Investment realities in agrifoodtech sector in 2025: 'Patience is not a virtue in venture capital'
In the face of a significant drop in venture capital (VC) funding for agtech startups, alternative sources of funding have become essential for these innovative companies to sustain and scale their operations. Over the past three years, global agtech and foodtech VC funding has seen a 70% decrease[1][3].
To combat this funding shortage, agtech startups are advised to explore various funding avenues. One such option is government grants and subsidies, which many governments offer to support agriculture innovation, focusing on sustainability, climate resilience, and food security solutions[1].
Another viable alternative is accelerators and incubators, which provide not only funding but also mentorship, networking, and validation opportunities. These platforms help startups de-risk their technologies and build traction[1]. Notable examples include The Reservoir, an incubator launching in Salinas, California in August, aimed at bridging the gap between deep tech R&D and commercial deployment[2].
Family offices and impact investors, who often have longer-term outlooks and are interested in startups with clear sustainability and social impact, are another potential funding source. Solutions focused on soil health, biological inputs, and regenerative agriculture are particularly attractive[1].
Strategic corporate investors, such as agri-input companies, food producers, and large agribusinesses, may also provide funding via corporate venture arms or partnerships to accelerate technologies complementing their value chains[1].
For startups with early revenues or solid pilots, alternative finance options like loans, convertible notes, or revenue-share deals can provide capital without diluting equity[1]. Regional and niche funds, particularly those focused on innovation hubs in Asia, Latin America, and Africa, can also be fruitful[1].
Non-dilutive funding, such as prizes, innovation challenges, and crowdfunding, can provide smaller but crucial capital injections without sacrificing equity[1].
As the realities of venture capital have changed significantly in recent years, startups are advised to focus on demonstrating validated business models, early traction with customers, and measurable impact to attract funding from these non-VC sources[1][3]. Emphasizing pragmatic, business-focused approaches, especially those addressing labor shortages and grower income, remains key as capital continues to flow cautiously but selectively into agtech[2].
However, for startups to attract venture capital, they need to be significantly better than existing options, emphasized Jackson Morrow, vice president of climate tech at JP Morgan[2]. This may involve considering accelerators and incubators for testing and validating products, and getting them to market[2].
The rise of AI technologies in agrifoodtech is expected to increase the pressure to go faster, according to Dave Kochbeck, former chief scientist at Silicon Valley Bank[2]. This pressure may necessitate a focus on marketing and storytelling to attract investment[2].
In summary, agtech startups navigating a VC dearth today should diversify funding strategies by engaging government programs, family offices, accelerators, and strategic partners, while meticulously de-risking their business propositions and proving commercial viability[1][2][3].
Technology plays a crucial role in agrifoodtech startups, offering potential for innovation, sustainability, and commercial success[1]. To secure funding and ensure continued growth, startups need to demonstrate validated business models and early traction with customers, while also focusing on marketing and storytelling to attract investors[2]. This may involve exploring various funding avenues like government grants, family offices, and strategic corporate investors, as well as utilizing technology to de-risk their business propositions and prove commercial viability[1][2][3].
