With global food security, water scarcity, and climate change as major geopolitical issues, Agtech offers hope… Labor automation, bio engineering and climate extremes are now part of a day’s work in modern agriculture, putting the $177 billion U.S. food industry on the front lines of much bigger conversations about the future of work, the ethical boundaries of technology and adaptation to climate change.
The Second Green Revolution
Advances from the mechanization in the 1920s and the Green Revolution from 1940-1960 have largely been exhausted. Rates of yield increases for major crops have been trending negatively on a 10-year curve at the very time that global forces of population growth, prosperity, and globalization are putting basic supply-and-demand pressure on our agriculture system. In 2013 there was a shift and AgTech grew 75 percent to reach $860 million across 119 deals. The momentum shift leading up to the phase-transition 2013 can be traced to a confluence of three underlying trends:
- A groundswell of macro economic trends that tipped the balance between supply and demand in agriculture
- Shifting consumer tastes, and
- A confluence of new hardware technologies that freed computation from the desktop and automated multivariate collection of big data
Inexpensive and infinitely configurable mobile devices (enabled by advances in wireless and energy storage) have liberated technology from the office desktop. At the same time, inexpensive but sophisticated hardware sensors have emerged to automate the collection of massive data sets. With these technology shifts, exciting technologies like drones, AI, satellite mapping, robotics, and the Internet of Things, have quickly realized that the agriculture value chain provides fertile first market opportunities for many technologies that are not advanced enough or have not yet found solutions in the consumer space. Many investors looking at these technologies are going to need to get smart on agriculture if they’re going to make informed investment decisions.
The Agtech Sector
According to AgFunder News data, agriculture has a long value chain and the sector is often described as being more horizontal than vertical
- Tracked 16 subcategories—as diverse as biotech, food e-commerce, and smart equipment—and 10 of these subsectors had more than 5 percent share of the AgTech market)
- Currently there is room for growth across the value chain
- Already this year, we’ve seen a $50M investment into drone maker 3D Robotics and a $95M investment into micro-satellite company Planet Labs, both of which count agriculture as key early market opportunities
- Foodtech company Soylent raised $20 million at a $100 million valuation
- Plant trait company Arcadia BioSciences recently filed a $86 million IPO
- FlowHive has emerged as the highest grossing campaign on Indiegogo, raising over $6.8 million for its honey-on-tap technology, already making it one of the top 10 crowdfunding campaigns of all time