A growing population demands better quality food and more eating options (such as veganism, the emerging field of alternative proteins – plant-based meat substitutes grown from animal cells – or certified organic products from the farm to the fork). People prefer to receive high-quality products at home without delay.
The Good Food Institute estimates that by 2050 the industry will have to feed some 10 billion people while being forced to meet global emissions, pollution, and deforestation benchmarks. One example: according to the Institute, industrial animal agriculture is responsible for 20% of global greenhouse gas emissions.
AgTech is much more than a line of business linking agriculture and technology. It is a key to the future of society. Innovation enhances yields, efficiency, and profitability, which translates into more food of higher quality, produced more sustainably and at more affordable prices. New foods can even be created in line with the trends seen around what is known as “new food.” For this reason, at Making Sense we are committed to consolidating our position as technological partners of companies in the sector to accompany them in this innovation process so that they can obtain the maximum possible value from their data.
The numbers behind a leader
The global number of Agtech & New Food Series A deals and the deal size have largely held steady, with small variations year on year. Fewer startups are receiving later-stage investment, but those receiving Series B+ funding are raising much larger rounds. Within North America, the amount of VC investment in Agtech & New Food almost doubled from $5.7 billion in 2020 to $9.3 billion in 2021, while deal count declined by 36% to 370 deals. North America accounted for 70% of Series B+ deals and 53% of exits.
The world’s leading AgTech ecosystem is precisely in North America: Silicon Valley. The other top Agtech and New Food Ecosystems are New York, London, Tel Aviv – Jerusalem and Denver – Boulder. All these data are taken from the very complete and accurate Global Startup Ecosystem Report (GSER): Agtech & New Food Edition, produced jointly by Startup Genome and the Global Entrepreneurship Network.
Silicon Valley is at the core of innovation. The same report estimates that the total entrepreneurial ecosystem in that region stands at USD 1.029 trillion (versus USD 13.68 billion global average), while the median seed round obtained by a startup there is USD 1 million, compared to USD 480,000 that similar companies in other corners of the world usually obtain.
Reasons for success
Silicon Valley’s position as a leading AgTech ecosystem is based on several pillars. Beyond the privileged role in terms of access to funding, the area also has one of the best-developed legal systems and business rules to foster innovative talent.
But that’s just the beginning: companies in the Valley are characterized by an open culture and by their ability to form diverse and inclusive teams, a key element when it comes to the future of food, as different inclinations, habits, customs, and restrictions appear among their own collaborators, which are then turned to reinforce innovative projects. This is key: startups that create vegan products (food and other items) and non-cultivated meat alternatives overtook cultivated meat in terms of deal amounts in 2021.
On the other hand, Silicon Valley is a global leader in most of the key technologies at the heart of AgTech innovation, such as artificial intelligence or big data, which are applied to multiple solutions for optimizing land use, predicting weather scenarios, anticipating variations in demand to optimize production or developing intelligent machinery to perform automated tasks, to name just a few examples. Again, this highlights the need for a technology partner to accompany these initiatives, maximize the value of the digital proposition of these organizations and help obtain the best possible deals.
Silicon Valley is consolidating its position as the epicenter of global technological and social change. Its next goal is to improve food quality, volume, and sustainability.