Red Hot: Agriculture & Food Investment Sets Record Pace in 2014

Precision Agriculture has burst onto the scene as one of the most discussed sectors of 2014. This is due in no small part to the recent commercialization of multiple disruptive technologies. Technologies such as drones, formerly limited to military use, are now being deployed on farms to help greatly increase production. Large corporations and venture investors have begun to notice the immense opportunities involved with mitigating the effects of a changing climate and an ever-growing need for better yields.AgInvestment

Total 2014 Q1 venture investment in companies covered by our Agriculture and Food sector was $230M, over double the amount from 2013 Q1. In a sign of the sector’s increasing momentum, the dollar amount of deals made in 2014 has already eclipsed the total for 2013; so far coming in at $331M. Current deal levels are also set to exceed the record number of investments which occurred last year.

The largest individual rounds of the year have so far occurred in the area of genomics. Arcadia Biosciences, a company focused on the production of genetically engineered hardy crops, closed a $33M funding round in early May. Chromatin, a developer of sorghum seed technologies, received $36M in January from a group of investors which included notable corporate participation by GE Capital and BP Ventures.

AgDealVolumeTied for the third largest funding round were two companies from our Food Logistics sub-sector, which has been by far the most active sub-sector this year. Our Food Logistics category includes all aspects of the food supply chain including: processing, storage, transportation and even start-ups focused on helping customers source local groceries. Aseptia, a developer of ground breaking food preservation processes, raised $28M. Munchery, a company helping individuals source local meals, also closed a series B round of $28M. Food sourcing, particularly of a local and healthful nature, has been a very active area this year in our Food Logistics sub-sector. In addition to Munchery, companies in this line of business receiving funding included Plated, Sprig and Blue Apron.

The replacement of animal protein with bio-based substitutes is an emerging trend in the agriculture and food space. Hampton Creek, which develops egg free mayonnaise, secured $23M in funding from Chinese billionaire Li Ka-Shing and Khosla Ventures, among others. Recent scientific advancements by protein replacement companies, most notably Beyond Meat, have established this growing sub-sector as one to watch.

2014 has set a record pace with regard to the amount of venture deals and money spent by investors. As investors and the greater public become aware of the profound impact precision agriculture will have on our food system these record levels of activity in the sector are likely to continue.