The Storm Before the Calm: AI’s Dual Role

The introduction of artificial intelligence (AI) has added another layer of complexity to the agrifood tech landscape. Rob Leclerc, PhD, an AgFunder partner, remarked, “AI is starting to create COVID-level anxiety for those closest to it, and that anxiety is likely to spread.” While Antony Yousefian of The First Thirty acknowledges AI’s potential to remove significant technical barriers in agriculture, he warns of a “private equity correction” that could stem from AI’s rapid disruption of traditional business models.

However, AI may also foster transformation. “Physical AI agtech” promises to attract substantial capital by enabling founders to collect primary data at both field and supply chain levels using edge AI, robotics, and IoT technologies that operate autonomously.

Francisco Jardim of SP Ventures sees AI evolving from a promise into practical deployment. With natural language interfaces, AI could facilitate smoother interactions between humans and complex data systems. Meanwhile, Maarten Goossens from Anterra Capital emphasizes that AI is shifting “from models to applications embedded in workflows,” offering a tangible ROI for agrifood companies.

Looking ahead, Leclerc predicts that 2026 could become known as the year of the AI agent, with impending developments poised to disintermediate traditional commercial channels.

Capital Flow Challenges and Corporate Roles

The current investment climate remains tight, with investors highlighting a widening gap in Series B-C funding, often referred to as agtech’s “valley of death.” Veteran investor Mark Brooks anticipates that capital will increasingly concentrate at the extremes, causing the mid-market to be squeezed the hardest. Strategic capital from sovereign wealth funds and government-backed entities is expected to play a significant role in this evolving landscape.

Agtech corporates are also urged to provide “credible demand signals” beyond mere “innovation theatre.” Gentiane Gorlier at The Yield Lab suggests that corporates should engage in co-development projects with clear procurement pathways and scale clauses. Furthermore, Jaap Strengers from Future Food Fund advocates for corporates to deploy “patient capital” for early-stage investments, while Mark Durno at Rockstart encourages businesses to diversify their fund allocation for better exposure.

Exit Strategies: A Look at Hong Kong and India

Exits, however, pose a significant question for the sector, as capital returns have been minimal. Potential acquirers remain hesitant, focused on internal issues and reluctant to meet 2021 valuations. PJ Amini of Leaps by Bayer notes that while early M&A activity has appeared, 2025 did not witness substantial rollups or category-defining exits.

Contrarily, the landscape in China appears more promising. Matilda Ho from Bits x Bites highlights a surge in mergers and acquisitions, particularly with state-backed capital fueling activities. Policymaker support in Hong Kong is enhancing exit opportunities, especially through AI and robotics listings anticipated in 2026.

Meanwhile, in India, Mark Kahn from Omnivore is optimistic about potential IPOs in the near future. He believes that companies need more access to growth capital, particularly in the Series B+ range, to drive promising exits.

Emerging Trends: Capital Focus Areas for 2026

As investors look forward to 2026, several areas are expected to capture significant attention. Anterra Capital’s Goossens predicts that midstream technologies will take the lead, with a focus on platforms that optimize the middle of the value chain through digitization and automation. Jardim expects farm robotics to garner the largest share of investment, driven by advancements toward greater autonomy.

Ag biotech is also anticipated to remain a lucrative field, particularly for platforms leveraging in silico design to expedite discovery and reduce costs. Other categories, like Farm Management Software and Sensing & IoT, stand to benefit from increased intuitive adoption fueled by AI advancements.

Investor Sentiment: A Mixed Bag

Despite optimism, investor concerns remain prevalent. Common grievances include the overwhelming capital focus on AI, unrealistic valuations based on unicorn exits, and companies failing to present credible plans. Investors like Mark Kahn and Jaap Strengers express frustration over capital allocation missteps and the prevalence of buzzwords devoid of substance.

Overall, 2025 was characterized by volatility and a swift pivot from narrative-driven innovation to fundamentals-driven execution, leaving many investors wary yet hopeful for the upcoming year.