Agrifoodtech Investment: How to Thrive in a Cooling Climate

In the world of agrifoodtech, the investment weather has decidedly shifted. According to a recent Agfunder report, funding plunged dramatically from $30.5 billion in 2022 to $15.6 billion in 2023—a stark 49.2% decrease. While most sectors felt the pinch, Bioenergy & Biomaterials and Farm Robotics, Mechanisation & Equipment bucked the trend with modest gains. For agrifoodtech business leaders navigating these choppy financial waters, strategic adaptability and sharp focus are essential.

Despite these challenging times, opportunities for strategic growth and innovation abound. For aspiring agribusiness leaders looking to navigate this downturn and position their enterprises to attract capital when the investment climate becomes favourable, focusing on a specific set of core activities is imperative to ensure sustainable scaling and enhancement of business value. Here is a birds-eye view of the pivotal four focus areas to help agribusinesses secure their competitive edge and appeal to investors.

Lean Innovation and Product Development

In a period characterised by scant funding, the emphasis on maximising the impact of every dollar spent cannot be overstated. Lean innovation, which advocates for developing products with minimal waste and rapid iteration based on user feedback, is critical. This approach not only conserves resources but also ensures that product development is closely aligned with market needs, thereby enhancing investor appeal.

US-based, AeroFarms, a specialist in indoor vertical farming, illustrates the value of lean innovation by using rapid crop production cycles to refine its growing technologies. By employing sensors and machine learning algorithms, the company minimises resource waste and maximises growth rates, making each cycle more efficient than the last.

Strategic Partnerships and Collaborations

Amplifying an agrifoodtech’s capabilities and reach through strategic partnerships can circumvent the need for substantial investment. Collaborations with universities for R&D, alliances with complementary businesses for go-to-market strategies, or joining forces with competitors for industry-standard setting can create synergies that enhance value propositions to both customers and investors.

In Australia, v2food, a leader in plant-based proteins, has expanded its reach through partnerships with local food service companies and retailers, thereby scaling up production and distribution capabilities rapidly without significant capital expenditure.

Customer Centricity & Market Fit

Understanding and responding to the evolving needs of customers is critical, especially during a downturn. Engaging deeply with customer feedback, market trends, and competitive offerings can reveal opportunities for differentiation and innovation, driving organic growth and demonstrating market fit to investors.

A notable example in this context is Too Good To Go, which connects consumers with restaurants and stores that have surplus food. By addressing customer needs for affordability and sustainability, the app has carved a niche in the competitive food delivery market, exemplifying how aligning with consumer preferences can drive expansion and attract investment.

Operational Efficiency and Scalability

Efficiency is paramount in a constrained funding environment. Streamlining operations, optimising supply chains, and automating processes where feasible can reduce costs and enhance margins. Demonstrating a clear path to scalability, focusing on sustainable growth, is crucial to attracting investment.

Australian startups like AgriWebb and Goterra epitomise this approach. AgriWebb leverages cloud-based software to enhance farm management efficiencies, while Goterra uses robotics in modular insect farms to manage organic waste effectively at the source, showcasing how technological innovation can drive operational efficiencies and scalability.

These strategies are not merely survival tactics but are essential principles for agrifoodtech companies aiming to thrive in today’s economic climate and capture investor interest, now and when the market inevitably warms again. As the investment landscape evolves, so too must the approaches of those seeking to navigate its challenges.

We are agribusiness investment specialists and help agrifoodtech businesses seeking investment or exits to improve their valuation and, in turn, the success of their capital event. We use an investor’s lens and live market data to reduce assumption and increase effectiveness. For a free 1-hour consultation to discuss how you can effectively weather the investment downturn, your valuation or your capital raise, call Joel on +61 409 918 101 or visit https://mosaiccap.com.au/contact/.

References:

Furr, N., & Dyer, J. (2020). The Innovator’s Method: Bringing the Lean Start-up into Your Organization. Harvard Business Review Press. Tidd, J., & Bessant, J. (2021). Managing Innovation: Integrating Technological, Market and Organizational Change. Wiley. Morgan, N. A., & Rego, L. L. (2021). Customer Centricity: Focus on the Right Customers for Strategic Advantage. Wharton School Press. Jacobs, F. R., Chase, R. B., & Lummus, R. R. (2020). Operations and Supply Chain Management. McGraw-Hill Education