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AIMPOINT RESEARCH: GROWING TREND OF CORPORATE VENTURE CAPITAL INVESTMENT IN AGRI-TECH
Source: Aimpoint Research

The pace at which innovative agri-food tech solutions are being developed and gaining traction has led to many legacy brands establishing corporate venture capital (CVC) arms as a tool to maintain relevancy and resiliency now and into the future. According to Finstere Ventures report, "CVC participation increased from 66 deals representing $770 million in 2019, to 107 funding rounds in 2020 representing $3.2 billion in capital committed."

The motivations of agribusinesses and food companies in their CVC activities are similar. Keeping up with the competition, increasing efficiencies and aligning with potential growth opportunities are key factors influencing corporate investment decisions. This approach can be effective for brands to ensure they remain at the forefront of innovation in agri-food tech.

The food-tech space has also been the beneficiary of growing SPAC (special purpose acquisition company) deals. SPAC's are shell corporations listed on a stock exchange with the purpose of acquiring a private company, thus making it public without going through the traditional initial public offering process. The growing demand for ESG (environmental, social and governance) investments is also helping to drive growth of SPAC in food-tech. Startups have moved to more exits through private equity and IPO and away from the usual route of a future corporate buyout.

Why It Matters

Rapid consolidation is emerging between agri-food tech and food corporations as legacy brands look to stay at the forefront of the innovation cycle and develop opportunities for growth. Identifying collaboration opportunities and connection points with some of the more disruptive or maturing agri-food tech startups can be an effective way for ag organizations to ensure they maintain a competitive advantage in their markets and stay ahead of future shifts in the food system.

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