Upstream records: Agrifood&Tech Investment in 2020

Elena Vardanian
5 min read

It’s been a blow-out year for AgriFoodTech. According to a Global AgriFoodTech report by AgFunder, startups raised $26.1 billion in 2020, a 15.5% year-over-year increase, which expects to increase to more than $30 billion as new 2020 deals come to light. For the first time in seven years Upstream investment surpassed Downstream investment. However, Downstream investment activity was spotted in Food delivery (especially eGrocery), for obvious reasons Cloud Retail technologies supporting at-home dining got a boost too. As to trends, the food industry moves towards food alternatives, especially protein.

Geography of the deals

Investment in US companies regained market share in 2020 to 37% of deal activity and 51% of dollars committed (up from 34% and 44% respectively). US startups raised $15.45bn in 2020, with a 56% year-over-year increase and 30% rise in number of deals compared to 2019, regaining global market share. This situation has reversed the trend of the last few years where other countries attracted more substantial investment from domestic and overseas investors as AgriFoodTech ecosystems developed (1).  

According to VenturePulse, China lost market share in deal activity terms, with a 21% drop in the number of deals. China landed on the number two spot thanks to large Downstream deals, particularly eGrocery, driving a 58% year-over-year increase in investment totals.

Deal activity and investment in Europe remained relatively unchanged, with just a slight 5% increase in the number of deals closed. The UK is a leader of the European region despite Brexit-related uncertainty.

Forecast for this year and beyond

While there is a lot of uncertainty for AgriFoodTech, AgFunder’s Global AgriFoodTech report offers a few predictions for 2021. One of them is the trend for early-stage businesses to go public via Special Purpose Acquisition Companies (SPACs). They expect that SPAC can help to build new high-growth food companies and drive early stage investment, creating incentives for innovation and entrepreneurship.

Plant-based products become more and more popular and mainstream, and there is no doubt that Animal Agriculture will shift towards regenerative practices, carbon neutrality and premium offerings relatively soon. Dairy will retain a strong position as farms work towards carbon neutrality. In emerging markets, animal proteins will remain dominant, owing to price and traditional farming practices.

Investments flow

Downstream activity decreased, driven by a 15% decline in Retail & Restaurant tech deal activity and a nearly 50% drop in dollar funding to Home & Cooking tech (1). For all the momentum the pandemic gave, funding to the online grocery sector would not look so attractive if it weren’t for Chinese companies and consumers. In all, China’s eGrocery companies raised $2.9 billion in 2020 — 57% of the category total last year.

While investors continued to support important Downstream categories such as eGrocery, they became more comfortable with upstream food production categories, many of which had Covid-19-related appeal.

The $15.8 billion invested into Upstream was driven by the Midstream Tech and Innovative Food categories, which raised $5.3 billion and $2.3 billion respectively. Meanwhile, investment in Innovative Food startups doubled year-over-year and deal activity grew nearly 60%. While losing market share to both categories, Ag Biotech still grew significantly in its own right, closing nearly 70% more deals and raising 60% in dollars (1).

Top companies
Top Upstream deals
Ag Biotech
Benson Hill, Greenlight, Biosciences, Pivot Bio
Gene editing technologies continue to dominate the leaderboard as biologicals face efficacy challenges. Pivot Bio’s fertilizer reducing microbes remain the one to beat. Some startups turned their attention towards Covid-19.
Novel Farming Systems 
Infarm, InnovaFeed, Plenty Inc.
The insect farming sector had a big year, closing multiple growth—stage rounds, while Infarm’s differentiated indoor farming business model enabled it to close a debt and equity first close of its Series C.
Innovative Food
Impossible Foods, Memphis Meats,
Mosa Meat
The top deals in this table were made by some of alternative protein’s very first movers.
Midstream Tech
Lineage Logistics, Samsara Networks,
Inc Zymergen
Companies focused on increasing efficiency in the supply chain saw some huge rounds including Lineage Logistics’ whopping private equity round for its network of cold storage facilities and automated warehouses around the world.  Sustainable ingredients suppliers also featured like Zymergen, Geltor, Ginkgo Bioworks and Apeel Sciences.
Agribusiness Marketplace
Indigo Farmers,   Business Network, Indigo
Agribusiness marketplaces gathered pace during the year as an essential means for farmers to access inputs and markets for their produce. Indigo made progress with its carbon trading market. Farmers Business Network also entered the carbon market in 2020.
Farm Management SW, Sensing 
XAG, ICEYE, DroneDeploy
It was a challenging year for early-stage startups in this category as investors flocked to less risky, easier to understand areas of AgriFoodTech.

The Bottom Line

According to a Global AgriFoodTech report by AgFunder, startups raised $26.1 billion in 2020. For the first time in seven years investment upstream surpassed downstream investment. Upstream investment increased 68% year-to-year to $15.8 bn, surpassing downstream investment ($14.3bn) for the first time on record. Downstream activity decreased, driven by a 15% decline in Retail & Restaurant tech deal activity. While investment in Innovative Food startups doubled year-over-year and deal activity grew nearly 60%.