The Booming Industry for Investors – AgTech
July 18. 2022
AgTech is a sector of the economy that includes numerous approaches to practically all stages of food production. It’s the use of technology, particularly software and hardware, in the farming industry.
According to the World Bank, the worldwide agriculture market is worth nearly $8 trillion. As a result, the use of cutting-edge technology in this industry has significant effects on people, the environment, and investors.
Q2 2022 AgTech Venture Capital Investment
According to the research of Crunchbase data, 193 AgTech firms raised $2.78B in total during the previous quarter. According to Kyle Welborn of CropLife, this indicates a 27 percent decline in investment and a 21 percent decline in deals from Q1 2022. Six AgTech companies exited the market last quarter, all through M&A deals. In comparison to Q1 2022, this is a 54 percent decrease in the number of exits.
Key Outcomes from Q2 2022
While the whirlwind growth was seen in the AgTech industry last year which had the concentration of investors to invest or explore an exit, this year the focus is on the pathway of acquiring profits. This won’t alter their go-to-market strategy for certain firms. Some businesses, however, may need to shift their attention quickly from simply demonstrating growth to demonstrating that they have a successful business strategy.
Future of Tech
As digital technology is utilized more frequently in agriculture, more data is being gathered by sensors, drones, and satellites that can all be analyzed. The information contains details on soil moisture and condition, humidity, temperature, and the health of plants or livestock. After that, AI can learn from every piece of data it receives, gradually improving its ability to predict outcomes. The intention is for farmers to use AI to improve decision-making, leading to a better crop.
The primary goal of blockchain is to increase the efficiency and transparency of supply chain operations and food traceability and to address problems like food fraud.
The public listings rather than M&A deals tend to yield the highest returns for founders and investors. The significance of having the option to be acquired will increase due to the absence of new public offerings this year. The average AgTech M&A departure was $131M, while the median price was $61.5M, according to an examination of 18 AgTech M&A transactions since 2017 where the acquisition costs have been made public. This is significantly less than the typical AgTech startup’s market cap at the time of listing, which has been $2.5B since 2017.