The disruption of the last decade in the food value chain has occurred in 2017 with the IPO of Blue Apron and acquisitions such as Bai Brands (1 , 7 billion USD), Sir Kensington Condiments and Whole Foods of Amazon ($ 13.7 billion). This wave of disruptions is taking place in parallel in the agricultural value chain, driven by increasing land take and land use, renewed focus on sustainability and, as in retail, changing consumer preferences.
A continued slump in commodity prices has shown that Ag "is facing declining margins and has triggered a wave of consolidation to achieve cost efficiency and to seek new innovations over the past three years as key seeds and chemicals are no longer patentable , the need for change has only intensified for the Big 6. Coincidentally, agtech's investment landscape has skyrocketed over the past decade, from a niche, opportunistic venture capital asset class, to a legitimate asset class that has focused and generalized funds Investment in fixed capital investment
In collaboration with PitchBook, Finistere quantified this activity – 2017 was another record investment year for the sector, with more than $ 1.5 billion in action, and significantly more than 300 different investors and more than 160 Deals, as opposed to the 31 deals and less than $ 200 million in 2007.
The data in our most recent report shows a marked maturing of ATECH investment with rising round sizes and notable VC-backed exits in 2017. Meanwhile We see increased demand for growth capital in a first wave of Agtech unicorns. Corporate Venture Capital's activities in this sector have expanded with more than 30 active funds, joining the agtech-focused funds such as Khosla, Fall Line, Finistere, Innovation Endeavors and S2G.
Big Challenges Are Tackled Through Innovation  All these activities give us an idea of what's coming up in 2018. The interest in discrete markets and technologies for agtech will continue as farm management uses data-driven agronomy, the images, sensors and artificial intelligence platforms include precision for "predictive" agriculture.
Automation will be another big step in 2018 as labor costs and bottlenecks mean that high-quality agricultural producers are looking for solutions for harvesting, weeding and crop protection. Meanwhile, new approaches to adding value to the breeder are explored by biobased companies such as Benson Hill, High Fidelity Genetics and Zeakal. Remarkably, these companies are developing with technologies that use capital-efficient development models, new genomic approaches to features, and low-cost AI toolsets-all the features needed for commodity crops.
There seems to be a challenge to be expected and a change to an established order.
In addition, acquirers and entrepreneurs alike focus on novel chemical processes – from new low-molecular discovery platforms to biologicals that offer alternatives to traditional plant and soil products. This is caused by changing consumer preferences and growing resistance to chemical products such as Roundup.
Similarly, consumers will continue to oppose the black box nature of food production in favor of transparency, and regulatory and labeling trends will continue to evolve as gene-edited foods enter the market and vertical farms boost organic local production.
Shifting Market Dynamics
Looking to the Future, 2018 will see the end of 200 billion dollars in the consolidation of the Big 6, with Dow / DuPont and Bayer / Monsanto under scrutiny, but largely expected. Nutrien has emerged from the fusion of Potash and Agrium, and ADM has renewed its bid for Bunge, which will likely also win Glencore for an M & A fight. How long it will take for these new companies to gain a foothold is not in sight. But with more than nine out of ten exits driven by mergers and acquisitions, many startup CEOs and their investors will watch this area with great interest and see an uptick in acquisition and strategic agreement next year.
It seems that we can expect a challenge and switch to the established order. The acquisition of by BASF's $ 7 billion acquisition of the Bayer seed business is changing the industry's momentum as it moves from traditional chemical production lines to seed for the first time. This is covered by the Agricultural Law 2018, which is expected to create an incentive for innovation, especially in specialty crops, and redefine risk structures through the farm insurance system.
Perhaps even more important is the rise of mega-funds like SoftBank and competition from aggressive players like Amazon could reshape ag. Also in private equity firms closed $ 232 billion in in 2017 and invested $ 538 billion over the same period. With less than $ 500 million in deals underway, PE companies are well placed to capitalize on quality companies seeking alternatives to M & A or the subordinate IPO option. This offers the most promising companies another opportunity to focus on creating sustainable growth EBITDA platforms.
Non-traditional entrants will continue to enter the sector through partnerships and as potential buyers. Many of them are technology giants that focus on core competencies – Google on data, Amazon on the food supply chain and Facebook on linking and selling to farmers. In fact, the venture capital funds associated with these groups are already playing in this sector. They are supporting two of 2017's most successful financings, both of which raised more than $ 200 million: Jeff Bezo's Expeditionary Fund in Plenty and Google Ventures in Farmers Business Network .  Establishment of Centers for Agtech Excellence
In the US, AGTECH is creating mini-clusters and new fund investors in regions such as Iowa, Missouri and Tennessee, while more and more international start-ups are seeking a presence in the US. Agtech will continue to operate globally. With reports from 460 Agtech startups, Israel is already well established. In the meantime, the EU is building a strong pipeline, including Latin America and Australia / New Zealand, which are making significant public R & D investment and monitoring the increase in "Tweener" rounds (beyond Seed, Pre-series A) where non-dilutive and angel capital enables start-ups to develop capital-efficient models. This fits in well with the accelerator fund model that groups such as Dogpatch (Ireland), Radicle (USA), CSIRO's main series (Australia / USA), Sprout, WNT (New Zealand), Yield Lab (USA / Ireland) and SP Ventures (Brazil ) have created a broad base for building a robust pipeline that feeds the venture ecosystem.
We have seen first-hand the diverse interest of investors in this sector, which includes companies, professional VCs and family offices. 2018 is expected to set a new record for agtech dollars, but with larger round sizes as strong syndication with world-class investors on both the west and east coasts continues to distinguish real winners from the pure adequate teams in this skyrocketing technology market. 19659024] Selected image: chombosan / Shutterstock
SOURCES: TECHCRUNCH.COM GSMARENA.COM MACRUMORS.COM
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