Australia’s agrifoodtech ecosystem fares better than Asia-Pacific and rest of world during VC downturn
Investment in Australian agrifoodtech startups dropped 24.5% year-over-year to $317 million in 2022, according to a new report from leading agrifoodtech venture firm and research platform AgFunder, in collaboration with the Bill & Melinda Gates Foundation, Omnivore and AgriFutures Australia.
The decline was less pronounced than across Asia-Pacific where investment dropped 58% compared to 2021, and globally where it fell 44%.
There were still some sizeable Series A rounds in Australia in the second half of 2022, when funding started to fall precipitously in many markets: Cultivated meat startup Vow bagged $49 million in November and precision fermentation specialist Nourish Ingredients secured $29 million.
Broadly across the region, downstream food delivery and restaurant startups, once the darling of the region’s agrifoodtech ecosystem, fueling tens of billions of dollars of investment, are no longer so attractive to investors.
The new star of the ecosystem is upstream innovation, and a mega $73 million Series B for Australian biologicals startup Loam Bio at the start of 2023 is a great example. The company which makes seed coatings that supercharge plants’ ability to capture and store carbon in the soil gathered high profile investors Lowercarbon Capital and Acre Ventures.
While total funding to the farm-to-fork agrifoodtech ecosystem dropped 58% year-over-year (YoY) to $6.5 billion in 2022 from the record-breaking $15.2 billion raised in 2021, investment in startups operating upstream increased 24% YoY. This increase appears to be continuing in 2023, according to preliminary data on 2023 funding flows.
This is good news for the 450 million smallholder farmers producing about 80% of the region's food. For the first time in years, upstream funding, which provides technologies to farmers and primary food producers, overtook downstream investment. The former raised $3.2 billion in 2022 versus the latter's $2.7 million, according to the report.
Bright spots for Australia in 2022 were Bioenergy and Biomaterials, Farm Robotics and Mechanization and Midstream Technologies which all saw small increases. And while the Innovative Food category, which includes alternative protein, experienced a 30% year-over-year decline in funding, it is still the largest bringing in nearly US$100 million over the year, buoyed by a US$50m round for Vow, one of the world’s leading cultivated meat companies, at one of the worst times in fundraising history.
Midstream Technologies was the next biggest category raising over $37 million as another global leader AgriDigital closed a $17.8 million round in May to take its digital grain management platform to the US.
Other Australia key insights include:
Australian agrifoodtech startups closed 38 deals in 2022, totaling US$316 million in investment
In H1 2023, the country closed $146 million in agrifoodtech funding.
Australia is in fifth place behind India, China, Indonesia and South Korea in regards to investments by country. The most active agrifooodtech categories in Australia in 2022 were: Innovative Food ($98m), Novel Farming Systems ($39m) and Farm Management Software, Sensing & IoT ($26m).
Other key insights from the report include:
Ag Biotechnology was the biggest upstream category in 2022, raising $813 million. China’s Zhongxin Breeding, a startup in this category, secured the year’s largest deal with its $327 million seed round.
Downstream's biggest category was once again eGrocery, which raised $1.6 billion in funding.
India eGrocery startup Blinkit's $150 million raise was the largest downstream deal.
Startups in Midstream Technologies raised $620 million in 2022, with big checks going to India's Waycool and China's Mojia Biotech.
Despite fewer deals, dollar investment in 2022 increased year-over-year in Innovative Foods; Ag Biotech; Farm Management, Software Sensing & IoT; Novel Farming Systems; and Farm Robotics.
India ($2.3 billion) overtook China ($1.3 billion) in 2022 as the region's top country for agrifoodtech investment, followed by Indonesia ($716 million) and South Korea ($461 million).
Southeast Asia startups funding reached $1.7 billion.
In H1 2023, Chinese startups have raised the most funding, with $861 million. India ($712 million) is next, followed by Hong Kong ($400 million) and Australia ($146 million).
Debt, early and growth-stage deals numbers have increased steadily since 2018; late-stage funding declined from 2021.
This report was produced by AgFunder in collaboration with the Bill & Melinda Gates Foundation, Omnivore and AgriFutures Australia.
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About AgFunder
AgFunder is one of the world’s most active foodtech and agtech VCs. We’re rethinking venture capital for the 21st century. Born in Silicon Valley in 2013, we use technology, media and our global network to invest in and support transformational founders and technologies. With the world’s only truly global agrifoodtech investment portfolio, we’ve invested in more than 60 companies across six continents.
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AgFunderNews reports on the evolution of the global food and agriculture system. By going beyond the headlines, we analyze the people, companies and technologies aiming to improve human and planetary health.
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