Plant-based proteins, food tracking technology, sensors – the number of innovations in the agri-food industry keeps on growing. But which ones will triumph (or lose relevance) in 2020?
A new report by AgFunder and Idea 2 Scale reveals a set of predictions for agri-food tech investment in 2020. Thee conclusions are based on surveys and interviews with 50 international investors in this space.
1. Biotechnology leads the way
Although alternative proteins are some of the most popular innovations in the agri-food sector, ag biotechnology was chosen by 58% of the investors who took part in the survey as the most interesting to invest in.
Ag biotechnology consists of technologies used in agriculture that involve chemical or biological processes – including “breeding, genetics, microbiome research, synthetic chemistry, and animal health,” according to AgFunder.
In 2018, this segment had received $1.5B in investment. And the expectation is that it will grow by about 10% per year in the coming years.
2. AgTech ahead of Foodtech
“There is a general preference for upstream technology (AgTech), over downstream technologies or FoodTech,” said Danny O’Brien, CEO of Idea 2 Scale. This assertion is based on the agri-food tech segments chosen by investors as the most appealing for 2020.
The categories that investors are feeling the most optimistic about for 2020 are:
- Ag biotechnology;
- Innovative food, which includes alternative proteins;
- Farm management software, sensors, and IoT, which got a vote of confidence from 46% of investors;
- Midstream technologies – those that tackle “the portion of the supply chain between the farmers and the retailer, including traceability technologies … and robotics for processors,” according to AgFunder.
3. Innovative food on the rise
“Innovative Food is a relatively nascent space for startups but based on consumer demand and current publicity for plant-based and alternative proteins, we wouldn’t be surprised to see Innovative Food emerge as the front runner of these three,” claim the report’s authors.
This category was chosen by 56% of investors as an interesting investment opportunity, which places it in second place on the list of most appealing agri-food segments.
What exactly are these alternative proteins? The buzz has mostly been about “plant-based meat”, such as the Impossible Burger (which is already available on Burger Kings across the US), and lab-grown meat. However, this category also includes cultured dairy, cannabis-based food products, plant-based seafood and others.
4. The fall of eGrocery and online restaurants
Online restaurants and meal kits, along with eGrocery, are likely to lose relevance in 2020. These two categories were chosen by investors as the most overhyped – online restaurants and meal kits in particular.
One of the most famous companies in this space is Blue Apron, which delivers ready-to-cook meal kits. Not only did its share price drop tremendously, but it’s also lost about half of its clients.
In 2018, eGrocery had received $3.6B in investment, but 2020 will be different. 40% of investors now see it as overrated.
The main reason for this shift? The continuous threat of Amazon, which has been investing in the sector. Proof of that is its acquisition of Whole Foods, its investment in meal delivery service Deliveroo, and the development of Amazon Fresh, a grocery delivery service. “It’s extremely difficult for others to compete in this space,” the report concludes.