Building on recent scientific breakthroughs and driven by an ever-growing global population, agricultural technology is growing at an unprecedented rate. Investor interest has kept pace with this progress, reaching a record $5.7 billion in 2021 and remaining high in 2022.
There are a few factors behind ag tech’s rapid rise. The COVID-19 pandemic exposed problems with both the food supply chain and agricultural practices. On the consumer side, demand for food grown using environmentally friendly agricultural practices increased. Finally, ag tech startups have benefited from scientific and technological advances in fields like genetic engineering, robotics, AI, and microbes.
Increasingly, ag tech investor trends are focusing on the themes mentioned above. Biotechnology startups that focus on sustainable, scalable, and novel ways to combat pesticide resistance, promote crop diversity, and optimize soil resilience are seeing significant growth.
In 1994, the first genetically modified tomatoes hit grocery stores in America. Since then, genetically modified crops developed to protect against insect damage, increase productivity, and resist plant viruses have fed billions of people globally.
Now, gene-editing tools like the CRISPR-Cas9 can quickly “tweak” DNA sequences—allowing scientists to pull out beneficial traits using crops’ own DNA. Gene-editing has several advantages over genetic modification: it is faster, more accurate, and simpler, as it does not introduce foreign DNA into plants. Ag tech is quickly embracing CRISPR-based innovation: crop improvement companies like Benson Hill have already incorporated gene-editing technology into their portfolios.
In keeping with ag tech’s pivot from synthetic agrochemicals, funder interest in biofertilizers and biostimulants is rising. Pivot Bio, a company which specializes in microbial nitrogen fertilizer, received $430 million in 2021.
For decades, farmers have relied on synthetic chemical pesticides as a staple in their crop protection efforts. However, these traditional pesticides can damage crops and other non-target organisms. Additionally, pests can evolve to resist the chemicals, rendering some synthetic chemical pesticides less effective over time.
The harmful effects of these traditional pesticides have spurred research into effective, affordable, and targeted alternatives. New advances in biopesticides—pesticides made from naturally occurring materials—may offer answers.
RNA-based pesticides can target specific pests without the risk of resistance or damage to crops. Although this is not a new concept in crop protection, previous generations of RNA-based pesticides were extremely expensive and time-consuming to produce.
This is no longer the case, however. A new generation of RNA-based pesticides developed by ag tech startups like GreenLight Biosciences and RNAgri Inc. can now be mass-produced inexpensively and efficiently. Furthermore, as conventional pesticides are still in short supply and high demand, it is likely that interest in biological alternatives will continue to build.
According to a recent study, cutting global consumption of red meat by just 20 percent could halve deforestation rates. Even a few years ago, many of us might have balked at the idea of swapping out the ground beef in our burger with a meat substitute. Now, companies like Impossible Foods’ “taste-alike” red meat substitute have made reducing meat consumption a much more palatable goal.
And the alternative protein market is still growing. In 2020, $3.1 billion went to alternative protein development. Although plant-based protein received the most attention, lab-grown cultivated meat and vat-grown microbial proteins produced via fermentation are quickly gaining ground.
As concerns around climate change and food insecurity mount, agriculture and ag tech must continually evolve in response. This is reflected by the industry’s increasing interest in technologies linked to sustainability, efficiency, and productivity.