A recent report published by the venture capital firm AgFunder finds that 2020 was a record-breaking year for investments in agricultural and food technologies (AgriFoodTech).
Investments made in the fiscal year 2020 were estimated to top US$30 billion, representing more than a 15.5 percent increase from 2019. The sector includes alternative proteins, eGrocery shopping, agricultural biotechnologies, agricultural marketplaces, supply chain infrastructure and transportation, and more.
Louisa Burwood-Taylor, head of media and research at AgFunder, explains that there were three primary drivers of this uptick: the maturing of AgriFoodTech as an industry, an increase in funding from venture capital firms and impact investors, and a growing awareness of the fragility of supply chains caused by the COVID-19 pandemic.
Two sectors – supply chain infrastructure and transportation along with eGrocery – saw the greatest number of investments. Burwood-Taylor says that this was a direct result of the COVID-19 pandemic, which pushed more consumers to avoid in-person shopping. She adds that businesses are also feeling pressure to keep up with other sectors, which are steadily expanding their online presence through eCommerce in other business sectors.
The global discussion of climate change is beginning to impact the kinds of technologies being developed in the agriculture sector. “You’d be hard-pressed to find a new farm technology that is not aiming to improve the climate footprint of agriculture,” Burwood-Taylor tells Food Tank. She says that startups are developing climate-friendly innovations ranging from more sustainable pesticides and fertilizers to tools that help farmers track yields and sales more accurately.
This shift toward climate-friendly practices advanced as stakeholders realize the impact of agriculture on the environment. The U.S. Environmental Protection Agency (EPA) estimates that in 2019 agricultural activities represented 10 percent of U.S. greenhouse gas emissions.
Alternative protein companies also received a significant portion of the 2020 investments. Burwood-Taylor states, “Entrepreneurs and investors are very excited about the potential to replace animals in the food system with products that replicate the experience of eating meat and other animal products.”
Consumer demand is also driving this growth. A desire for more plant-based alternatives increased 27 percent in the past year, according to the Good Food Institute (GFI). In the last two years, plant-based meat sales have more than doubled and in 2020, and now represent a US$7 billion market.
“AgriFoodTech is no longer an investment backwater; it’s a fully-fledged investment destination,” Burwood-Taylor tells Food Tank.
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