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AgFunder: 2019 deals reached $19.8 billion

A new report from AgFunder reveals that the world’s agri-foodtech startups raised a total of $19.8 billion in 2019, across 1,858 deals and 2,344 unique investors.

The company notes that, while the number signals a 4.8% drop in funding and 15% decline in deal activity year-over-year, it also represents a staggering 250% growth in five years, and proves that the huge scale of investments in 2018 was no freak outlier.

In some respects, as AgFunder’s research head Louisa Burwood-Taylor notes in the report, a meeker 2019 also chimes with a wider pullback seen across the VC space, as highlighted by recent KPMG research in the VenturePulse report.

“Venture capital investment across all sectors dropped 16% in 2019 against a backdrop of global uncertainty related to the US-China trade war, Brexit, and a weakening Chinese economy,” said Burwood-Taylor. “It was the same for agri-foodtech, particularly affecting the US and China, but not to quite the same extent.”

The report shows how much of the pullback in agrifoodtech funding came from the increasingly competitive area of innovation downstream in the food supply chain.

The drop in funding overall, AgFunder says, was largely a result of a 56% decrease in investment to consumer food delivery apps as the more mature players extended their dominance in an over-saturated marketplace with ever-larger fundraisings.

(Meanwhile, the company notes, investment grew in enabling, white-label technologies for retailers to create their own delivery options.)

Another downstream category, eGrocery, also suffered a 7% decrease in funding across fewer deals, the report reveals, as the economics of delivery services cause challenges and sentiment sours. Walmart, for instance, reported a $1 billion loss on its e-commerce offering, dampening investor expectations. Even so, eGrocery innovation remained active in China — in 2020, the ongoing coronavirus threat could make these services increasingly important for consumer access to food. China’s MissFresh, one of the leaders, raised one of the year’s largest rounds.

The largest agri-foodtech deal of the year turned out to be what AgFunder describes as a massive SoftBank-led $1 billion Series E round for Rappi, Latin America’s biggest on-demand delivery startup. Total funding for companies like Rappi in a category the AgFunder research team now calls Cloud Retail Infrastructure — still reached 16% of total agri-foodtech funding in 2019, as seen in this pie chart below.

Upstream startups — early stage companies providing farm-facing and supply chain innovations — reached new heights in 2019. Upstream startups posted their strongest H2 on record with funding overall reaching $7.6 billion, a 1.3% year-over-year increase. Alternative proteins and vertical farming drove much of the upstream uptick. Investment in the “Innovative Food” category, which is mostly alt protein plays, doubled year-over-year to $1 billion, bolstered by Impossible Foods’ $300 million bridge round and a 17% increase in the number of deals; no doubt an IPO by Beyond Meat helped whet investor appetites, AgFunder says.

With vertical farming, two huge deals landed on the doors of two contrasting approaches with Germany’s Infarm and New Jersey’s Aerofarms both each securing over $100 million in their respective rounds. Their success, alongside the robotic insect farm Ynsect, drove a 38% increase in the Novel Farming Systems category, despite 16% fewer deals.