Agtech investment has been the subject of renewed focus from investors, but can this technology deliver on its promise to transform the agri-food sector?
Investment
Think agri-food investment and for most thoughts of old-fashioned fixed assets such as land, grain elevators, heavy processing plants or fleets of vehicles are conjured up. Agri-food and technology investment are seldom synonymous in investors’ minds. This perception defies reality as the agri-food industry has long been at the forefront of developing and adopting new technologies. Now investors appear to be increasingly alive to the opportunities agtech offers.
Take for example ChemChina’s recent $43 billion bid for Syngenta, the world’s largest agri-chemical company. The deal is reportedly motivated by the promise Syngenta’s seed and agrochemical technologies offer towards addressing Chinese food security fears.
Mega deals are not the sole focus of agtech investment. According to a recent AgFunder report the food and agriculture technology sector attracted US$4.6 billion in investment in 2015, almost doubling the previous year’s total (US$2.4 billion), and a staggering 920% increase on the 2012 figure. Average ticket size tracked by AgFunder amounted to just US$6.8 million.
Potential Bubble?
While investor’s appetite for the food & beverage sector shows no sign of abating, should we be concerned an investment bubble is forming?
According to KPMG, a record breaking US$128.5 was invested in venture capital backed companies in 2015. Despite growing by a factor of 9 in just three years, agtech still attracted just 3.6% of this investment – a disproportionately small share of investment, in our view, given the myriad of potential applications for technological innovation in the agri-food sector.
Make informed agtech investments
The agtech industry is booming, spurred on by promises of greater productivity, sustainability, and return on investment. As more and more investors engage with this growing sector, it is crucial that they do so with a comprehensive understanding of the agtech landscape to avoid potential investment pitfalls.
At Farrelly Mitchell, our agtech consultants deliver actionable data and recommendations on the most effective agtech investments within the industry. We have a deep understanding of the latest technology & innovation revolutionising the industry, and we can identify suitable agtech and digitalisation tools to maximise your productivity and efficiency. Contact us today to embrace change and transform your operations.
