Venture capital investment in agriculture and food technology fell significantly last year, according to investment data analysis by a global VC firm released this week. But Australia bucked the trend, recording a US$90 million increase in funding in 2019.
Globally, investment in foodtech and agtech startups reached US$19.8 billion across 1,858 deals from 2,344 unique investors last year. That is a decrease of 4.8 per cent in dollars and 15 per cent in the number of deals from the record-high investment in 2018.
The figures come from AgFunder, a global foodtech and agtech VC that curates data from thousands of investment deals for its annual analysis.
According to the company, which backs several agtechs including Australia’s The Yield, the main reason investment fell so sharply was a 56 per cent reduction in investment in food delivery apps.
That segment of the market boomed in 2018, particularly in China with a growing tech savvy middle class. But the market has begun to consolidate with a few key players dominating.
AgFunder says the overall drop in agri-food tech investment is also reflective of a broad decline in venture capital investment across all industries last year, amid the US-China trade war, Brexit and a weakening Chinese economy.
On the bright side, upstream agri-food investment increased, overall investment was more diverse; with more firms and startups from outside traditional powerhouses the US and China, and Australia was one of the few countries to record an increase in deal activity.
28 local deals raised over US$90 million in 2019, according to the AgFunder data. Orange’s SparkLabs Cultiv8 accelerator was the 12th most active accelerator fund in the world making seven major investments. Its 2019 cohort includes startups tackling biosensors for crops, autonomous seed planting technology, indoor farming lighting, and solar powered wifi networks.
AgFunder says overall upstream investments – companies operating closer to the food producer and before the retailer – increased slightly in 2019, and investment in some areas, like meat alternatives, indoor farming, robotic food delivery, and cloud kitchens, continued to grow despite the overall slump.
The single biggest agri-food tech investment last year was for a South American on demand delivery company, Rappi. The Uber rival received $US1 billion dollars in April last year in a round led by global VC giant Softbank.
Over the last five years investment in the agri-food tech has increased 250 per cent and trajectory remains positive, according to AgFunder.