Collaborative Strategies for Advancing Agtech Investment

Editor’s Note: Sarah Nolet is the managing partner at Tenacious Ventures, Australia’s pioneering agtech venture firm, where she steers the firm’s vision and strategy. Additionally, she hosts the Agtech, So What? Podcast and is a renowned thought leader in the industry.

Connie Bowen serves as general partner at Farmhand Ventures, an impact investment firm dedicated to nurturing start-ups that are reshaping the future of work in agriculture. She is also the author of Agriculture is for People.

The views expressed in this article are the author’s own and do not necessarily represent those of AgFunderNews.

The Investment Landscape in Agtech: A Close Examination

As stakeholders in the agtech sector, it’s critical to recognize the limited funds allocated to agricultural technology amidst a vast landscape of investment opportunities. In 2024, global investments in alternative assets totaled around $25 trillion, with approximately $11 trillion designated for private equity. Of this, only $16 billion found its way to agrifoodtech, mainly favoring foodtech innovations, according to AgFunder research. This financial gap reveals the pressing need for investment in agrifood systems.

Despite agriculture representing a $3 trillion global industry plagued by urgent challenges—including climate volatility, labor shortages, and rising healthcare costs tied to unhealthy diets—investment in innovative solutions remains woefully underfunded. It’s crucial for limited partners (LPs) to shift their perception and realize the vast potential in agtech investments.

The State of Agtech Investment: Challenges Ahead

The immature state of the agtech asset class poses significant roadblocks. Many LPs are hesitant, not due to a lack of opportunities or pressing issues but because they perceive agtech as an unstable investment category. This skepticism can lead to a decline in available capital and a detrimental focus on competing narratives rather than fostering collaboration.

Understanding Asset Class Immaturity

Fund managers are frequently focusing on irrelevant metrics that do not translate to agricultural success. For instance, the number of deals made does not correlate with the efficacy of products solving farmers’ problems. Metrics such as celebrity advisory boards or media coverage fail to influence farmer adoption, leading to confusion and misalignment in value. Instead of compelling narratives, agtech needs substantial differentiation to encourage investment.

Fostering Collaborative Learning

It is essential for stakeholders within the agtech ecosystem to shift from a competitive stance to one characterized by cooperative learning. Rather than vying for the same pool of funds, industry players should focus on building a collective understanding of investment dynamics, particularly as different sectors within agrifood require unique capital strategies.

A Vision for Maturity in Agtech Investment

Creating a Unified Investment Narrative

To attract LP investments, presenting agtech as a cohesive and viable category is imperative. Educational initiatives—embracing tools such as investor education programs, founder resource toolkits, and shared databases—provide the foundation needed for LPs to understand the landscape, enabling them to make informed decisions.

Highlighting Diverse Investment Strategies

The complexity of natural systems in agriculture requires a diverse set of strategies. By showcasing varying investment tactics as essential tools, stakeholders can better identify opportunities in agrifood. Collaborative podcasts and publications can facilitate this exchange of knowledge, bridging the gap between competing funds and creating a more informed marketplace.

Embracing an Abundance Mindset

In a sector with immense potential for positive change, adopting an abundance mindset is crucial. Engaging in competition over small pieces of the funding pie undermines the broader mission of addressing the existential challenges facing agriculture. As industry professionals, we must recognize that by working together, we can build a robust framework for agtech investment that not only drives returns but also addresses critical agricultural issues.

The road ahead requires unity and a willingness to collaboratively develop the agtech investment landscape. The focus should be on leveraging each other’s strengths, fostering relationships, and creating opportunities for all stakeholders involved. Now is the time to act collectively to facilitate sustainable growth in agriculture, making it an attractive domain for investors.

The question is not whether collaboration is beneficial; it’s whether we have the determination to achieve it.