Venture funding for agtech startups has largely dried up amid persistent inflation and falling farmer profitability. However, some firms speaking to the most pressing issues in agriculture are still able to snag investment, according to a new Pitchbook report.
Investors poured $1.1 billion into agtech startups in the second quarter of 2024, with the number of deals continuing a steady decline, Pitchbook said. Four subsegments drove investment: ag finance, livestock technology, farm robotics and drones and imagery analytics.
For the most part, successful startups look to combat declining farm profits by offering financing options or other solutions that save producers money by making operations more efficient. Deals for agriculture finance and insurance companies were up 12.5% from the previous quarter, showing the most subsequent growth among all agtech segments.
Farmers are bracing for a record decline in profits and have pulled back on nonessential purchases, constraining demand for agricultural retailers and service providers. Amid that backdrop, investors are also pulling back: Deal values in 2024 are projected to be down 42.4% compared to last year, according to Pitchbook, with the number of deals set to plummet 30.7%.
Farm management technology and finance platforms have been able to somewhat withstand the downturn, especially those offering sustainability benefits and profit incentives for farmers.
Notable deals of the quarter included a $60 million fundraising round for climate risk assessment and insurance platform Arbol, which offers farm insurance plans that cover losses from extreme weather events. Additionally, AgriWebb, which develops livestock management software for ranch mapping, raised 11 million Australian dollars, or $7.2 million using currency conversion at the time of the deal.
"Despite challenges, the critical role of agtech in addressing global food production and sustainability issues continues to attract investment and drive innovation," Pitchbook said in its report
