Dive Brief:
- Venture capital investment in agtech startups dropped off precipitously in 2024 as a broader downturn in the agricultural sector led to a retrenchment among investors, according to a new Pitchbook report.
- Agtech deal values fell 25.6% over the previous year while deal counts decreased 24.3%, Pitchbook said. Despite the decline in activity, the median deal value reached a record high of $3.6 million in 2024 driven by increased focus on late-stage startups.
- While agtech investment remained depressed throughout 2024, dealmaking picked up significantly in the last quarter of the year. Deal activity grew to $1.8 billion across 149 deals, an 8.9% increase from the third quarter.
Dive Insight:
It was a tumultuous year for the agtech sector, with a string of once-promising startups declaring bankruptcy or downsizing in the face of a tough economic environment.
Investors gravitated toward more established startups amid market uncertainty, with biostimulant maker Sound Agriculture raising $25 million in venture funding and Carbon Robotics nabbing $70 million for its laser-powered, weed-killing robot.
An interest in mature startups came at the expense of still-emerging companies. Early-stage investments declined 33.7% year over year, Pitchbook said, particularly in pre-seed and seed deals.
Investors in 2024 also favored startups that sought to tackle food security, climate change and other global challenges. Startups that grabbed funding last year included those focused on artificial intelligence and autonomous solutions, precision agriculture, gene editing and biological inputs.
Those shifting investment trends, however, have left the vertical farming sector significantly hollowed out. At least 28 companies in the indoor farming space declared bankruptcy or ceased operations, Pitchbook found, though specialty strawberry grower Oishii was still able to raise $150 million.
Despite the difficult year, Pitchbook expects a rebound in the agtech market once the economy recovers and interest rates are cut.
“The industry’s focus on capital-efficient solutions and sustainable growth, coupled with advancements in regenerative agriculture, ag biologicals, and robotics, positions it for potential growth in the coming years,” the report said.