AgTech (Agriculture Technology) refers to any technology or innovation designed to improve agricultural processes, such as farming, soil management and livestock breeding. Usual innovations used in AgTech include automation and robotics, sensors, drones and aerial images and GPS.
One of the main pain-point in the agricultural industry is related to the seasonality and the volatility of the activity that makes it difficult to produce forecasting models and might condition the profitability.
These tech devices, boosted by precision agriculture and robotic systems, allows businesses to reduce operational waste, reduce the risk of volatility in the industry, increase the resource utilization and decrease the usage of pesticides all contributing to a more environmentally friendly activity.
New Technologies, Same Agriculture Problems
Historically, the four main challenges that further fueled the development of AgTech were: increasing population (and food demand associated), scarcity of natural resources, climate change, and food waste production that depends on seasonality
According to Oliver Wayman , despite advances in technology, these challenges remain major obstacles today as global food production needs to increase by 70% in 2050 to meet growing food demand. Food scarcity and hunger are still prevalent global concerns.
In order to effectively address these challenges, governments, AgTech companies, and investors need to capitalize on advancements in technology and utilize IoT (Internet of Things), artificial intelligence, sensors, robotics, drones, and GPS technologies to increase yield while using minimum resources and still be more profitable, efficient, safe, and sustainable.
The AgTech sector is seeing increased venture funding and investment activities. According to the Pitchbook, there were 201 deals in the AgTech space amounting to $3.2B, representing 57.1% qoq growth in 3Q21.
Among the biggest AgTech deals that made headlines in 2021 include:
- Infarm, a IoT technology and data science-based indoor vertical farming system raised $200M of Series D, on December 16, 2021
- Bowery, a vertical farming startup raising $320.7M Series C funding round, on August 13, 2021
- Bear Flag Robotics, an enterprise that retrofits tractors and other farming machinery with AI, was acquired by John Deere's for $250M on August 05, 2021
- Pivot Bio, Bio-fertilizer producer, secured $430M Series D funding.
Smart Agriculture Market Bound for Growth
Smart Agriculture is leading the pace within the AgTech space. This segment specially includes IoT and AI tech, location systems (GPS, satellite, etc.), and robotics.
Labor Shortage Highlights Need For AgTech
The labor shortage in agricultural America is caused by a number of factors, including high prices of land, massive initial investment, volatility of commodity pricing, higher labor wages, and physical demands of the agriculture industry.
Farmers who are 35-year old and younger only make up 9% of the total US farm workforce. This is a small number in an industry where the average age of principal operators is nearly 60.
Without young farmers to fill important roles in the agriculture sector, many food producers are looking to invest in automation and robotics to fill the gap. This includes automated tractors powered by AI.
Investors Flock to AgTech
In 2021, there were a total of 632 VC deals in the AgTech space. All deals combine for more than $12.2B. 130 deals involved dgtech companies in food tech, feed production, and alternative proteins. 105 VC funding transactions were poured into supply chain, tracking, and e-commerce.
PitchBook noted that there is substantial backing for AgTech startups specializing in AG biologicals or sustainable and environment-friendly alternatives to synthetic fertilizers.
Also, there is a massive interest in emerging soil health management techniques. Specifically, these are AgTech solutions that gather and analyze data from field sensors and hyperspectral images captured by drones, planes or satellites to generate complete measurements of soil health.
Corteva states that in the next five to six years, smart farm robots are projected to be “very, very viable” and will be offered through the “as a service” business model to make them more affordable to farmers.
Notable AgTech VC Deals
- In January 2022, Green Labs, a South Korean AgTech startup, secured a $140M Series C Funding in a round led by BRV Capital Management, with participation from Skylake Incuvest and SK Square. Green Labs helps over 500,000 farmers gain control over their fresh produce by providing them AI-powered insight into crop lifecycle.
- In January 2022, Aigen Robotics received $4M seed money from NEA, with participation from AgFunder, Global Founders Capital and ReGen Ventures. The funds will be used to develop solar-powered, autonomous robots capable of reducing carbon output down to negative. Currently, the agriculture industry represents 16% of the world's total carbon emissions.
- In June 2021, Beeflow, an LA-based AgTech startup that trains bees to pollinate specific flowers, raised $8.3M Series A in a round led by Ospraie Ag Science.
- In May 2021, Bowery Farming, an indoor, vertical farming startup, secured $300M from Fidelity Management with participation from existing investors GV (formerly Google Ventures), General Catalyst, and GGV Capital.
- In February 2021, Anuvia raised $103M in Series C round led by TPG ART and Pontifax AgTech , with additional investment from Generate and Piva Capital. Anuvia specializes in nutrient delivery technology that reduces greenhouse gas emissions by 32% compared to conventional fertilizers.
Demand Boom for More Flexible, Convenient AgTech
AgTech has successfully put vast expanses of agricultural lands, equipment, and personnel right on the palm, revolutionizing the way fields have been utilized, managed, and harvested. With agricultural applications making food production smarter, more streamlined, and easier, AgTech enabled not just farmers but also other stakeholders across the wide and multi-leveled agri-ecosystem to get increasingly involved in food production and supply chain.
AgTech has become commonplace in the wide agriculture sector. But the demand for AgTech solutions with flexible and extremely convenient UI/UX continues to soar as users want seamless operation across geographies and intuitive employment by their personnel. As AgTech evolves, more conventional farms, emerging modern agribusinesses and even governmental agricultural entities now turn to various agriculture software and other digital farming tools to achieve and benefit from smart, precision agriculture to save time, increase yield, and generate bigger revenue.
Sources: AgriInvestor, Agriculture, PitchBook, Markets and Markets, TechCrunch, Yahoo Finance, CropLife, StartUs Insights