Agritech’s Venture Capital Funding Gap in Australia & New Zealand
In December 2018, Finistere Ventures in collaboration with Pitchbook, released its 2018 Agtech Investment Review. The Review provided an in-depth insight into global financing activity, industry trends and regional variations.
In its Executive Summary, the report found that $1.6 billion has been invested in agritech globally in 2018 as of Q3 2018. With agritech deals on track to meet or exceed $2B, median deal size rose to $10 million as shifting consumer preferences drove a funding surge in burgeoning investments areas such as alternative proteins.
Additional findings included:
Growing maturation of agritech investment sector, including investors focusing on capital-light segments and increasing capital deployment in later-stage companies scaling up
Increasing late-stage median deal sizes ($10M, up from $9M in 2017) and valuations ($78M, up from $50M in 2017)
Decreasing early stage agritech financing deal sizes (down to $2.95M from $4.5M in 2017) and valuations ($10M, down from $15.3M 2017)
Lion’s share of capital invested in Crop Protection & Inputs Management (36%) and (previously under invested) Plant Sciences (11%) thanks to the $65M Series C financing of Benson Hill Biosystems
Number of large, $25M+ financings continues to increase
This report, was supported by similar findings in AgFunder’s 2018 AgriFood Tech Investing Report. AgFunder applies a broader definition to ‘agritech’, but its conclusions were consistent with Finistere Ventures. The increase in funding was being driven to a large extent by the big jump in the median deal size for later stage deals.
In a more detailed analysis of regional variations, Australia and New Zealand face a hard truth. Despite the exponential global growth of venture investment into the agritech sector, very little of that investment has been invested into the region. This was confirmed by Michael Dean, founding partner, AgFunder, at the 2019 evokeAG conference in Melbourne.
Given the size of the two countries primary industries, its importance to both economies and the opportunities facing the emerging agritech sector, this lack of connected global capital is a significant constraint on the region’s ability to grow globally competitive agritech companies.
This is a key driver behind the establishment of the Australia New Zealand Agritech Council. By adopting the lens used by investors in San Francisco, Singapore, Tel Aviv & London, the Council members realised that our two countries were just too small in a global context to attract investment visibility from key offshore markets.
By working together and building a collaborative trans-Tasman culture, the Agritech Council believes it can address this major imbalance by taking a regional approach to promoting and supporting the regional agritech ecosystem. It’s that belief that drives us to take the necessary actions to close the trans-Tasman global venture funding gap for good.