There’s no doubt that agriculture technology, as a sector of innovation, is having a moment. Investment funding into agritech startups has surged in recent years, topping $4.6 billion in 2015 up almost 10X from 2012. During the first half of this year, there has been a cooling in agritech investment alongside the pullback in global venture capital markets. The agritech sector recorded $1.8 billion across 307 deals in H1-2016 compared to $2.2 billion and 285 deals in H1-2015 according to AgFunder’s newly-released Mid-Year AgTech Investing Report.
With signs of a slight rebound in the global VC market in the second quarter of this year, we don’t expect the pullback in agritech to be sustained, particularly given the number of new agritech specific funds (7) and accelerators (12) that were announced in H1. During the first half of 2016, the number of other investors coming to agritech also increased, with 52% more unique investors recorded compared to the first half of 2015.
While this is a positive sign for the sector, the agritech investment ecosystem is still immature. Like other niche sectors, agritech has a small group of core investors. In recent years, that number has increased. Several new venture stage funds have launched providing a skeleton for the fledgling agritech funding market, but there are still funding gaps, particularly at the seed and growth stages.
Some of these gaps are beginning to be filled, particularly at the earliest stages, but there is still some way to go before agritech startups have a sustainable, healthy funding ecosystem in which to mature.
So, with continually positive expectations about the potential for agritech startups to transform the world’s oldest and least digitized industry, the question now is: how exactly will funding come into the sector?
The growth of agritech venture capital
The first main wave of agritech funds launched in 2006 and by our count, today there are now 13 core firms that have raised funds totaling $1 billion. Even in such a small group, they are spread across Canada, US, Europe, Israel and India and not all of the funds to-date have focused exclusively on food and agriculture; some have emerged from life sciences or healthcare funds. 
The first agriculture venture capital funds focused on biotech with agriculture one of the sectors served; Canada-based Avrio Capital raised $75 million and California-based Finistere Ventures raised a smaller fund of $32 million.
One of the only other funds to launch before 2011 was Cultivian Ventures, started by ex-Dow AgroSciences veteran Ron Meeusen and life science veteran Andy Ziolkowski, which closed a $34m fund in 2008. “It was pretty lonely out there for a while,” says Cultivian’s Ron Meeusen.
Then change happened. Between 2011 and 2015, seven new firms entered the space globally and three firms raised follow-on funds, including Cultivian’s Fund II which is $114 million. This year alone has seen a wave of fundraising activity, with three firms announcing fund closures: Anterra’ Capital closed its first fund on $125 million, which is the largest agritech fund on record (alongside S2G Ventures); Avrio’s third fund closed on $110 million, and alternative protein-focused New Crop Capital closed on $25 million. In addition, Pontifax Food and Agriculture Technology Fund (Pontifax AgTech) announced the first close of its fund targeting $200 million; Finistere held the first close on its second fund; and we at AgFunder are launching a new agritech fund, initially targeting $20m, which we expect to close in Q4 of this year.

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