Agriculture technology, or agtech for short, wasn't a target sector for venture capitalists or entrepreneurs for a long time, but it has confirmed its place as an industry of interest for the venture capital community.
The opportunity to bring agriculture, a $7.8 trillion industry representing 10% of global GDP, into the modern age has caught the attention of a growing number of investors globally. This increasing interest in the sector coincides with a more general “Third Wave” in technological innovation, where all companies are internet-powered tech companies, and startups are challenging the biggest incumbent industries like hospitality, transport, and now agriculture.
There is huge potential, and need, to help the ag industry find efficiencies, conserve valuable resources, meet global demands for protein, and ensure consumers have access to clean, safe, healthy food.
It's a complex and diverse industry, however, with many subsectors for farmers, investors, and industry stakeholders to navigate. Entrepreneurs are innovating across agricultural disciplines, aiming to disrupt the beef, dairy, row crop, permanent crop, aquaculture, forestry, and fisheries sectors. Each discipline has a specific set of needs that will differ from the others.
The most high profile and best-funded subsectors to date include those using digital, precision, biological, genetic, and big data technologies to help farmers improve efficiencies on the farm and use fewer resources. In an incredibly complex industry, it's relatively easy for investors to understand the potential for these technologies to help reduce reliance on declining water resources, damaging chemicals, and a stable climate.
When we consider the future of agtech, it's useful to think about the expectations of a technology's lifecycle and how technology actually evolves. Essentially, a new idea/technology is introduced, it demands a huge amount of hype, the hype goes beyond the technology's current capabilities, the crowd is disillusioned until the tech climbs out of the barrel and shows its usefulness.
In other words, there's a lot of technology that's exciting to the public, but it's only in its first innings and iterations. We'll need to wait for the real innovation to come, but once it does, it will be transformational.
Until that point, the agtech startup scene will continue to attract the attention of forward-thinking investors who are compelled by the macro drivers that highlight the need for technological advancement of the world's least digitized industry.
The oldest industry in the world must catch up with the world's other industries; it's inevitable that agtech adoption will boom. We are just at the beginning.
Nobiletec is a multi-national consultancy firm specializes in B2B, B2C and P2P FinTech solutions.