GLOBAL – Agrifood companies globally managed to raise at least US$26.1 billion in 2020 despite of the global economy taking a hit due to the Covid-19 related challenges, a new report by AgFunder has revealed.
The US$26 billion was a 15.5% year-over-year increase above 2019 and is a modest estimation given that when all pending deals come to light.
The total fundraising for the space in 2020 is estimated to be closer to $30 billion, a 34.5% increase over 2019, according to the report.
Companies providing upstream services including innovative food, novel farming, and ag biotech received about US$15.8 billion in investments through 1,950 deals.
Those providing downstream services such as in-store restaurants, online restaurants, and e-grocery, received about US$14.3 billion in investments through 1,142 deals.
A safe place for investments
In a year where very little was known, one thing was certain: People need to eat.
Last year was the first time since 1994 that consumers spent more on food at home than dining out, according to National Restaurant Association data cited by Finistere.
This reality made, food and food tech companies to be seen by many investors as reliable and safe places for investment during a period full of uncertainty.
According to a November report from Finistere Ventures, the first three quarters of 2020 saw more investment in food tech than all of 2019.
Late-stage and growth-stage funding take the lionshare
Looking across all sectors in AgFunder’s report, the largest amount of funding — more than US$20 billion — went toward late-stage and growth-stage funding.
This money went to companies that had previously established themselves and were seeking funds to continue to grow, expand and innovate.
Meanwhile, there was more muted growth on funding toward early stage companies, potentially showing a hesitancy to invest in something new during the coronavirus pandemic.
Known as leaders in emerging spaces attract more investors
In the innovative food category, most of the top investment recipients were companies that have become known as leaders in emerging spaces.
Impossible Foods took both the No. 1 and No. 2 spots, with the plant-based meat company’s US$500 million funding round last March and US$200 million funding round in August.
The third highest investment was last January’s US$161 million for cell-based meat company Memphis Meats, which is hoping to be among the first to sell cultured meat in the United States.
Investments pay off
While all of these investments may not have paid off immediately, some did.
Impossible Foods does not share its sales information, but saw demand take off as more consumers embraced plant-based meat during the pandemic.
The company expanded its grocery availability 77-fold in 2020, and plans to double its R&D department in the coming year.
Memphis Meats on the other hand is on track to become a major player in the up-and-coming cell-based meat segment after it is granted regulatory approval from the U.S. Food & Drug Administration.
Strong agrifood investments will likely continue
Even as the pandemic eases and medical experts are hopeful that life could return to normal in about a year, the strong agrifood investments will likely continue.
While other business ventures may also rebound, the AgFunder report points out the issues these agrifood companies are solving — ranging from efficient production to better food access — will continue to loom large in society.
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