The third quarter of 2024 marked of a significant milestone in agtech venture capital activity, says Pitchbook’s analysis, with two consecutive quarters of increased deal values signalling a recovery from the lows of early 2024.
VC funding for the sector is on the rise, with total deal value up 15% in Q3 from the previous quarter – hitting $1.6 billion across 159 pacts, according to the data firm’s research.
But while deal value grew, deal counts continued to decline, falling 17.6%. Seed and early-stage agtech startups achieved record deal sizes, although fewer total deals are being closed.
Investors are still struggling to realise returns
Exit activity remained muted in the quarter, with 10 total exits for VC-backed agtech companies.
The impact of the Federal Reserve’s rate cut has yet to be seen but may spur new activity in an exit market that has struggled for several quarters.
Median pre-seed/ seed deal sizes in 2024 have risen 92.8% from last year, surpassing peak levels achieved during the zero-interest-rate period, while early-stage deal sizes are up 100% year-on-year. Late-stage VC deals saw a 13.1% increase in median deal size due to limited exit opportunities.
Despite the challenging exit environment, valuations for agtech startups of all stages increased in 2024, following broader VC market trends.
Yet many late-stage startups that have remained private while awaiting future exit opportunities have struggled to maintain their peak valuations. Knowde and MycoWorks both closed down rounds this quarter.
Cautious optimism
Alex Frederick, a senior emerging technology analyst at PitchBook, believes it’s premature to declare a full recovery in agtech VC investment. “Cautious optimism is warranted”, he tells AgTechNavigator.
Deal values have increased for two consecutive quarters, despite declining deal counts. This trend, he says, suggests “a flight to quality”, with investors becoming more selective and conducting deeper due diligence in the current economic climate.
The uptick in VC funding can be attributed to several factors, he adds – stabilising valuations after the market volatility of recent years, allowing investors and founders to find common ground; a focus on larger investments in companies with the strongest potential; and a general shift towards quality over quantity in deal-making.
“This selective approach has led to fewer deals overall, but with larger average investment sizes, indicating a more measured and strategic deployment of capital in the agtech sector,” he says.
Back in the game?
Despite the fewer total deals, the Pitchbook report notes a resurgence in investment underscores growing investor confidence in the sector’s potential to address critical challenges in agriculture and climate change.
The industry demonstrated a strong focus on sustainability, carbon removal, and technological innovation during the quarter, with several key developments highlighting these trends.
And agtech is cultivating even more. The report highlights companies specialising in soil health. Technologies such as biochar and enhanced rock weathering are gaining traction as they improve crop yields, sequester carbon, and boost soil lifecycles.
Colossal Biosciences, a biotech firm using genetic technology to revive extinct species and promote conservation, secured the largest agtech deal of Q3, raising $162.6 million and achieving unicorn status with a $1.6 billion valuation.
Other notable deals include autonomous electric tractor developer Monarch’s $133 million Series C and plant biotech company Switch Bioworks’ $23.6 million seed round.
Aquaculture is making waves
Among the agtech subsegments, aquaculture saw the largest increase in deal activity, with 15 deals in Q3 compared to Q2’s seven. Portuguese clam farm operator Oceano Fresco secured the largest aquaculture deal, raising $18.4 million in late-stage VC funding.
