agtech investing report: year in review 2014 by @agfunder

AGTECH FUNDING REPORT 2014: YEAR IN REVIEW | AGFUNDER.COM

AgTech InvestingY E A R I N R E V I E W 2 0 1 4MARCH 2015

REPORT PREVIEW


AGTECH INVESTING REPORT 2014

INTRODUCTION


The AgTech sector had a record breaking year in 2014, with $2.36B invested across 264 deals. The big takeaway is that agriculture is being transformed by a confluence of new technologies drawn from many industries: from genomics and non-GMO crop technologies, to drones and the Internet of Thing (IoT) that give farmers real-time information, to protein substitutes that threaten to disrupt the meat industry, and delivery services that threaten to disintermediate traditional grocers and connect farmers more directly with consumers. The opportunity for technology to modernize agriculture is massive. Agriculture is a $6.4T global industry that employs 1.3B people worldwide and new technologies are emerging which are promising to transform agriculture from a calcified industry to a tech industry as it races against a growing population and middle class, changes in taste and diet, and faces its impact on the environment. This is the most complete profile of AgTech funding activity to-date to provide investors, entrepreneurs, and industry participants with proof of this expanding sector. Like cleantech, which was orientated around diverse technologies dealing with energy, efficiency, and sustainability; AgTech’s north star looks to the agriculture value chain and the diverse technologies that directly touch the industry.

AgFunder is an online equity

crowdfunding platform for

agriculture technology. We

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Authors: Melissa Tilney,

Rob Leclerc, and Emily Demarest.

Design: Simona Barta

Still on our mission to feed 10B by 2050! Rob Leclerc, AgFunder CEO

AGTECH FUNDING REPORT 2014: YEAR IN REVIEW | AGFUNDER.COM 4

YEAR IN REVIEW


271 Unique Investors

264 Deals

$2.36B Invested

OVERVIEW 2014


1. AgTech as a Sizeable Investment ClassAgTech had a breakout year in 2014 in terms of deal volume and investment totals. Our analysis of AgTech’s $2.36B in financing over 264 deals in 2014 shows that AgTech received more financing than seven of the 19 sectors tracked by MatterMark1 and is on par with venture funding for security companies ($2.3B), and ahead of cleantech ($2.0B) and fintech ($2.2B). 2. The Emergence of Precision AgPrecision agriculture is broadly defined as the group of hardware and software technologies that help farmers improve decision-making with data-driven analytics. Companies can be analytics providers or provide supporting technologies, such as drone platforms that have identified agriculture as a key vertical. Precision ag represented 30% of AgTech deals in 20142, but received only 12% of investment capital. Most investment centered on early stage opportunities: 83% of the deals were Seed or Series A, with median deal size of $1.15M. FarmLink ($40M) and Airware ($25M) stood out at later stage companies that received significant financing.

We anticipate that large, stand-alone companies will emerge as the space matures, and this may trigger consolidation and M&A. 3. Bullish Bets Were Made in FoodTechAt the other end of the agriculture value chain spectrum, foodtech3 companies saw $679M in financing over 59 deals. Dominating this group was grocery delivery service Instacart ($260M), and Hampton Creek ($113M), which is aiming to disrupt the poultry industry with a plant-based egg. Together, these two companies represented over 50% of the total foodtech financing. Overall, sustainable protein also attracted some of most elite firms in Silicon Valley, as these companies disrupt the meat and egg industry, which traditionally demands many resources to maintain and has a huge environmental impact. It appears these investors are challenging the idea that venture capital isn’t out to solve big problems.

Five themes stood out from the AgTech fundings for 2014:

THEMES

1.  Mattermark Traction Report 2014. Note: time period for Mattermark Oct. 1, 2013-Sept. 30, 2014. 2.  Precision Ag mostly encompasses the companies in the categories: Decision Support Technologies, Drones & Robotics, and Smart Equipment & Hardware 3.  FoodTech mostly encompases companies in the ategories: Sustainable Protein, Farm2Consumer (F2C), Food Ecommerce, Food Safety & Traceability.


4. Indoor Agriculture’s New FrontierIndoor Agriculture also had a breakout year, receiving seven percent of invested dollars in 2014. Long considered unviable due to high energy costs, the emergence of Indoor Agriculture is being driven by the local food movement and water conservation initiatives, affordable LEDs, and a nascent cannabis industry. The largest deals in 2014 were London-headquartered SunDrop Farms, which raised $100M from KKR, and New Jersey Based Aerofarms which raised $36M.

5. Investors Got High on Cannabis Given deregulation trends (and Snoop Dogg’s recent announcement of a $25M fund for weed startups) no AgTech report would be complete without a summary of technology geared towards the cannabis industry. While not all cannabis startups fall within the scope of AgTech, twelve weedtech (and hemp) companies captured nearly $23M in total funding for 2014, with a median deal size of $1.16M. The largest financing went to GrowLife ($12.1M), which produces cultivation technology for growers and trades on the OTC under the symbol

PHOT. Of notable mention, Eaze gave new meaning to the term ‘getting high’ after it raised $1.5M for its marijuana drone delivery

service. In this case, we know what those investors were smoking.

