VWV Volumes #12: Ben Piekarz '24 discusses the Agri(-Food)Tech Revolution
Source: Verdict (https://www.verdict.co.uk/agri-tech-future/)
I first heard about the Agricultural Revolution when reading Yuval Noah Harrari’s Sapiens. The essence: humans transitioned from roaming hunter-gatherers to animal-domesticating farmers approximately 11,000 years ago. This shift had mixed effects on the human population. On one hand, settling down allowed humans to reproduce and multiply exponentially faster than they could while roaming the earth. On the other hand, humans became workhorses, with less free time and often little food unless they were part of the ruling class. Still, the original Agricultural Revolution undeniably altered our way of life and trajectory as a species.
When I worked as a fellow for J-Ventures, an early-stage Silicon Valley VC fund, during my gap semester this past fall, I was stunned by the amount of agricultural technology startups I came across. I realized that we’re actually in the midst of another agricultural revolution. We’re transitioning from human-controlled agriculture to automated and machine-controlled agriculture. It’s the Agri(-Food)Tech revolution.
The Market
Deloitte predicts that the global AI agritech market will grow at a CAGR of 24% until 2024, with Asia being the fastest growth region. As a more specific example, the market for grow lights, artificial lights that help plants grow indoors (crucial for urban agriculture), is expected to expand at a nearly 20% CAGR over the next five years. Why are the FoodTech and AgriTech industries expanding so fast? We need to feed the future, and we’re battling a triple-edged sword: a growing world population, climate change and its destructive environmental implications, and a decrease in the number of farms/farmers.
The Innovation
Fortunately, AgriTech startups are coming to the rescue. Automated and precision farming practices from across the world are changing agriculture and farming as we know it. For example, Connecterra is a Danish startup that leverages AI to help dairy farmers manage the health of their herd. BeeHero and BeeWise are two competing Israeli startups leveraging AI to automate beehive management, enhance beehive health, optimize crop pollination and maximize crop yields. Meanwhile, Provivi is a SoCal company “using modern science to help farmers protect crops in a naturally effective and sustainable way”. Artificial foods are also taking off, from public company Beyond Meat’s famous plant-based patties to Berkeley-based startup MeliBio’s artificial honey. These startups are just a few I recently encountered, but there are countless others seeking to revolutionize smart agriculture and food technology in other ways, including urban/vertical farming and robotic crop harvesting.
Agri-FoodTech Funding
Strangely enough, AgriTech startups typically acquire funding from either accelerators or generalist VC funds as opposed to AgriTech-specialist VC funds. According to Phillip Seifi, founder of Presearch.co, “there are only a handful of VC firms that specialize in food and agricultural technology, and most Series A and later stage funding comes from generalist funds.” French VC Hugo de Gerauvilliers, who I reached out to when writing this article, estimates based on his research that there are approximately 25 VC’s worldwide that specialize in the Agri-FoodTech industry. When Gerauvilliers crunched the numbers using data from an Agfunder report that showed that 2344 investors partook in Agri-FoodTech deals, he found that “only 1% of FoodTech investors are specialists”.
Source: AgFunder (https://agfundernews.com/from-agfunder-with-love-global-agri-foodtech-funding-reaches-19-8bn-in-2019.html)
My Thoughts
The exact number of pure Agri/FoodTech VC funds is difficult to pinpoint, but investors have been hesitant to focus primarily on AgriTech. Perhaps it’s because the field is still new -- huge exits and massive valuations, especially in pure AgriTech, are still rare. Still, as Gerauvilliers mentions in his medium report, VC’s focused on AgriTech should innately have a competitive advantage in attracting and assisting startups. Many of these startups need specialized guidance, and the need for Food/AgriTech innovation is increasing as we move into the future. My take: expect the number of Agri/FoodTech-specialist VC’s to increase substantially over the next few years and a healthy portion of these funds to eventually make massive profits. It’s 2021, and these fields are ripe for specialized players.
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