By Natalie Willis, Reporter, Valley Ag Voice
AgTech investment appears to be regaining momentum, with deal values increasing for two consecutive quarters, according to Pitchbook’s Q3 AgTech Report. Venture Capital deal value for agricultural technology investments recovered from lows in early 2024, with $1.6 billion invested over 159 deals.
However, while quarter-on-quarter deal value grew 15%, deal counts declined by 17.6%. This means investors may be focusing on fewer, more promising companies by making larger investments rather than spreading funds across multiple smaller ventures.
This could signal a shift toward maturity in the AgTech sector, where funding concentrates on scaling up existing solutions rather than exploring numerous early-stage startups. Alternatively, it might reflect a cautious approach, with investors consolidating their bets in the face of economic uncertainties or market volatility.
The uptick in deal values signals cautious optimism in a sector that has faced significant challenges over the past two years, Agriculture Dive reported.
Alex Frederick, senior analyst at Pitchbook and co-author of the report, told Agriculture Dive that venture capitalists are prioritizing high-quality startups, particularly those addressing automation, sustainability, and carbon removal.
The AgTech sector’s downturn after a boom in 2021-2022 saw deal values plummet from a peak of $13.9 billion in 2021 to $7.8 billion in 2023. As of Sept. 30, 2024, deal values stand at $4.3 billion, with the sector on pace to fall further this year.
According to the report, seed and early-stage AgTech startups are receiving record-breaking amounts of investment per deal even with fewer deals occurring overall. Investments in the earliest startup stages are up 92.8% compared to last year, surpassing the high levels seen during the zero-interest-rate period from 2020 to 2022.
For late-stage startups, the average investment size increased by 13.1%. However, these increases are partly due to limited options for startups to exit.
“Despite the challenging exit environment, valuations for AgTech startups of all stages increased in 2024, following broader VC market trends,” the report explained. “Yet many late-stage startups that have remained private while awaiting future exit opportunities have struggled to maintain their peak valuations.”
The largest AgTech deal of the quarter was Colossal Biosciences — a biotech company working on reviving extinct species and conservation. The company achieved “unicorn” status for raising $162.6 million and with a $1.6 billion valuation.
Other deals noted in the report include autonomous electric tractor developer Monarch which raised $133 million. Switch Bioworks, a plant biotech company, secured $23.6 million.
Aquaculture, an AgTech subsegment, had the largest increase in deal activity with 15 deals this quarter — the largest deal was Portuguese clam farming company Oceano Fresco which raised $18.4 million.
However, exit activity remains limited with only 10 exits for VC-backed AgTech companies. According to the report, the Federal Reserve’s recent interest rate cuts might help revive the struggling exit market, but the effects are yet to be seen.
