Agrifood companies drew at least $26.1B in investments in 2020, report finds
Dive Brief:
- Companies in the agrifood space raised at least $26.1 billion in 2020, a 15.5% year-over-year increase above 2019, according to a new report from AgFunder. When all pending deals come to light, the total fundraising for the space in 2020 is estimated to be closer to $30 billion, a 34.5% increase over 2019, the venture capital fund wrote.
- Companies providing upstream services — innovative food, novel farming, ag biotech, farm management software, robotics and equipment and agribusiness marketplaces — received a projected $15.8 billion in investments through 1,950 deals. Those providing downstream services — in-store restaurant and retail, online restaurants and meal kits, e-grocery, restaurant marketplaces and home and cooking tools — received a projected $14.3 billion in investments through 1,142 deals.
- Although there has been a significant amount of business turbulence during the COVID-19 pandemic, food and food tech are seen as reliable and safe places for investment. According to a November report from Finistere Ventures, the first three quarters of 2020 saw more investment in food tech than all of 2019. Last year was the first time since 1994 that consumers spent more on food at home than dining out, according to National Restaurant Association data cited by Finistere.
Dive Insight:
In a year where very little was known, one thing was certain: People need to eat. The technologies, products and support systems represented in AgFunder’s report all have the same long-range outcome of feeding the world. And it’s apparent that investors wanted to ensure companies that were working to revolutionize the food system would be able to continue their work.
Looking across all sectors in AgFunder’s report, the largest amount of funding — more than $20 billion — went toward late-stage and growth-stage funding. This money went to companies that had previously established themselves and were seeking funds to continue to grow, expand and innovate. Companies in growth stage — with Series B and C funding rounds — likely saw 2020 funding increase more than 50% above 2019. Meanwhile, there was more muted growth on funding toward early stage companies, potentially showing a hesitancy to invest in something new during the coronavirus pandemic.
In the innovative food category, most of the top investment recipients were companies that have become known as leaders in emerging spaces. Impossible Foods took both the No. 1 and No. 2 spots, with the plant-based meat company’s $500 million funding round last March and $200 million funding round in August. The third highest investment was last January’s $161 million for cell-based meat company Memphis Meats, which is hoping to be among the first to sell cultured meat in the United States.
Rounding out the top five is fermented dairy protein maker Perfect Day Foods and The Not Company. Perfect Day received a $160 million investment in July. Its dairy proteins are being used in several brands of ice cream, including Smitten, Graeter’s and Nick’s, as well as in Brave Robot, a launch from affiliated CPG The Urgent Company.
Arama Kukutai, co-founder and partner at Finistere Ventures, said in an interview this past summer that funders have a vested interest in companies they have supported. Providing them with more funds during the pandemic not only helped them achieve their preset milestones, but also let them continue with innovation — and be on track for future launches.
While all of these investments may not have paid off immediately, some did. Impossible Foods does not share its sales information, but saw demand take off as more consumers embraced plant-based meat during the pandemic. The company expanded its grocery availability 77-fold in 2020, and plans to double its R&D department in the coming year. Perfect Day is moving into more CPG products, with Brave Robot ice cream slated to be available in 5,000 stores by Earth Day. And Memphis Meats is on track to become a major player in the up-and-coming cell-based meat segment after it is granted regulatory approval from the U.S. Food & Drug Administration.
Even as the pandemic eases and medical experts are hopeful that life could return to normal in about a year, the strong agrifood investments will likely continue. While other business ventures may also rebound, the AgFunder report points out the issues these agrifood companies are solving — ranging from efficient production to better food access — will continue to loom large in society.