If you’re reading this, you’re probably looking for investment opportunities – and considering the AgTech industry. (Which is to say, digital technology applied to agriculture.) As you’ll learn by the end of this article, startups in this sector are increasingly regarded as smart investment opportunities.
Without further ado, here’s why you should invest in AgTech.
1. AgTech is attracting more investors, but the space isn’t crowded – yet
According to AgFunder’s latest agrifood tech investment report, investors’ appetite for AgTech is growing every year.
In 2018, investment in AgTech startups (along with supply chain startups) registered a year-over-year growth of 44% – the greatest acceleration of growth the segment has ever registered. All in all, between 2013 and 2018, investment in this space grew $5.4 billion.
Also, let’s not forget that the past few years have seen some major acquisitions of AgTech companies by industry incumbents. John Deere acquired Blue River Technologies and Monsanto bought The Climate Corporation. If that’s not a sign of growing interest in AgTech, what is?
2. AgTech can help feed the world
If you’re passionate about ensuring a sustainable future for humanity and live by the phrase “put your money where your mouth is,” then this reason should appeal to you.
The predictions for the world’s future food security aren’t great: 2050 should see the population grow to 9 billion, which will be accompanied by a 70% increase in food requirements, according to FAO. At the same time, climate change and pollution are limiting access to water.
Simply put – if we want to feed the world, we need to grow more food with fewer resources.
3. Farming is ripe for disruption
How do you know if an industry is about to be disrupted? According to experts, there are a few signs: consolidation; a widespread, clear need for change; and prevalence of old technology.
Agriculture fits into all of those. The industry is dominated by big players at many stages (think Bayer, Monsanto, Cargill, Syngenta).
As for need, we covered that in the reason above. But let’s not forget the farmers. Do they need AgTech? Yes. Many farmers work with thin margins and constantly face risks that can jeopardize their livelihood. AgTech can step in to help them run more profitable businesses and protect their crops.
Incumbents are still shifting focus from old technology into AgTech and adoption among farmers is growing but still limited. McKinsey’s reports on industry digitization show this modest evolution. In 2015, agriculture was the least digitized industry of all; in 2018, it was still a “digital novice.” But it was identified as having “above average” potential for automation.