The start of food and agriculture has set a record of $ 22.3 billion in grants last year – more than double the amount collected in 2019, according to a new study by the Finnish Ventures.
As people were stranded at home during the Covid epidemic, demand was exacerbated by e-commerce purchases, such as food kits and delivery.
The country also saw how the problem could affect the normal production, processing and distribution of food. Arama Kukutai, a partner in the Finnish, said that inspires interest in growing food in controlled areas, such as standing farms, where yields are predictable.
The introduction of food and agriculture has set a record of $ 22.3 billion in grants last year – more than double the amount collected in 2019, according to a new comprehensive study by Finist Ventures and Pitchbook.
The Covid epidemic has encouraged investment in these industries rather than delayed them, according to Arama Kukutai, a partner of Finnish Ventures, which has only invested in agriculture and agriculture since its inception in 2005.
With people stranded at home due to health and travel restrictions, demand has been found for e-commerce food, such as food kits and delivery.
“2020 was the first year since 1994 when the restaurant share of food was lower compared to home,” said the Finnish study.
In response to these changing mechanisms, food technology support has gone into related services.
Food technology companies have collected nearly $ 17.3 billion from all 631 annual deals. Sixty-eight percent of that goes to commerce and shipping. Food kits alone raised $ 6.2 billion, and e-commerce companies earned $ 5.3 billion within the tech sector. The biggest deal last year was $ 800 million in funding for an app to buy a Chinese food group, Xingsheng Youxuan.
The country also saw how the problem could affect the normal production, processing and distribution of food. Farmers had to dispose of milk and produce what could not be shipped or stored, while on the other hand, food made of bricks and mortar had empty shelves after the purchase.
Kukutai said that has driven interest in food growth in controlled areas, such as stagnant farms, where yields are predictable. These indoor farms are often built near urban areas where the production they grow will consume much.
Agtech companies raised about $ 5 billion in 416 deals by 2020. The top 10 major deals in agricultural technology include four cycles of domestic farming businesses, ranging from $ 140 million per Plenty to $ 203 million for Revol Greens.
Venture’s capitalists are always attracted to “agrifood.” Investors historically saw these businesses as needing large sums of money and unlikely to make huge profits, although there were some unusual exceptions, such as Trinity Ventures investment in Starbucks in the years before its 1992 IPO.
In 2011, $ 3 million in funding for agricultural technology companies received 42 small deals, while $ 1 million in funding went to food technology companies for 22 deals.
But that era is over.
Historical deals following the lead of Starbucks have attracted many investors to participate in these sectors. For example, Monsanto acquired a climate data company Climate Corp. in 2013 more than $ 1 billion, and recently, Beyond Meat created its own public market. The plant-based meat company has seen its shares increase by more than 180% since receiving an IPO in 2019.
Finistere was the first supporter of Plenty, and some of the starters of their portfolio today work to make board meat from mature cells (Memphis Meats), monitor nest health in nesting sites without disturbing any bees (Apis), and help farmers identify threats to their plants early, using sensory drones and data analysis (Taranis).
CNBC asked Kututai what trends are likely to clear or decline in 2021 where food technology and agricultural technology are affected.
He worked for decades in agriculture before becoming an investor, and grew up in New Zealand, where water pollution and cattle production are a growing problem. He said 2020 could be the year we got the “high cow”.
The investor expects funding for other protein and dairy products to remain steady throughout 2021. “Milk and meat are still important,” he notes. “But the way we produce has a huge impact on the environment.”
Other protein startups have increased 2.6 times more than they did in 2019, closing $ 3.1 billion in funding by 2020 compared to $ 858.7 million last year.
Similarly, plant-based milk is increasing in popularity, with consumers thousands of years and younger reducing the purchase of traditional milk and beef, poultry and pork for natural and health reasons.
Strong consumer demand should help keep investor interest and commitments high and lead to attractive integration and growing products, predicted Kututai.
Swedish vegan maker Oatly recently applied to go public. Oat-based company milk is used as one of the dairy products made by Starbucks, and former Starbucks manager Howard Schultz was the first investor.
Finistere and Pitchbook’s 2020 Agrifood Tech Investment Review also note that new types of proteins are active, made up of cells grown on board, rather than proteins from plants or insects.
On the contrary, the investor said he expects the economy to decline slightly in the second half of 2021 in many food, commerce and retail businesses. His own fund has supported players in this space, including Good Eggs and Fridge Farmer.
Online ordering practices will continue to thrive in the aftermath of the epidemic, now that people are accustomed to it, Kututai said. But many businesses in this segment have been able to pull money forward by 2020 to meet rising demand. They should be able to move on to the next year of operation without much fuss.
Instead, expect potential IPOs, SPACs or M&A deals among some of these by 2021.