Private sector investment into an industry is a key measure of its success. Two major reports published this month show the UK forging ahead in terms of agri-tech investment, after a quieter period where companies focussed on validating their technologies and building value before seeking finance.
Last year, we discussed the findings in the 2018 global AGFunder report that UK agri-tech investments in 2018 were down as compared with previous years. We argued that this was a matter of timing of the business cycles and did not reflect a decline in appetite or growth opportunities in the sector.
Happily it appears we were right. Those businesses were incubating, strengthening and growing and in 2019 entered into a series of successful deals, securing a big slice of the global investing action.
The most recent AgFunder report therefore shows a much more positive picture, with the UK resuming its position as the leader in the region, and the fourth biggest globally, with $1.1 Billion raised across 112 deals. Global agri-food tech investment grew by 94 % in Europe to $3.3 billion.
Some clear trends are emerging. Sustainability is fast becoming the 21st Century “megatrend” and investing for positive impact is attracting those investors focussing on environmental and social issues. The UK’s pending Agriculture Bill will no doubt be seen as a key driver to continue this trend.
Although food delivery is the strongest category in Europe, the UK is seeing diversification with start-ups in areas such as Novel Farming Systems; alternative proteins, fintech for agriculture and agribusiness market places. We are also seeing these kinds of companies growing across our ecosystem, including our members Entomics, Yagro, CRM Agri and Stable.
While investment into downstream food technologies such as restaurant market places fell for the first time since 2016 this was mostly due to the maturity of the sector and it being over saturated.
However, this is driving innovation by the big players into new delivery options. A new category of ‘cloud retail infrastructure’ is emerging and this includes ghost kitchens and last mile delivery services. A sector that has potential to grow with the current uncertainty that will see consumer looking for experiences that provide alternatives to eating out.
In contrast the upstream venture capital trend was the strongest on record.
The big boom was in alternative proteins and the picture was skewed by a number of key players in the ‘Innovative Food’ category such as Impossible Foods and Beyond Meat, which had a valuation of $9billion at one point during the year
Tech Nation Report
These findings were also reflected in the recent UK Tech Nation report. This report also uses investment (absolute amounts as well as trends) as a measure of success and shows that UK tech companies aligned to United Nations Sustainable Development Goals have raised £2.2bn over the last 6 years, the highest in Europe.
Tech clusters Cambridge, London, Bristol, Edinburgh and Oxford are among the top 20 European cities highlighted for tech investment and the report emphasises the power of digital connectivity as an engine for growth. Artificial intelligence and robotics features strongly as future market opportunities.
Two of our members – Small Robot Company and KisanHub feature in the report. Small Robot Company combines both AI and robotics to create a suite of autonomous vehicle technologies that can deliver precision agriculture to individual plants. KisanHub uses complex algorithms harnessing field and crop insights to connect food companies to the data sources they require and supports greater transparency of the supply chain from seed to sale and field to factory.
Both companies are highlighted as “ones to watch” in the TechNation report.
Timing and Confidence – Key to Success
As we are all told frequently by financial institutions, the value of investments can go up as well as down, and past performance is no indicator of future success. But as the last 3 years have shown, timing is critical when taking a “snapshot” using investment deals as a metric. Avoiding a “bubble” is also crucial and over-valuation of companies can lead to their rapid demise and send shock waves through the investor community, reducing the appetite for risk and future investments.
But supporting the future trends around more sustainable, climate-friendly investments that meet the UN’s SDGs are surely a good bet by anyone’s standards.