The Challenges of Investing in AgTech: Insights from Better Food Ventures

Silicon Valley veteran Rob Trice embarked on a journey more than a decade ago to launch a specialist food and agriculture fund, earning him valuable insights into the industry’s hidden complexities. “How hard could it be?” he thought initially, only to realize that the challenges he faced in agriculture were significantly different from the social media landscape where he previously thrived. As he reflects on his journey now, he admits, “It’s harder than other areas I have invested in.”

Over the past ten years, Trice has been exploring these challenges through Better Food Ventures, an organization dedicated to investing in early-stage companies that are addressing some of farming’s most pressing issues with information technology solutions. Their portfolio includes promising startups like Afresh, Breedr, and Milk Moovement.

The Genesis of Better Food Ventures

Rob Trice (RT): Michael and I first crossed paths around 15 years ago during the telecom era. My venture capital career began in 2000, and while it was exhilarating, I felt uninspired as discussions shifted to 5G networks.

I began contemplating where Silicon Valley would next direct its digitization efforts. Observing my wife struggle to use Square at a farmers’ market prompted me to think: “This is 5–10% of the world’s economy. How hard could it be to digitize food and agriculture?”

After launching two organizations, including The Mixing Bowl, which connects food and agriculture innovators for thought and leadership, I was soon joined by Michael. Better Food Ventures invests in companies utilizing information technology throughout the food and agriculture value chain to create a positive impact—not just social impact, but also profitability.

Targeting the Right Companies

ATN: What kind of companies are you looking for?

RT: We’re classic early-stage investors, focusing exclusively on digital technologies capable of generating SaaS-style revenue multiples. Our strategy excludes consumer packaged goods (CPG), hardware-intensive operations, retail, and farm operations. We see ourselves as fundamentally “digital monkeys.”

Identifying Problems in Agriculture

ATN: Without an agriculture background, how do you know which problems need solving?

RT: We invest significant time in understanding the market. Digital agriculture companies have proven their worth, often exiting for $300–400 million. Through conversations with ranchers, farmers, and orchard owners, we grasp the real pain points — identifying what’s a true necessity versus what’s merely a ‘nice-to-have.’

The Suitability of the Silicon Valley Model

ATN: Is the Silicon Valley playbook suitable for agriculture?

RT: The venture model is applicable, but only selectively. While there might be interest from impact investors, the capital deployment methods used in Silicon Valley have yet to evolve significantly for agriculture. Many still liken it to the era of hardware and infrastructure investments, rather than the consumer-centric model seen in social media.

Current Trends in Agtech Funding

ATN: Agtech funding keeps sliding. What do you make of that?

RT: I’m not surprised—currently, the market appears “constipated.” With 150 incubators and accelerators pushing deals through the pipeline, the need for successful exits remains critical for restoring investor confidence. Many investors are reluctant due to previous high-profile failures, impacting not only agrifoodtech but also fintech and CPG industries.

Bridging AI and Agriculture

ATN: Is the sweet spot somewhere between AI and ag?

RT: Absolutely. For AI to be effective within food and agriculture, we first need reliable and digitized data. A significant number of farms still lack this fundamental requirement.

Data Ownership Concerns

ATN: As an investor in AI companies, does it matter who owns the data?

RT: There’s an assumption that farmers own their data, but the crucial question is whether they’ll permit its use for a specified purpose. Usually, as long as farmers understand who is using the data and why, they are amenable. We’re working on initiatives like COSSAF, aiming to fill gaps relating to data ownership.

The Impact of Economic Policies

ATN: Is US economic policy affecting ag investment?

RT: Yes, many farms are struggling financially. California’s tariffs, particularly on almonds, corn, and soy, have eroded profit margins. When margins decrease, farmers are compelled to cut back on their purchases, thus stifling further investment in agricultural solutions.

As agriculture grapples with evolving challenges, Better Food Ventures continues to push boundaries, seeking innovative solutions that not only address today’s problems but also bolster the future of the industry.