AgFunder, the leading agriculture-focused online investment platform, has reported a record USD4.6 billion of investment into the agriculture technologies sector for 2015, almost double the USD2.36 billion invested in 2014, and outpacing growth in the broader venture capital market.
Over the past five years, global investment in the agtech sector has markedly accelerated from barely USD500 million in 2012 to approaching USD5 billion as entrepreneurs and investors look to tackle production and sustainability issues facing the farming sector.
“Mid-year we projected the agtech sector would end with USD4.1 billion; the extra half billion surpassed expectations,” says Rob Leclerc (pictured), CEO of AgFunder. “Food e-commerce accounted for a large portion of the topline number. That aside, there was healthy investment diversity across the agriculture value chain. Given that agriculture accounts for approximately 10% of global GDP, we still see a lot of room for development in the sector, particularly as investors look for value outside traditional tech markets, which many fear are in a bubble.”
Last year alone, 499 companies raised financing across 526 deals, a 90% increase in deals over the 264 recorded in 2014. Agriculture-focused venture capital firms and strategics led investment activity, which included over 600 unique investors. They were joined by a mix of angel investors, generalist venture capital players, family offices, private equity firms, and impact investors.
Companies in the food e-commerce, irrigation & water, and drones & robotics subsectors drove activity in 2015, accounting for 60% of total investment dollars. This was a departure from 2014, when startup investment was more heavily weighted toward bioenergy, soil & crop technology, and sustainable protein. It reflected a shift in global investor preference toward bets on ‘Uberfied’ technologies and technologies disrupting the food chain close to the consumer.
The year also saw greater geographical diversity in agtech innovation and investment. Companies based in the United States raised just over half of agtech’s total funding, down from 90% in 2014. In part, this may represent better reporting on international deals, but innovation continues to develop in markets such as Israel, which ranked second in total investment (USD550 million), closely followed by the large emerging markets of India and China, which took third (USD506 million) and fourth (USD480 million) positions respectively in our geographical rankings.