Ag tech VC firm, AgFunder, released its annual report on agrifood tech funding today. Companies in this sector raised $26 billion in 2020, a 15.5 percent increase over 2019. If that wasn’t enough, AgFunder actually expects that already record-breaking figure to bump up to $30.5 billion as more deals done in 2020 are revealed.
The AgFunder 2021 Agrifoodtech Investing Report breaks the agrifood tech sector into “upstream” companies, which are closer to the farm, and “downstream” companies, which are closer to the consumer. AgFunder said that for the first time on record, upstream companies outraised downstream companies in 2020. Those upstream companies pulled in $15.8 billion across 1,950 deals, while downstream companies raising $14.3 billion across 1,142 deals.
AgFunder also found that alt-protein/novel ingredient/functional food companies raised $2.3 billion across 26 deals, and that e-grocery was the most funded downstream category, raising $5.1 billion across 119 deals. AgFunder noted that the agrifood tech sector is maturing, with startups at both growth and late stage raising larger deals than ever before.
“This is no longer seen as a niche, experimental and risky sector, highlighted by the increase in the median size of growth stage and late stages deals,” Louisa Burwood-Taylor, head of media & research at AgFunder, said in today’s press announcement. “Investors piled in despite Covid; the first wave of innovators in each category are now mature and able to raise huge rounds with many household names such as Impossible Foods; and the second wave of innovators is now raising much larger rounds than the first wave did at the same stage.”
What’s interesting about that statement is that AgFunder positions this growth in agrifoodtech as being in spite of the pandemic. While the pandemic has inflicted enormous economic difficulties around the world, it also seems like there was increased investment because of the pandemic. Downstream technologies in particular benefited as restaurants and grocers all accelerated adoption of systems that reduced human-to-human interaction and helped meet the rising demand for e-commerce to get our food.
AgFunder’s report reinforces earlier data showing the increased investment in food tech in 2020. Pitchbook said that a little more than $12 billion was invested in food tech companies last year. There is probably some definitional and scope differences between the two reports, but the broader point stands. Food tech companies raised a ton of money last year, and with the pandemic still very much a part of our lives, the breakneck pace of investment will continue in 2021.