7 investors discuss how agtech can solve agriculture’s biggest problems • TechCrunch

climate change and Geopolitical instabilities wreak havoc on agriculture. To gauge how VCs are responding to these issues, we spoke to seven investors.

First, rising greenhouse gas emissions result in punishing droughts and storms that damage crops, exacerbate food insecurity and threaten countless livelihoods. At the same time, Russia’s invasion of Ukraine is shaking global grain supplies, driving up costs and further aggravating supply chains.

Even as this and other crises hit the multi-trillion-dollar industry, startup investors see potential for huge returns with technologies that could increase yields, cut emissions and reduce waste.

“There are opportunities for development [and] Introducing new technologies throughout the food value chain that will impact key issues such as food safety and emissions,” Adam Anders, managing partner at Anterra Capital, told TechCrunch. Among the areas where he sees the greatest potential impact, the investor cited improving crop genetics, extending the shelf life of more produce and putting digital tools in the hands of farmers.

Consumer behavior is another piece of the proverbial puzzle, as climate literacy increasingly transforms the way people shop.

“In recent years, we’ve seen an exploding interest in sustainability among consumers and food brands, and awareness of the negative impacts of farming continues to grow,” said Ting-Ting Liu, an investor at Prosus Ventures. “Not only are people paying more attention to agricultural emissions, but they are also paying more attention to how much land and water is needed to support the world’s food supply and how much runoff there is,” she said.

Liu argued that this demand creates strong tailwinds for companies looking to address the environmental impact of agriculture, ultimately driving more capital into everything from cellular agriculture to methane reduction solutions for livestock.

Still, agtech isn’t immune to some of the broader trends in the venture space.

While the value of agtech VC deals rose from $6.5 billion in 2020 to $11.4 billion in 2021, several investors told TechCrunch that they were trading this year amid the broader tech downturn by 2022 have noticed a slowdown in agtech deals.

“2021 was a record year for VC across the board. In 2022, VC investments across the board are about 30% lower year-over-year, and I’d expect a similar slowdown for agtech,” Monica Varman, a partner at G2 Venture Partners, told TechCrunch. “However, in the medium to long term, I expect Agtech VC funding to increase given supply chain challenges, traceability and advances in enabling technologies in synbio and robotics,” she added.

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Even agtech investors are still largely funding men. Of the nearly $11 billion spent on agtech in 2021, 78% went to companies with all-male founders, according to PitchBook. The discrepancy has only worsened so far in 2022, rising to 81% (from nearly $7.3 billion) as of Sept. 14, according to the data firm.

To assess if (and how) VCs are responding to these issues and more, we turned to the following:

  • Brett Brohl, Managing Director, Techstars Farm to Fork and Managing Partner, Bread and Butter Ventures
  • Monica Varman, Partner, G2 Venture Partners
  • Jinesh Shah, Managing Partner, Omnivore
  • Adam Anders, Managing Partner, Anterra Capital
  • Ting-Ting Liu, Investor, and Ashutosh Sharma, Head of India, Prosus Ventures
  • Camila Petignat, Partner, The Yield Lab

Brett Brohl, Managing Director, Techstars Farm to Fork and Managing Partner, Bread and Butter Ventures

The value of the Agtech VC deal increased from $6.5 billion in 2020 to $11.4 billion in 2021. Will this kind of growth continue?

It’s not going to continue in the short term, mainly because of macro factors that you just don’t see — for example, a lot of late-stage deals are going on lately — so definitely not in the short-term.

Over the long term, the sector offers tremendous opportunity and room for innovation, so over time you will see continued growth and investor focus on agtech.

Agriculture is responsible for about a quarter of global greenhouse gas emissions. How has the climate crisis changed the way you invest?

This is a big reason why transaction value has skyrocketed in 2020 and 2021. Investors understand that challenge creates opportunity. Agtech isn’t as mainstream as many other sectors, so we need more eyeballs and capital. When you make the food system more effective and efficient, you make it more sustainable.

We’re not a fund big enough to fund a startup forever, and we depend on later investors, so that attention and resulting capital inflow helps remove some risk from our portfolio.