Five themes stood out from the AgTech fundings for 2014:

THEMES


$467$416

$509

$969

55

78

67

64

Q1 Q2 Q3 Q4

8

Investment was strong across all

quarters. Investment dollars dipped

slightly in Q2, but deal volume

surged to 78 deals and stayed

above Q1 levels for the rest of the

year.

Q4 ended on an upswing as deal

flow reached $969M, a 90% jump

over Q3 and greater than any other

two quarters combined. Five deals

(Instacart, LanzaTech, SunDrop

Farms, Hampton Creek, and

Impossible Foods) drove this

performance, accounting for 54%

of Q4 investments.

Deal Volume and Amount by Quarter

DEAL ACTIVITY BY QUARTER

Deal Volume

Financing | $Millions


As the chart illustrates, the AgTech

industry is diverse and investment

is distributed across many

subsectors, with ten subsectors

receiving >5% of total funding.

Food ecommerce, bioenergy, and

soil & crop technology were the

largest subsectors in 2014,

accounting for 45% of all

investment dollars.

(See “Deal Volume and Amount by

Subsector” for complete list of

subsectors.)

AgTech Subsector Breakdown

DEALS BY SUBSECTOR

16%

16%

13%

8%7%

7%

7%

5%

5%

5%

9% Bioenergy

Food Ecommerce

Soil & Crop Tech

Sustainable Protein

Biomaterials & biochem

Indoor Agriculture

Waste Mitigation

Decision Support Tech

Smart Equip. & Hardware

Drones & Robotics

Other

% of Total Investment Dollars


$374

$370

$314

$200

$177

$175

$154

$129

$125

$119

$59

$49

$25

$19

$16

$54

Bioenergy

Food Ecommerce

Soil & Crop Tech

Sustainable Protein

Biomaterials & Biochem

Indoor Agriculture

Waste Mitigation

Decision Support Tech

Smart Equip & Hardware

Drones & Robotics

Farm2Consumer (F2C)

Food Safety & Traceability

Food Storage

Water

Animal Nutrition & Health

Miscellaneous

10

Bioenergy received the most

investment capital with $374M, but

there are three broad financing

clusters: one group above $300M,

a second group from $100M-

$200M, and then a third group

below $60M.

Deal volume was distributed

differently. The top three

subsectors by deal amount

accounted for only 25% of deal

volume. In contrast, precision ag

(drones, smart equipment, and

decision support technology)

accounted for 29%.

Deal Volume and Amount by Subsector

DEALS BY SUBSECTOR


# Deals

19

22

26

6

22

19

12

30

22

23

14

10

4

5

5

25


Seed stage deals accounted for

over 46% of all AgTech deals, but

received only 3% investment

dollars. This is expected for a

relatively new industry where the

majority of activity is in new

company formation.

Deal volume shows a clear trend—

the number of companies receiving

capital is highest for seed stage

and then declines dramatically with

each next stage.

Deal Amount and Volume by Stage

DEALS BY STAGE

$82

$419

$349

$617

$299

$424

$171

121

53

33

16

7

17 17

Seed A B C D Late/Other

Debt

Deal Volume



AgTech had 271 unique investors

2014, and forty one of those made

two or more investments. This is a

healthy indicator showing recurring

activity in the sector, and it’s

comparable to other fast growing

industries.

The most active investors were top-

tier Silicon Valley investors with a

history in cleantech, like Khosla

(10), Kleiner (5), and Andreesson

(5). Ag focused investors, like

Cultivian Sandbox (6) were the

other notable group. Among active

investors, a new crop of

accelerators participated, albeit in

small investment amounts.

Number of Deals by Investors

INVESTOR ACTIVITY

#AgTech Investments Added to Portfolio in 2014

#Investors

Num

ber o

f Inv

esto

rs

230

29

x1 x2 x3 x4 x5 x6 x10


Instacart$220M Series C

Advanced Animal Diagnostics$15M Series C

Edyn$1.15M Seed



LanzaTech$112M Series D

Vestaron$14M Series C

Tule$1M Seed

Instacart$44M Series B

Airware$25M Series B

Hampton Creek$90M Series C

Conservis$10M Series A

Glowing Plants$120k Seed

Airware$25M Series B

Farmer’s Business Network$4.6 M Series A

Impossible Foods$75M Series A

AbClex$2M Series B

Ginko Bioworks$120k Seed

Granular$4.2M Series A

Beyond MeatUndisclosed Series B

Instacart$44M Series B

enEvolv$1.8M Series A

TerrAvion$97k Seed

AgLocal$1.3M Seed

Farmer’s EdgeUndisclosed Series B

Hampton Creek$23M Series B

Novihum TechnologiesUndisclosed

Meadow$97k Seed

BioConsortia$15M Series B

Blue River Technologies$10M Series A

Granular$4.2M Series A

Tule$1M Seed

13

Investments by Top 5 Most Active Investors

INVESTOR ACTIVITY


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