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AGFUNDER: INVESTMENT IN AGRITECH/FOOD SETS RECORD HIGH IN 2020
AgFunderNews reports:

To view the complete report, click here.

Zero percent of us would choose to go through another year like 2020 (2021 isn't exactly spectacular yet, either). But for the agrifoodtech sector, we pen 2020 as the year investors got serious. We could thank the pandemic... but then, why would we thank the pandemic?

Deals made and dollars disbursed in 2020 were the highest on record, surpassing 2019 levels, according to AgFunder's 2021 AgriFoodTech Investment Report. As more data trickle in, total dollars committed to agrifoodtech ventures in 2020 is expected to hit $30.5 billion. That represents a 34.5% increase over 2019 investments.

The sector's stellar performance is attributable to an increasing number of really big rounds, signifying a maturing sector with a few clear outliers.

Michigan-based cold storage and warehousing venture Lineage Logistics' $1.6 billion funding round accounted for 5% of the projected investment total. Plant-based meat company Impossible Foods raised two rounds totaling $700 million, leading a long and increasingly tech-diverse roster of investor-backed alternative protein companies. China-based Furong Xingsheng's $700 million round topped the list of e-grocery deals; that list was dominated by Furong Xingsheng's domestic peers.

There were also a lot of really small rounds, which speaks to investor confidence in placing their bets on the agrifoodtech sector at large, and on the next generation of early-stage innovations and technologies. Early-stage investments grew 10% year-over-year in 2020; the number of deals grew 15%.

Upstream love
A trend we noticed mid-year held through the end of 2020: that for the first time in years, upstream ventures-the technologies closest to the farm-outpaced their downstream peers in both number of deals and dollars invested. Upstream technologies secured $15.8 billion across 1,950 deals to downstream technologies' $14.3 billion across 1,142 deals.

Usually downstream ventures score bigger rounds, but last year, upstream ventures also won on median deal size.

And, investors placed bets on a lot of new upstream technologies. Early-stage upstream ventures closed 30% more deals and nearly 50% more capital year-over-year; early-stage downstream activity actually decreased-by nearly 10% in deal count and 25% in dollars invested.

We are neutral observers, to be sure. But what is nevertheless exciting about the performance of the upstream side of agrifoodtech is that it signifies investors' growing confidence with the food and agriculture industry's tech transition. The technologies closest to the farm tend to be more capital intensive and difficult to test; they also take longer to get to market and secure uptake than their software-heavy downstream peers.

Even just a few years ago, new agri-inputs, farm robotics, novel farming systems, and innovative foods were deemed too "risky" for all but the most specialized investors. Today, there is a flood of generalist investors backing such technologies.

Take San Francisco-based cellular meat company Memphis Meats. Its earliest investor, in 2015, was SOSV-a venture capital-backed startup accelerator for high-impact hardware and life sciences ventures. Back then, cost projections for lab-grown meat products like the ones Memphis is developing were in the hundreds if not thousands of dollars per unit.

Today, as unit costs inch towards the single digits, investors like Temasek and SoftBank are getting on board: both investment firms backed Memphis Meats' $161 million Series B round last year.


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