Which emerging technologies, like cellular agriculture and AI-powered robots, have the greatest potential to impact key issues like food security and emissions over the next decade?

We are 100% believers in cellular agriculture and are also big fans of the robotics space, especially robotics that solve very specific pain points and have low BOMs.

“Automation and computer vision will transform agriculture over the next decade, especially as food security concerns move food production closer to the point of consumption.” Monica Varman, Partner, G2 Venture Partners

We also love packaging space – a lot of packaging is used for transporting and moving food. We also welcome anything related to logistics, manufacturing or transport that makes the food chain more sustainable.

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What green flags do you look for when investing in an agtech startup? Are you open to supporting founders who have no experience in the industry?

Investing in agtech startups is no different than any other business. A great team can take a C-idea, spin it, iterate it, and make it work. But a C-founder will kill any idea, no matter how good it is.

While Founder Market Fit can be an asset to a company, great entrepreneurs are smart, have a great work ethic, are coachable, and know how to surround themselves with people who will make up for their weaknesses. Industry experience is therefore not a prerequisite for us.

Which agtech areas have received the most attention from early-stage founders in recent years? In which areas would you like to see more work or investment?

The obvious answer is alternative proteins. So much capital has been invested and so many founders are building cool things in the space.

I’d like to see things that are a bit downstream get more attention like manufacturing, logistics and the future of grocery retail. In recent years, you’ve seen traditional agtech investors push their thesis further down, so it’s happening.

I’m also very interested in fintech applications in agriculture, like what Traive and Milk Moovement are doing.

What are you doing to fund underrepresented founders in agtech?

We actively seek out investors, forums and networks that support and invest under-represented founders or work with entrepreneurs who are a stage ahead of us investing. We also have a diverse investment team – 75% of our fund is women.

Finally, we offer open office hours for everyone every week and offer free public education through multiple channels to help founders rise.

Before the invasion, Russia and Ukraine accounted for about 28% of world wheat exports and 15% of corn exports. Given its impact on the global supply chain and global grain supply, how has the Russian invasion of Ukraine affected agtech VC deals?

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I don’t think it did much for early-stage agtech founders or venture capital. The macroeconomic effect of the war has been, at least in part, a tightening of the money supply that will trickle down to early-stage startups. However, the effects were not significant in the early stages.

Bayer bought Monsanto for $63 billion in 2018, and a year earlier ChemChina acquired Syngenta for $43 billion. Today, Bayer’s market cap is less than the value of that deal, and China’s ambassador to Switzerland has called the Syngenta acquisition a bad deal for Beijing. Have the outcomes of these deals impacted investors’ hopes for spectacular late-stage exits?

I wouldn’t call these acquisitions “modern” agtech companies. Monsanto has been around for over 100 years, and Syngenta was founded over 20 years ago, and even then it was a spin-off. Moreover, this happened in 2017 and 2018. Investments in Agtech have exploded since then, suggesting the market doesn’t think these two acquisitions indicate underperforming risk investments.

Results from companies like Upside Foods, FBN, and Indigo Ag will be far more important to the agtech ecosystem. Unfortunately, it’s a very tough market for late-stage companies right now, and that will slow exit and depress ROI on many venture investments, not just agtech deals.

How do you prefer to get pitches? What’s the most important thing a founder should know before they call you?

I’m open to heartfelt intros, thoughtful cold emails, or pitches during my open office hours. If you get me on the call, the most important thing is to be yourself.

Is there anything else you would like to comment on?

I find the blurring of lines between food tech and agtech very interesting. What is Agtech? It’s not just resources; there’s a lot more to it than that, and that’s exciting for me.

Monica Varman, Partner, G2 Venture Partners

The value of the Agtech VC deal increased from $6.5 billion in 2020 to $11.4 billion in 2021. Will this kind of growth continue?

2021 was a record year for VC. In 2022, VC investments across the board are about 30% lower, and I’d expect a similar slowdown for agtech.

However, in the medium to long term, I expect Agtech VC funding to increase given supply chain challenges, traceability, and advances in enabling technologies in synbio and robotics.

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