Venture capital investment in agtech startups saw a significant decline in 2024, reflecting broader challenges within the agricultural sector. According to a report from Pitchbook, investment in the sector dropped sharply, with deal values falling by 25.6% and the number of deals decreasing by 24.3%. Despite the overall decline, the median deal value for agtech investments reached a record high of $3.6 million, indicating that investors were still willing to commit substantial sums to more mature, late-stage startups.
The drop in deal activity can be attributed to a series of factors, including a general downturn in the agricultural industry and the challenging economic conditions investors faced throughout the year. In addition, several once-promising agtech companies were forced to declare bankruptcy or downsize operations, further dampening investor sentiment. As a result, many venture capitalists opted to focus their resources on more established startups, which were perceived as less risky compared to early-stage companies facing market uncertainty.
Investments were particularly focused on startups that had already reached a later stage of development. Notable examples included Sound Agriculture, a company producing biostimulants, which raised $25 million in venture funding, and Carbon Robotics, which secured $70 million for its innovative weed-killing robot powered by lasers. These companies were able to attract significant investment due to their established technologies and clear paths to commercialization.
The downturn in early-stage investments was particularly pronounced, with pre-seed and seed deals dropping by 33.7% year over year. Investors were less willing to take risks on new, unproven ideas, particularly in the face of broader economic pressures. As a result, the pipeline of new startups entering the agtech space became noticeably thinner. This trend was exacerbated by the broader uncertainty in the economy, which made it more difficult for early-stage companies to attract the funding they needed to scale their operations.
In terms of the types of startups receiving investment, there was a notable shift in focus. In 2024, investors favored companies that were tackling global challenges, such as food security and climate change. Many of the startups that secured funding were working on cutting-edge technologies like artificial intelligence, autonomous solutions, precision agriculture, gene editing, and biological inputs. These fields of innovation offered the potential to solve some of the most pressing issues in agriculture and food production, making them attractive to investors looking for long-term impact.
However, the shifting investment trends did not bode well for all sectors within agtech. The vertical farming industry, for example, was particularly hard hit. At least 28 indoor farming companies filed for bankruptcy or ceased operations, according to Pitchbook. While the industry struggled, some companies, such as Oishii, a specialty strawberry grower, were still able to secure significant funding, raising $150 million despite the difficult climate.
While 2024 proved to be a challenging year for agtech, there are signs that the market may rebound in the future. Pitchbook analysts remain optimistic about the potential for growth in the agtech sector once the broader economic situation improves and interest rates decrease. The report suggests that the industry’s focus on capital-efficient solutions, along with ongoing advancements in regenerative agriculture, ag biologicals, and robotics, could position the sector for future growth.
As the economy recovers, there is hope that investors will once again turn their attention to the agtech space. The continuing emphasis on sustainability, food security, and technological innovation is likely to drive future investment, particularly in sectors that offer long-term solutions to global challenges. Though the road to recovery may be slow, there are strong indications that agtech will remain an important area of focus for investors in the years to come.
