Global agtech companies collected $3.3 billion across 222 deals in the first three months of 2022, marking a 15.5% quarter-over-quarter increase in deal value, PitchBook’s Q1 Emerging Tech Research report on agtech shows.
After the last year’s record investment in agtech, the trend continues despite challenges with food security exacerbated by the war in Ukraine, which has led to a surge in fertilizer and commodity crop prices and increased the risk of a potential recession.
PitchBook analysts listed “increased concern for food security, data-driven productivity gains, and environmentally friendly agricultural techniques such as carbon monitoring tools and biochemicals” as key factors driving robust venture capital momentum into agtech startups in 2022 “as agtech innovation becomes critical to boosting crop yields.”
As Alex Frederick, senior analyst of emerging technology at Pitchbook and one of the authors of the report, told Emerging TechBrew, “crises like the war in Ukraine, which has sent the price of nitrogen fertilizer and many other foods surging, will create some opportunities for agtech startups to innovate.”
Kula Bio’s biofertilizer tops list
Two biotech companies – Colossal and Kula Bio – are among 10 agtech early-stage VC deals attracting over $120M.
The US-based startup “Kula Bio has raised $61.2 million in VC funding to develop a microbial biofertilizer that converts atmospheric nitrogen into a soil-stored crop nutrient.”
The company’s microbial product Kula-N, AFN explains, leverages the bacteria Xanthobacter autotrophicus, which removes nitrogen from the air and puts it in the soil.
As the company explains on its website, it is “helping farmers improve crop yield and reduce environmental impact” by making a “cost-competitive biofertilizer that boosts a naturally occurring process to deposit meaningful amounts of nitrogen in the soil.”
Agtech is increasingly appealing to investors
The agtech sector attracts more money and more deals than ever before, The Crunchbase points out, enticed by “the shifts in how people think about food, investing and even changes brought about by COVID-19.”
Crunchbase data shows that in 2021, the agtech sector has attracted “nearly $5 billion invested in 440 funding deals to VC-backed startups”.
According to an opinion piece by a partner in Foley & Lardner LLP, “public markets have become more receptive to AgTech, and SPACs and IPOs are a greater option for startups in this space today.”
“When there are more exit options, there is traditionally more interest from investors,” the piece concludes.