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5 trends that shaped agrifoodtech in 2020

December 24, 2020

2020 has been a year like no other in living memory for the vast majority of us. The Covid-19 pandemic, which began in China at the tail end of last year and gradually engulfed to entire world by the second quarter of this one, has brought the global economy to its knees.

Many of us have, for the first time in our lives, been told to shelter in place, to lockdown in our homes, and avoid going to work or to meet with family and friends to avoid spreading the virus.

There’s no longer any doubt that this experience, shared on some level by every single person on the planet, will change our world permanently.

Perhaps no other sector feels this as much as agrifood, which historically has been utterly reliant on the free flow of goods and labor – and the ability of consumers to go to shops and restaurants.

But it hasn’t all been a catastrophe. ‘Necessity is the mother of invention,’ as the saying goes – and it’s often the case that the greatest leaps forward in innovation happen in the midst or the aftermath of a crisis.

For the food and agriculture industries, that means that tech has found its time to shine.

Below are five of the biggest tech trends that have emerged in agrifood this year:

1. Food e-commerce just keeps getting bigger

Online grocery has been far and away the highest-funded group of startups since AgFunder began tracking investments in the overall agrifoodtech space in 2017 (AgFunder calls this particular category ‘eGrocery.’) [Disclosure: AgFunder is AFN‘s parent company.]

Perhaps unsurprisingly, Covid-19 has seen the category cement its leading position in 2020, as consumers were forced in many cases to turn to online shopping in order to fulfill their everyday grocery needs.

Two of the year’s largest deals went to an eGrocer: China’s Missfresh, which banked $495 million in July from investors including Goldman SachsTencent, and Tiger Global. It followed this up with a $306 million injection from Chinese state-linked funds earlier this month.

Other big eGrocery funding deals happened in the US (Instacart, $225 million); India (BigBasket, $102 million across two deals); Italy (Tannico, $27 million); Mexico (Jüsto, $16 million); and Saudi Arabia (Nana Direct, $18 million). [Disclosure: Jüsto is an AgFunder portfolio company.]

Likewise, online meal delivery apps, online restaurants, and cloud kitchens also attracted major funding during the year. US-based DoorDash raised $400 million during the first half of 2020, before going public in a blockbuster $71 billion IPO this month. Indian rivals Zomato and Swiggy each raised close to $115 million during H1, while Finland’s Wolt raised $108 million.

Will the switch to online ordering of groceries and meals continue after the pandemic has abated? That still waits to be seen, though numerous surveys suggest that Covid-19 may have converted many consumers to the convenience of online shopping.

2. Automation, robotics, and ‘contactless’ tech thrown into the limelight

Another knock-on effect of the pandemic and the lockdowns that have come with it is an increased interest in technologies that take the human out of the process – whether it be farming, manufacturing, or logistics.

This has been particularly evident in agrifood, where the desire for hygiene was already paramount – and has only become stronger since Covid-19 arrived on the scene.

Farmers have become more open to technologies such as sensors, drones, and robots as they struggle with labor issues due to the pandemic and a resurgence in isolationist politics that have hit immigration in some countries. China’s XAG raised what may be the largest funding yet for an ag drone startup, banking $182 million in a Baidu and SoftBank-led round last month.

Towards the consumer-facing end of the value chain, automation and ‘contactless’ technologies have also seen a boost – from tech-enabled food delivery lockers and self-driving grocery carts to unmanned supermarkets and robotic waiters and grill cooks.

3. Bring on the biologics

Back on the farm, 2020 has seen a growing number of biologically-inspired crop inputs emerge from the lab as farmers, consumers, and regulators alike become more conscious of the negative side-effects of chemical treatments.

Belgium’s Biotalys raised $55 million in Series C funding early in the year for its antifungal crop protection tech which imitates the immune response of animals with heavy-chain antibodies such as — disparately — llamas and sharks.

Fellow Belgian outfit Aphea Bio is taking a different approach, focusing instead on algorithmic discovery of microbes that target specific fungi that can blight corn, wheat, or soy crops. It secured $16.6 million in an Astanor Ventures-led Series B round last month.

Israeli startup WeedOut closed out its Syngenta-led Series A round for $4.22 million last month. It has built a platform to create biological herbicides that imitate pollen, allowing them to be applied while weeds are flowering and overcoming chemical herbicide resistance by using weeds’ own reproductive systems against them. The first product created with the platform targets cotton and soybean pest Palmer’s amaranth, which has developed resistance to the commonly used chemical-based herbicide glyphosate.

