European climate investors are underinvesting in agribusiness potential

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Data Snapshot is a regular AFN feature analyzing agribusiness technology market investment data provided by our parent company, AgFunder.

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Climate investors may want to take a closer look at emerging opportunities in vertical farming. Or insect farms. Or pea milk. Or vegan leather.

In fact, there’s a long list of agribusiness technologies in indoor farming, alternative proteins, agricultural robotics and biomaterials that could be relevant to investors with a climate-focused agenda, according to a researcher. new study by AgFunder and Invest-NL.

The overwhelming majority of investments in these four categories could be considered climate positive, according to AgFunder’s special report entitled Climate Investing in European AgriFoodTech in 2022, produced in partnership with Invest-NLthe Dutch state-backed impact investor. It was published last week as an addendum in the Europe AgriFoodTech Investment Report in collaboration with F&A Next.

Trillions of dollars are needed each year to achieve the goals of the Paris climate agreement. Only $630 billion in climate finance has been committed Last year. With the central role of the agri-food value chain in climate change – it contributes around a third of all greenhouse gas emissions – and its potential for adaptation and mitigation of climate change, there are huge untapped opportunities for technologies that can support the transition to a more sustainable environment. and circular food system.

European investment in AgriFoodTech by climate theme – 2021 (see category icon key below)

In European agribusiness venture capital, the opportunity to invest in climate is particularly under-exploited. Of the $9.2 billion invested in agribusiness last year, only 25% went to startups developing technologies that could have a positive impact on the environment.

Climate Positive Agribusiness

“Climate-positive”: what does this mean for the agri-food space? AgFunder worked with Invest-NL to identify filters for the types of technologies that could have a positive environmental impact on how food is produced, consumed and disposed of (or better, reused).

We searched for startups facilitating the transition to sustainable agriculture. Examples include companies like Stenon in Germany, an agricultural management software and sensing company that makes sensors for real-time soil analysis, and Micropep Technologies in France, an agri-biotech company that develops organic alternatives to produce. agrochemicals.

European investment in AgriFoodTech in 2021 by climate category

We also looked for companies developing innovative foods that help consumers reduce their consumption of meat – a high-carbon food group – and eat more plant-based foods. Examples include a Finnish alternative dairy company Oddly well and the UK Ivy Farm Technologiesthat makes lab-grown meat.

And we looked for companies supporting greater circularity in the food system by reducing food waste, developing eco-friendly food packaging, and recycling or recycling agricultural waste streams. Examples include France Pyxoa reusable packaging company trying to reduce single-use food containers, and the Netherlands Orbisquewhich manufactures monitoring devices for trash cans to monitor and help reduce food waste.

win and miss

The food category that raised the most “climate capital” in Europe last year was Novel Farming Systems, which includes indoor farming and aquaculture. The $560 million invested in technologies with a potentially positive climate impact represents 99.9% of the capital invested in the category in Europe in 2021.

One company, German vertical farming start-up Infarm, raised the bulk of the sector’s capital: $300 million. Also on the list: French insect breeding company Agronutris and Smart Growth Solutions from the United Kingdom. [Disclosure: AgFunder, AFN’s parent company, is an investor in IGS.]

Innovative climate-focused food companies raised $445 million, representing 88.7% of all capital invested in European innovative food startups. And climate-positive bioenergy and biomaterials raised $152 million, or 90.4% of all capital invested in the sector last year.

Other sectors where companies are significantly aligned on climate issues: agricultural robotics and mechanization and agricultural management software and detection.

Worryingly, these “upstream” sectors are not where investors in Europe channel most of their capital. Of the $9.2 billion invested in European agribusiness last year, 75% went to “downstream” companies, namely online grocery companies, which raised 46% of all European risk capital funding for the agri-food industry.

In fact, a number of sectors that have the greatest potential for climate impact lost funding last year. Capital for new farming systems was down 23% from 2020. Investment in farm robotics and mechanization fell 28%, bioenergy and biomaterials fell 21%, and farm management software and detection dropped by 4%.

For investors concerned about climate issues, these are the agri-food sectors to support.

The green bars indicate where climate-related agribusiness transactions take place. The categories with the greatest climate overlap are all upstream sectors: new agricultural systems, innovative foods, agricultural biotechnology, and agricultural robotics and mechanization. (Note: Two Agribusiness Marketplace startups have raised funds but amounts have not been disclosed

Download the full Europe 2022 AgriFoodTech Investment Report here – and see page 33 of the climate section.

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