SA国际传媒

Shifts in how people think about food, investing and even changes brought about by COVID-19 have led to more money鈥攁nd more deals鈥攊n the agtech sector than ever before.

Last year was a record year for agtech, with nearly $5 billion invested in the sector in 440 funding deals to VC-backed startups, according to SA国际传媒 data. That far outstrips the $3.3 billion invested in 422 deals in 2020.

Last year saw four deals of a quarter-billion dollars or more:

• Berkeley, California-based , an agtech tech company that looks to take nitrogen from the air and make it available for plants, raised a $430 million Series D last July;
• Chicago-based , developer of nutritional vegan protein from a microbe, closed a $350 million Series C, also in July;
• San Carlos, California-based , an agtech and commerce platform, raised a $300 million Series G in November; and
• Goleta, California-based 鈥嬧��, which develops plant-derived shelf life extension technologies, closed a $250 million Series E in August.

That pace doesn’t seem to be slowing down. Through the first month-plus of this year, more than $1 billion has come into the sector, SA国际传媒 figures show.

That number was helped by South San Francisco, California-based vertical farming startup , which raised a $400 million Series E led by new investors and , and also included participation from strategic partner and existing investor 1. Founded in 2014, Plenty has now raised $940 million to date, according to SA国际传媒 data.

鈥淚 don鈥檛 think the question is why are we seeing this now,鈥� siad , CEO of Plenty. 鈥淚 think the question is why hasn鈥檛 it received more capital sooner?鈥�

Intersection of change

Those who invest or work in the industry point to a handful of reasons why agtech鈥攍ong thought as slow to change and unlikely to bring back big returns鈥攊s now receiving large rounds.

One of those main reasons the sector finally seems to have taken root with investors is the changing buying habits of millennials in particular and people in general when it comes to their food鈥檚 taste, nutrition and sustainability.

鈥淐onsumers have made a real impact,鈥� said , founder and managing director at , a multistage venture fund focusing on investments in food and agriculture industries. 鈥淐onsumers definitely want more nutrition. They want different tastes.鈥�

Consumers have also flipped the script on when and what they want to eat at different times of the year, and what they want in the food they eat, said Kukutai, who believes both alternative proteins and indoor farming will push agtech to even greater funding heights this year.

Krishnan said while millenials have different wants when it comes to food, baby boomers have different needs as they get older. That has led to different ways to produce food, be it through genetics, fermentation or vertical farming.

Rise of vertical farming

Vertical farming, for instance, has become a popular investment. The basic concept is that produce is grown on levels鈥攐ne above each other鈥攃onserving both land and water while also cutting down on pesticides and other chemicals.

Florida-based vertical ag company recently announced plans to go public on the through a merger with a SPAC. The deal is slated to close at the end of April, said Henner Schwarz, the company’s chief commercial officer.

Schwarz agrees consumer preferences have changed, leading to increased interest in vertical farming in particular and agtech in general.

鈥淐onsumers want locally grown, ultra-clean, no pesticides produce,鈥� he said. 鈥淭hat is a big driver.鈥�

COVID and climate

While Schwarz believes consumer changes are the main tailwinds driving the industry, another is the one thing that seems to be raising the tide for many sectors in technology鈥擟OVID.

鈥淐OVID has definitely been an accelerator,鈥� he said.

Schwarz said many countries are seeking to increase the food they produce to improve food security and cut down on the effects of supply chain disruption.

Krishnan said while 鈥淎gtech 1.0鈥� concentrated on areas like genetics, pesticides and fertilization, 鈥淎gtech 2.0鈥� focuses much more on digitization, data science and alternative farming, which has helped respond to COVID and the issues it caused with supply disruptions and labor force access.

鈥淪omething like digitalization has become important because people need supply chain visibility, they want to know crop yield,鈥� said Krishnan, adding tech around automation and robotics also have become more valuable due to labor shortages.

However, it鈥檚 not just the pandemic that has caused the industry to pay more attention to issues like yield and supply chain visibility, but also climate change, Kukutai said.

The sector has had to adapt as retailers and distributors have adjusted how they secure food thanks to environmental and climate changes.

鈥淐limate change isn鈥檛 coming,鈥� Kukutai said. 鈥淚t鈥檚 here.鈥�

Investors see a path

The final鈥攁nd perhaps most important to investors鈥攆orce pushing agtech forward are greater opportunities for liquidity for investment in the sector.

Historically, the most likely path to an exit and liquidity for an agtech startup investment was to sell it to a large acquirer like or a conglomerate with tentacles in the agtech space like .

However, public markets have become more receptive to agtech companies, whether the path is a SPAC or the traditional IPO route.

Krishnan pointed to food design and sustainability platform developer and RNA design and research company as two examples of companies that have gone public in recent years.

鈥淭hat鈥檚 what鈥檚 exciting about it,鈥� Krishnan said about the ability to exit to the public market. 鈥淐ompanies are more revenue ready.鈥�

Kukutai agreed optionality in exits has clearly affected investment in the industry.

鈥淲e considered all options before the recent raise,鈥� he said. 鈥淏ut in the end we wanted to stay private and knew we had great strategic partnerships.鈥�

Schwarz said 鈥渓ots of options were available鈥� when Kalera was contemplating a listing in the U.S.

鈥淵ou see the long-term interest,鈥� Schwarz said 鈥淵ou see the megatrends and that makes (agtech) very interesting.鈥�

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