On the M&A front, Syngenta acquired Italian biologics company Valagro in October, while American Vanguard bought biological crop input group Agrinos in the same month.

There’s still work to do, however. To that end, Farmers Business Network (FBN) — one of the world’s top online agribusiness marketplaces — launched an on-farm R&D network for biologics. The network will connect developers of biological ag inputs directly with farmers, who can be rewarded for performing full-scale, real-world trials in their fields.

4. Carbon comes of age?

Will we look back on 2020 as the year when carbon markets came of age? It would appear there’s still some way to go before we can say we have a fully functioning marketplace for ag carbon credits, but it’s fair to say that this has been a pivotal year for this nascent industry.

While governments in the US and many other major agricultural economies are yet to put regulatory frameworks in place, business has made significant moves of its own. Notably, Cargill has involved itself in several carbon sequestration initiatives, including co-founding the Soil & Water Outcomes Fund which will pay farmers for putting regenerative ag methods into practice in the form of carbon credits that it will use to offset its own carbon footprint.

Ag marketplace startup Indigo announced the identities of its first corporate carbon credit buyers in October, with Barclays, JPMorgan Chase, Boston Consulting Group, IBM, and Shopify among those set to buy from its community of farmers. US startup Nori also unveiled the first high-volume purchase of carbon credits through its platform, with Shopify among the buyers.

In the same month, Canada’s FarmersEdge announced that it is launching a “data-fueled” carbon credit program that will assist growers in using their data to qualify for carbon credits, while US-based FBN launched its own scheme — called Gradable — that is focusing on carbon abatement.

Australia’s Soil Carbon Co raised almost $7 million in June for its melanin-based soil carbon sequestration tech, while compatriot FarmLab announced an initiative earlier this month to get 1 million farmers worldwide to trap 1 billion tonnes of carbon dioxide by 2025.

5. Alt-protein goes mainstream, with Asia Pacific leading the way

Apart from convincing (or rather, compelling) consumers to shop for their groceries and meals online, Covid-19 has had another lasting impact on the food we buy.

More people than ever are aware of, and interested in, alternative proteins. While the pandemic has heightened anxieties about food hygiene — especially with regards to foodservice and packaging — in general, its assumed zoonotic origin has also impacted on consumer perspectives about where we source meat, and how it is raised and processed.

The single largest funding round closed in 2020 was the $500 million raised by US plant-based protein startup Impossible Foods. South Korea’s Mirae Asset Global Investments led the round, with existing investors including US-based Khosla Ventures, Hong Kong’s Horizons Ventures, and Singapore sovereign fund Temasek also participating.

Impossible followed that up in August with a $200 million round led by New York’s Coatue Management.

The plant-based protein makers have also been expanding their footprint into Asia, as evidenced by the identity of several of Impossible Foods’ investors.

Archrival Beyond Meat struck several key partnerships in the region this year, including one with Alibaba to sell its products in the Chinese tech giant’s supermarket chain Freshippo; one to trial its meat analogs in KFC, Pizza Hut, and Taco Bell outlet sin China; as well as an alliance with Starbucks in the country.

According to market research startup Ai Palette, consumers in Asia and the US are keen to increase the plant-based component of their diets. More specifically, interest in plant-based protein as an alternative to conventional, animal-derived meat and dairy is on the rise in countries including China, India, and the Philippines. [Disclosure: Ai Palette is an AgFunder portfolio company.]

Beyond plant-based protein, ‘lab-grown’ meat is also gaining attention.

Mosa Meat, the Dutch company that unveiled the world’s first ‘lab-grown’ beefburger back in 2013, has raised $75 million in Series B funding this year.

Back in Asia, cell-based seafood startups Avant Meats and Shiok Meats have both grabbed headlines and raised funds from traditional aquaculture companies. Earlier this month, Singapore granted the world’s first-ever regulatory clearance for a cell-derived, cultured meat product, approving US startup Just Eat’s ‘clean’ chicken bites for sale in the city-state.

Please note: The above is not intended as an exhaustive list in any sense. These are simply five of the trends that stood out for the AFN editorial team this year. If you have a different perspective or think we’ve missed anything, please feel free to email me at [email protected] or find me on Twitter at @jacknwellis. In the meantime, here’s wishing you happy holidays from the whole AFN team!

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