Market Map: Precision ag startups are fertile ground for VCs

On Apr 4, 2022

The agtech sector is reaping the benefits of increased global venture capital investment, as the industry posted the third-strongest quarter on record during the last three months of 2021, according to PitchBook data.

That fourth-quarter activity helped propel 2021 to a decade-high deal value for the industry, with $10.5 billion invested in total, a 58.6% increase from the previous year and more than double the 2019 value. The capital was invested across 751 deals, also a decade high.

Precision ag startups, which deal with optimizing or automating tasks like seeding, irrigating and harvesting, attracted more than $2 billion in funding through 159 deals in 2021, a 42.6% increase year-over-year. The segment also experienced a significant increase in exit activity.

Where are investors planting their money? The market map below outlines the global agtech ecosystem. You can explore the precision ag segment by clicking on the colored tile.

To go deeper, check out our 2021 Annual Agtech Report. PitchBook subscribers can also explore the full agtech market map with details on nearly 2,100 companies.

Precision ag companies fall into four subsegments:

Farm management software: Software and other devices that help with farm operations, including data collection.

Robotics and smart field equipment: Advanced machinery that helps automate or optimize fieldwork.

Field IoT: Internet of things sensors and software used to monitor and analyze crops, water, weather and pests.

Drones and imagery analytics: Tools used to gather crop health information, such as disease and pest detection. They also utilize predictive analytics to help guide decisions and maximize productivity.

Precision ag startups attracted $696.5 million in VC in the fourth quarter, a nearly 69% increase in deal value from the previous quarter and the strongest quarter of the past decade for the segment.

While there is room for growth, especially in field robotics and automation as well as drones, technology fatigue is a risk going forward, according to PitchBook analyst Alex Frederick. Farmers have been let down by earlier generations of tools that failed to live up to expectations.

Field IoT saw the biggest growth YoY, climbing by 128.4%. Key companies in this subsegment included Semios, the provider of an agricultural data analytics platform, and TriEye, an infrared imaging systems developer. The agtech businesses raised $79 million and $74 million rounds in 2021, respectively.

On the other hand, investment in drones and imagery analytics dropped 18% YoY.

The imagery analytics field may be getting saturated, which could fuel consolidation in the medium term, Frederick said.