Rob Leclerc, PhD, is cofounder and partner at AgFunder, the parent company of AgFunderNews.

The Disconnect Between Big Tech and Agriculture: An Urgent Call for Innovation

As Silicon Valley continues to channel billions into artificial intelligence, the agriculture sector is exposing a significant gap. The trillion-dollar agricultural industry is lagging in innovation and investment compared to its tech counterparts.

The Challenge of Legacy Systems

Major agriculture companies invest less than 2% of their revenue in research and development (R&D), a stark contrast to the 14% that tech giants like Alphabet and Amazon allocate. This conservative spending reflects a broader reluctance to adopt new technologies, as incumbent firms cling to outdated assets and slow decision-making processes that ultimately stifle innovation from promising startups.

The Investment Gap is Stark

Research and development statistics reveal a staggering disparity. While tech giants invest heavily in R&D, companies like Nestlé invest just 1.8% of their sales, and Tyson Foods allocates less than 0.3%. Such meager investments hinder the ability to compete effectively in an increasingly tech-driven landscape.

Talent Acquisition and the Broader Context

The technology sector is also outpacing agriculture in attracting talent. Reports indicate that tech companies are offering compensation packages exceeding $300 million to lure AI researchers, fostering a competitive environment where agricultural firms are seen as less attractive. This discrepancy emphasizes the agriculture sector’s sluggishness in recognizing and investing in innovation.

Venture Capital: A Troubling Trend

The situation is mirrored in venture capital, where agrifoodtech investment peaked at $51 billion in 2021 but dwindled to just $15.6 billion in 2023. Investors are increasingly focused on consumer-facing technologies, leaving farm-level innovations starved for funding.

Barriers to Startup Success

Ambitious startups in the agricultural sector are facing significant hurdles. The slow-paced decision-making and lengthy testing cycles typical of large agricultural companies can suffocate innovation. Many startups have found themselves unable to secure traction in the market due to these systemic barriers.

Emerging Patent Filings and Insights

With traditional agricultural players failing to invest adequately in R&D, outsiders are stepping in. The number of patent applications in agriculture has surged, with firms like DJI and Kubota rapidly expanding their technological foothold in areas once monopolized by longstanding agricultural incumbents.

Transformative Leadership: The Road Ahead

There’s a visible gap in leadership styles and backgrounds in the agricultural sector. While some firms have made strides by hiring tech-forward executives, the majority still adhere to traditional leadership models, limiting their ability to innovate. To thrive, agricultural companies must recruit leaders who understand and embrace technology.

The Market’s Recognition of Innovation

Investors are increasingly rewarding companies that actively pursue technological innovation. Notable acquisitions in the sector have resulted in significant market cap increases, underscoring the financial benefits of adapting to new trends.

The Stakes: What’s Next for Agriculture

The agriculture sector is facing unprecedented challenges including climate change and shifting consumer demands for sustainability. These pressures necessitate faster adoption of technology—autonomous systems, AI-driven optimization, and gene editing are no longer optional but essential for survival.

A Call to Action: Steps for Incumbents

• Increase R&D Investment: Allocate a more substantial percentage of revenue towards innovation, signaling a commitment to change.
• Establish Venture Funds: Build a pipeline for acquisitions and investments that encourage a culture of innovation.
• Invest in Data Infrastructure: Leverage data capabilities to ensure competitive advantages and customer loyalty.
• Embrace a Culture of Rapid Innovation: Develop a “fail-fast” mindset to expedite the testing and implementation of new technologies.
• Articulate a Bold Vision: Identify significant innovation goals that inspire both internal teams and the market.

Conclusion: The Urgency of Transformation

Agricultural firms have fundamental advantages, including strong cash flows and established brands, but complacency is costing them. Without aggressive investment in innovation and a willingness to adapt, these companies risk becoming obsolete in a rapidly changing landscape driven by technological advancements.

This article originally appeared in our Q2 2025 investor letter, shared publicly at the request of several of our limited partners.