Insight  > Sector research  > Are we investing enough in AgriTech to feed the world? What the numbers tell us.

Are we investing enough in AgriTech to feed the world? What the numbers tell us.

Growing populations means an ever-increasing demand for food. AgriTech may hold the answer.

AgriTech

With the global population expected to reach close to 10 billion by 2050, one can only ask, how can we expect to feed this many mouths? Alongside this, resource intensity is also a question. About a quarter of global greenhouse gas emissions comes from food farming. This needs to be controlled and reduced to achieve Net Zero. So, the need for change becomes even more acute.

What is the definition of an AgriTech company?

Simply put, AgriTech companies are developing technologies that increase crop and protein yield, improve farming efficiency and resilience, improve environmental and sustainability of farming practices, and help provide financial resources for agricultural operations.

From aquaculture and animal biotech to indoor farming and robotic field equipment, there are numerous fields that AgriTech covers.

The companies in this space are the ones innovating to help fulfil the ever-growing needs of the global population while tackling some of the excesses of climate change.

How many AgriTech companies have received investment this century?

Investigating AgriTech companies that have received investment over 2000-2021, we found 1,773 companies globally in this space, with 474 headquartered in Europe. The UK lays claim to 90 of these companies, i.e. UK is the home to around 5% of such companies.

Globally there has been £186 billion of investment into these companies from just over 6000 different investors. Narrowing that down to Europe, the figure becomes about £80 billion from about 1,400 investors. Investment into the UK companies stands at £866 million from 361 investors.

What is the breakdown of AgriTech investment by sector?

Delving deeper to see where the investment is going, we see 5 key segments that make up AgriTech.

  1. Agri Biotech (ABT) – creating inputs for crop and animal agriculture covering areas including genetics, microbiome, breeding, animal health, seed, and fertilizer.
  2. Indoor Farming (IF) – components, systems, growers focused on indoor farming. Including technologies addressing vertical farming, aquaponics, and hydroponics.
  3. AgriFinance & eCommerce (AFE) – provide financial services and marketplaces designed for agricultural companies and growers.
  4. Precision AgriTech (PAT) – provide software and sensors to monitor, analyse, predict and optimize crops, water, weather and pests in resource-efficient ways.
  5. Animal AgriTech (AAT) – developing technology solutions to monitor, analyse and optimize animal health and production, and even substitution through Alt Proteins.

Agri BioTech is the top segment for investment in all the geographical breakdowns, often by a considerable margin. However, as the below breakdowns show, the UK has a comparative specialisation in Indoor Farming and Animal AgriTech. Together these account for almost 40% of UK investment in this sector, whereas globally or Europe-wide these are under 10%. This represents a growth and differentiation opportunity for the UK Agritech sector.

Comparative Segment Investment

Who is investing in AgriTech companies?

Worldwide there are just over 6000 investors in AgriTech. For the UK the figures are a fraction of this, with only 361 investors funding UK AgriTech. However, government-backed Innovate UK is one of the top global investors too, showing the UK does punch above its weight in the sector.

Top 5 Investors Globally by number of companies invested

Top 5 Investors into Europe by number of companies invested

Top 5 Investors into the UK by number of companies invested

What is the direction of travel for AgriTech investment?

Looking at the graph above there is a clear increase in the level of investment over the period, that is present in all three geographical regions.

Globally there was over £14 billion of investment into AgriTech in 2021 alone.

Evidently investment levels have seen the largest increases in recent years, after having experienced very little change in investment levels pre-2011.

Please do note that there are standout spikes in investment levels for Europe in 2009, 2015 and 2018, owing to specific M&A activity.

The graph above shows that the number of deals into AgriTech has increased significantly over the period, particularly in early-and-mid part of 2010s.

Unsurprisingly, venture capital deals are the most numerous sources of funding for AgriTech businesses – funding almost 80% of all deals.

Private Equity and Corporate/M&A activity make up on average around 9% and 12% of all deals respectively.

What our research tells us about AgriTech investment

What we can see from this research is that globally there is a large focus on Agri Biotech, claiming over 80% of all AgriTech investment. This segment has the potential to tackle some of the biggest issues associated with agriculture. For example, Pivot Bio is a developer of microbial nitrogen fertilizer intended to replace synthetic nitrogen fertilizer, one of the toughest challenges facing modern agriculture. They have raised over £500 million to date.

Here in the UK, there is a specialisation opportunity in Indoor Farming and Animal AgriTech. Just recently, London based Vertical Future, raised the largest series A ever for a European indoor farming company, at £21 million including participation from the likes of SFC Capital.

Lastly, overall investment into AgriTech is displaying an upwards trend with noticeable increases in recent years. This is a trend that is expected to continue as the world tackles the growing food demand as well as trying to abate greenhouse gas emissions associated with food production.

Venture capital is expected to continue to make up the bulk of these deals, as investors fund risky early-stage companies developing innovative technologies for a big pay-out. The successful companies will flow through to Private Equity investors and established industry players, such as Consumer Products sector acquiring players for growth & sustainability. We also expect an increasing number of public market debuts in this sector in coming years.

Source

  • Data collected from https://pitchbook.com/ on 1/2/2022.
  • Data applies to companies that are classified as AgriTech under PitchBook methodology and that have been involved in a completed ‘deal’ from 01/01/2000 to 1/2/2022, includes various forms of investments and/or transactions.
  • Figures for geographical breakdowns are attributable to companies headquartered in the respective regions.
About Adam Simmonds | Investment Research Analyst
With a First-Class Bachelor of Science (BSc) in Economics and Finance, Adam’s role with GovGrant is to offer insight to the venture capital and private equity community. He brings fresh perspective, through the lens of IP, to identify value, risk and opportunity that is unlikely to have been considered by others. View profile

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