments, likely leading to a larger benefit for the Earth as a whole.
"We believe as this class of investors becomes increasingly involved in late-stage agrifood investment, access to growth capital to build companies that will dominate and truly disrupt incumbents will be central to the development of the agrifood sector, in many ways mirroring what occurred in life sciences when biotech companies disrupted existing oligopolies," the report says.
Looking ahead to the rest of 2021, the report predicts more money being poured into companies in the food-tech realm. This will come from more investments, M&A pickups from larger corporations and companies going public through IPOs and special purpose acquisition companies.
Since the start of 2020, the report estimates there has been $46 billion of capital raised through market exits, headlined by DoorDash and Deliveroo both going public. Considering Oatly has already filed its preliminary incorporation papers with the U.S. Securities and Exchange Commission, and there is talk that Eat Just, Chobani and Impossible Foods will go public this year, more is likely on the way.