The Evolving Landscape of Agrifoodtech: Insights from Mark Durno at Rockstart

After experiencing turbulent years, the agrifoodtech sector is witnessing a transition. The excessive hype has faded, leading to a smaller but more focused pipeline yielding “quality deals with defensible valuations,” as expressed by Mark Durno, managing partner of agrifood at UK-based early-stage investor Rockstart.

The Current State of the Market

The market’s correction has presented challenges; with limited exits and cash-strapped limited partners (LPs), selecting investments has become a more pragmatic task for early-stage investors. Durno emphasizes that while the investment thesis remains unchanged, the strategies have adapted to these new realities.

Navigating Market Volatility

According to Durno, LPs are hesitant to commit during times of market volatility. “If pension funds and institutional investors with long-term perspectives avoid early-stage investments, we risk stunting the growth of the next wave of companies,” he warns.

Quality Over Quantity in Deal-Making

Despite fewer deals on the table, those that are closing tend to be more substantial and impactful. Rockstart recently finalized investments in FloVision, specializing in AI for food production, and ALTR, which focuses on nanotechnology for beverage alcohol control.

Is the Worst Behind Us?

Durno reflects, “Last year was challenging. We had to adjust a significant portion of our portfolio. Now, however, I see better deals with solid valuations.” He believes recent trends, including successful IPOs like that of Klarna, signal an impending recovery.

The AI Takeover: Implications for Agrifoodtech

When asked if AI is overshadowing agrifoodtech investments, Durno states that the sector suffered due to previous failures that made investors more cautious. He highlights that the current investors are well-informed and focused on the potential of quality agrifood companies.

Funding Challenges and Future Outlook

Durno notes that funding for early-stage ventures has become increasingly difficult to secure. “Both investors and startups need to adapt,” he shares, adding that Rockstart has recently commenced its second agrifood fund, amounting to roughly €40 million ($46.3 million).

Strategic Approaches to Investment

While the founder-led investment approach remains, there’s now an acute focus on risk assessment. Durno explains that the original intent was to invest early and follow through, but shifting market dynamics mean they concentrate capital primarily at the pre-seed level now.

Insights on Regenerative Agriculture

Durno discusses the challenges of shifting towards regenerative agriculture and the importance of education in this transformation. He believes large-scale adoption will take time and relies on early adopters to pave the way for others.

Exciting Innovations in Agrifoodtech

Notable investments include companies like SenseUP, specializing in RNA coatings, and BugBiome, focusing on pest control via insect microbiomes. There’s a strong emphasis on developing nutritious, clean ingredients from upcycling practices.

The Role of AI in the Sector

Durno asserts that AI is essential for advancing precision agriculture, with companies like Cordulus and Tunen leading in data extraction and micro weather station technology.

Regulatory Environment: A Mixed Bag

On the topic of regulations in the EU, Durno acknowledges frustrations but points to a shift in policy language from “green transition” to “competitive and clean.” This alteration suggests a more supportive climate for innovation and competitiveness in the agrifood sector.

The Future of Controlled Environment Agriculture

While acknowledging the potential for controlled environment agriculture (CEA), Durno remains cautious about its economics. “It’s essential to have a modest approach, focusing on local, fresh produce rather than overspending on non-viable structures,” he emphasizes.

Conclusion: Growing Resilience in Agrifoodtech

Durno’s insights highlight a necessary shift towards resilience in the agrifoodtech landscape. As industry players look for ways to ensure sustainable growth, the focus on solid business metrics and regulatory adjustments will play critical roles in shaping the future.