Agri-FoodTech is no longer a niche category, a subset of agriculture

In 2017 I attended the World AgriTech event in San Francisco along with 1500 other eager entrepreneurs, CEOs and venture capitalists. There was no shortage of technologies and ideas and the halls were practically bursting with disruption.

That same year, I went to the Natural Foods Expo and Beyond Meat had a stand. People were waiting 45 minutes to taste the Beyond Meat burger. Nobody thought then that meat substitutes would become a whole category in food, let alone one worth $20.7 billion globally, set to grow to $23.2 billion by 2024.

The skyrocketing rise of alt protein is a perfect analogy of how Agri-FoodTech has captured the imagination of entrepreneurs, consumers, innovators and investors and has shown how the industry has legs. Meat alternatives are the perfect combination of disruption plus technology plus environmental responsibility, packaged up in a familiar way consumer can embrace. A veggie burger that tasted like meat – amazing!

The 2021 AgFunder AgriFoodTech Investment Report captures what the sector has been experiencing perfectly. 2021 was a “blow-out year” (despite Covid!) with an expected $30 billion raised, a 34.5% growth over 2019. The early wave of funding that characterized the sector is maturing across categories. While early-stage investments continue to grow, the first round of innovators funded are now raising larger, later-stage rounds.

“Agri-FoodTech is no longer a niche, experimental and risky sector. Median deal-size growth signals maturity of first wave innovation,” – AgFunder, 2021 AgriFoodTech Investment Report.

Agri-FoodTech is its own sector. Its own industry. Agri-FoodTech is growing up.

Agri-FoodTech is the Natural Culmination of Our Times

In hindsight, it is glaringly apparent why Agri-FoodTech has taken off.

The world is more populated, more innovative and (in some countries at least) more affluent than ever before. We are also terrified, staring down the barrel of climate change, food insecurity and global population growth.

Investors are shifting away from extractive models, looking to put their money behind innovators that make a profit and a difference. The popularity of Agri-FoodTech investment capital is the natural culmination of science, plus innovation plus ESG investors (or what we used to call the “triple bottom line” — planet, people and profit).

Wealthy individuals are moving the needle forward. Love him or hate him, but Bill Gates — now the largest owner of private farmland in the U.S. — has invested millions into agricultural research in Africa. He has backed start-ups in food waste, dairy data, in-field nitrogen fixation, plant-based ingredients and even forest-based carbon sequestration data. Gates has been nothing, if not diverse, in putting his money behind Agri-FoodTech solutions. His investment firm owns stakes in Impossible Foods and John Deere,

And all these nimble, fast-moving, tech-enabled disruptors have been just what the doctor ordered for the “Big Ag/Big Food” behemoths.

Food systems are institutionalized, bloated with tradition and slow to adapt and respond to change. The culture of open innovation pervading Agri-FoodTech has challenged what has been an inwardly looking space to turn its gaze outward toward a more collaboratively-focused approach.

Innovation in food and agriculture is still slow compared to the lightning speed change that seems to happen in other sectors. Who here had never heard of Clubhouse a month ago? But when it comes to food, people like what they like, and habits, trends and tastes evolve slowly. And when it comes to farming, farmers know what they know and are notoriously risk-averse towards adopting change.

Yet Agri-FoodTech is making inroads, slowly but surely. The big companies recognize they need these new nimbler, tech-orientated companies to keep them relevant. Hence, the ongoing series of acquisitions, notably starting with Monsanto’s $930 million deal to buy Climate Crop in 2013, a company founded by former Google employees using data to underwrite weather insurance to farmers. (Monsanto itself would be acquired by Bayer in 2016, after a tough acquisition battle).

What’s Next for Agri-FoodTech?

We’ve got the investment, the great tech and an amazing ecosystem relevant to our sector. But the question remains, how do we capitalize on the tantalizing promise Agri-FoodTech tempts us with?

Deployment is an issue. Innovators (and their investors) would love a rapid deployment, but Agr-FoodTech still exists within the boundaries of slowly-moving food production systems. It’s difficult to deploy new ideas successfully to any large scale — especially within agricultural production — without collaboration from larger ag companies and their broader reach.

We need to educate investors. Food and farming are an exciting investment sector, but it isn’t a quick one. The time-scale involved with testing new beta phases in agricultural innovations alone works excruciatingly slow compared to other tech sectors. It still takes 365 days for the Earth to orbit the sun. Within reason, crops still grow in the time-frame they have always grown.

Many early-stage ag-focused companies are wickedly tech-savvy but forget they need to understand the farmer. Farmers and farming are a culture all of their own. Leverage farmers’ industry expertise – put them in board positions and use their help to guide and support the company’s growth.

But beyond just asking farmers what they think, we need to educate and selling Agri-FoodTech concepts to the farmers. I attend a lot of events and I rarely see a farm face there. We need to involve farmers in the innovation process, train, teach and support them. Kevin Costner might have built his “Field of Dreams” in an Iowa cornfield, but Agri-FoodTech innovators will fail if they expect a “build it and they will come” response from farmers.

The next 20 years is, arguably, the most critical time we have ever experienced in the history of agriculture. Climate change has food production in its grip on all sides. Farmers contribute to climate change, help reverse climate change, and are most affected by climate-change-fueled weather disasters. What we do this year will have real, tangible effects on what people eat, how that food was grown and whether they have enough to eat within our lifetimes.

Agri-FoodTech was born in the spirit of innovation. With the belief that technology could solve the fundamental issues facing healthy, equitable and available food security for the world. We’ve proven we have what it takes to make actual change, not just headlines.

I, for one, can’t wait to see us take our industry to the next level.

CS Partners has created an executive salary survey for the Agri-FoodTech industry. Why? Because Agri-FoodTech is no longer a niche category, we are our own industry and it’s time we begin to benchmark our standards, including executive compensation.

Executive compensation guides help startups, growth companies and investors by offering transparency. Having a guide helps your company be competitive when hiring executive positions, assists with your portfolio companies’ investment and growth, and gives you something trustworthy to compare pay scales within Agri-FoodTech industry norms.

Understanding what our industry pays its executives provides the clarity Agri-FoodTech companies need to retain their executive teams.