What is “AgTech”?
Agricultural Tech (AgTech) refers to the application of modern technology to the agricultural process.
From using drones to monitor crop yields to installing LED lighting for healthier indoor chickens, AgTech seeks to tackle humanity’s urgent need for sustainable food sources that use less water, less land, and feed significantly more people.
Some other examples of AgTech include:
- Autonomous farm equipment
- Aerial imagery
- Alternative proteins
- CRISPR and gene editing
- Minichromosomal tech (think CRISPR for plants)
- Satellite imagery
- AI-driven heat and light control
- Soil and water monitors
- Vertical farming
Maybe you’ve heard of some of these innovations but remain fuzzy on the others. Regardless, they all have a role to play in making sure we can keep ourselves fed and nourished.
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5 AgTech startups worth watching in 2023
To get you started on your search, here are five promising AgTech startups to keep an eye on in 2023 and beyond.
1. Apeel
According to the UN Environmental Program (UNEP), nearly half of all fruit and vegetables produced globally are wasted each year. And that’s precisely the problem that Santa Barbara-based Apeel Sciences is looking to solve.
The company’s main product is remarkably simple: A plant-based, spray-on coating that helps fruit and veggies last twice as long before decomposing. As a result, between 2019 and 2021 Apeel claims to have helped 40 food retail partners in eight countries save 42 million pieces of fruit from going to waste.
In addition to extending the life of your avocados; the company also helped to conserve nearly 4.7 billion liters of water in that two-year timespan.
In August 2021, Apeel secured $250 million in Series E funding from high-profile sources like Oprah, Katy Perry, the government of Singapore, and various VCs and shows no sign of stopping.
2. AppHarvest
The secret to AppHarvest’s rapid growth (pun intended) is its proprietary indoor farming method, which brings together dozens of cutting edge AgTech innovations. From hybrid lighting to pest control sensors, closed-loop irrigation to robotic pickers, AppHarvest’s growing process uses 90% less water and generates 30 times the yield of traditional farming methods.
AppHarvest opened its first 60-acre indoor farm in 2020, and is currently on track to open at least 11 more by 2025. Plus, the company already has relationships with Target, Walmart, Kroger, Costco, and other major buyers of fresh produce in place, ready to receive more product.
With record performance in 2022 and a fresh USDA loan of $50 million, AppHarvest is carving out a big name for itself in the vertical farming world.
More: 5 best farmland ETFs to grow you
3. Terviva
Terviva’s motto is “planting millions of trees to feed billions of people.” And while all trees are great, Terviva isn’t just talking about any kind of tree.
Specifically, they mean the pongamia.
Native to the subtropics, pongamia are multipurpose “miracle trees” that:
- Require little to no water, fertilizer, or pesticides
- Store carbon and produce nitrogen
- Are resilient to climate extremes like droughts and monsoons, and
- Have a dense root system that controls erosion
Best of all, pongamia produce oil- and protein-rich legumes that Terviva has converted into three commercial ingredients: Ponova™ Oil, Ponova™ Protein, and Ponova™ Flour.
Since 2010, Terviva has raised $100 million in capital enabling the startup to start cultivating 1,500 acres of pongamia forests in Florida, Hawaii, and Australia. And unlike Jonathan Webb of AppHarvest, Sikka’s goal isn’t to dominate the competition, but to inspire them.
As reported by Canary Media, “Farmers are only willing to take a risk like that when they are, as Sikka puts it, ’totally f*ucked.’” As bad luck would have it, a bacterial disease recently wiped out citrus groves in Florida, inspiring more and more farmers to follow Sikka’s lead and plant pongamia.
Terviva plans to open a new U.S.-based facility and launch its first retail Ponova™ products by the end of 2022.
4. TerraClear
TerraClear solves “the oldest problem in agriculture.”
How do I get these damn rocks out of my field?
Rocks are a big problem for farmers because each one can cause up to $150,000 in damage to their precision equipment. And yet, even in the advanced tech age that we live in, farmers are still picking up rocks the old fashioned way.
“Only when you’ve actually picked by hand do you realize how bad it is and how much you don’t want to do it” laments a farmer in TerraClear’s promo video. “It seems like it never ends,” says another.
That’s why TerraClear came up with an innovative, three-step solution to a 10,000-year-old problem.
- First, a drone scouts the farm and generates a detailed picture of where the rocks are
- Next, it runs the images through a “neural network” to categorize the rocks by size and location and generate an optimal route to remove them
- Finally, the farmer uses the map to go suck up the rocks using a wicked-looking TC100 Rock Picker attachment that fits on the end of a regular tractor or bobcat.
The company’s long-term vision is to fully automate the process and have robotics operate the heavy equipment. But even in semi-manual form, all of TerraClear’s products have sold out instantly.
TerraClear announced a Series A funding of $25 million in May, 2021, bringing their total funding to $38 million. And considering virtually every farm on earth has this problem, the sky’s the limit for TerraClear to rapidly scale production and sales.
5. UPSIDE
A 2018 study by Oxford University found that by 2050 we’ll have 10 billion mouths to feed and double the demand for meat. And considering that meat production already accounts for 60% of all greenhouse gases, raising that much livestock just isn’t sustainable.
But at the same time, shares of Beyond Meat keep falling as plant-based alternatives fail to convert the world’s carnivores. What if we could have real beef, that’s identical on a cellular level, without raising a methane-emitting cow?
Founded in 2015, Upside was the first company ever to successfully cultivate lab-grown chicken, beef, and duck. Since then the company has received funding from Bill Gates, Richard Branson, and Whole Foods. In April, they secured a $400M Series C Round catapulting their valuation past $1 billion.
The company will use the money to build a commercial production facility capable of producing tens of millions of pounds of meat annually.
The company reports that their products will be commercially available “ASAP” — and intriguingly, the first adopters will be Michelin-starred restaurants.
As for retail shoppers, it’s not a stretch to assume that you’ll see UPSIDE’s innovative, “slaughter-free” meat in your local Whole Foods soon.
Should you invest in AgTech?
Many experts have compared the booming AgTech sector to the tech bubble of the late 90s. In both cases, low interest rates led to a free-flow of VC capital and a flurry of good press.
But in the latter’s case, the bubble finally burst in 2000 when tech startups burned through their capital and failed to become profitable.
Will the same thing happen to AgTech? Are there too many players in the space? Or will AgTech continue taking off as humanity comes together to invest in essential technology?
Here are some pros and cons to investing in AgTech in 2022:
Pros
- AgTech offers an innovative and important set of options for ESG investors.
- Sector growth is widely considered to maintain a compound annual growth rate in the double digits through 2030.
- Many AgTech startups like AppHarvest have already gone public, so investors can start investing right away.
- Funds like the iShares Emergent Food and AgTech Multisector ETF (IVEG) and the Global X AgTech & Food Innovation ETF (KROP) offer convenient and inherently diverse industry exposure.
Cons
- Only 2.4 percent of seed-stage AgTech companies survive to profitability, according to Bluefields Associates.
- Many of the most promising AgTech startups are still in the private equity stage.
- Farm income has always been low and erratic, and most of the world’s farmers can’t afford to implement AgTech without outside grants.
- Extreme climate behavior has thrown a wrench in predictive modeling, lending a degree of speculation to the entire sector.
Net Farm Income, courtesy of the American Farm Bureau Federation
The bottom line
Whether it goes boom or bust, the AgTech sector will be a thrilling space to watch. Each of the companies on this list presents a novel solution to an ancient problem. And if one of them hits the farming tech jackpot, they could completely revolutionize how we grow our food.
Invest in the future of farming:
