The latest AgFunder data suggests the precipitous drop in agrifoodtech investment since early 2022 may finally be leveling off. However, deal counts are down and a good percentage of venture rounds are flat or down rounds, observes the CEO of AgriNovus, a nonprofit dedicated to growing the agbioscience economy in Indiana.
But amid all the uncertainty over trade, interest rates, lower commodity prices and the grim funding environment, says Mitch Frazier, “My worry is that we see the challenge and don’t find the opportunity. As the quote goes, ‘Pessimists sound smart and optimists makes money.’”
Times are undeniably hard, both for farmers and growers and for startups trying to raise money, he adds: “But some of the best companies are built in the hardest times. And when you sit back and look at things on a two-, three-, four-year basis, I actually feel pretty bullish.
“Right now, the cost of production and current market prices are roughly the same, so there’s not a lot of margin, particularly in row crops, with challenges around tariffs and trade adding complexity. But this just means that against this backdrop, everyone in the ag bioscience ecosystem has to be really intentional about what problems need to be solved.
“The companies who emerge from this, those that either find their home in a bigger company or find their home with a venture backed cap table, will be the ones that can deliver improvements to net cash farm income.”
Expect more consolidation
In this environment, he predicts, “We’re going to see corporates with cash on the balance sheet and others with cash on the balance sheet begin to look at strategic acquisitions, and we’re going to see consolidation. We’ve already begun to see that. Over the last couple of years, you’ve seen John Deere make moves, we’ve seen Corteva make moves, we’ve seen others make moves.
“We’re also going to see companies focus on getting to profitability sooner, which may mean slower growth, but we’re still going to see really promising venture-backed companies that meet the model for the investors’ thesis. We’re still going to see great companies get funded, although I think we will see corporates taking more of a role.”
But if input costs are going up and crop prices are going down, leaving many farmers between a rock and a hard place, are they going to be in a position to pay upfront for what agtech startups are offering, even if such innovations will save money in the long haul?
It’s a fair question, says Frazier, noting that returns on many row crops were negative in 2023 and 2024. “But when you look on a 20-year basis, adjusted for inflation, net cash farm income is still above the 20-year average. I don’t say that to minimize the challenge and the reality that exists on the farm, but austerity creates opportunity.”
Addressing the shortage in skilled labor
One obvious area of opportunity is tech addressing the perennial shortage in skilled labor, he says.
“Look at what we saw from John Deere at CES. It announced three critical innovations around autonomy: One around autonomy for large ag tractors, one around autonomy in construction, and one for commercial mowing.
“Jahmy Hindman, CTO of Deere, did a beautiful job highlighting the struggle to find skilled labor. There are roughly 2.4 million farm jobs that need to be filled annually, while 88% of contractors struggle to find skilled labor in construction, and we see this challenge across the economy.
“We remain below 5% unemployment nationally, which most economists consider as roughly full employment. So the reality is that we don’t have more people to bring into the workforce; there isn’t a large bastion of workers to fill these jobs. Therefore we have to turn to innovation to solve this problem.”
He adds: “I think this labor piece sits above trade, sits above the current interest rate environment, sits above the tough fundraising environment. It is one that I think is universal and will create significant opportunity for innovators who can offer solutions.”
“You see companies like Deere doing it, but we also see companies like Solinftec [disclosure, AgFunderNews’ parent company AgFunder is an investor], a Brazilian ag tech company which established its US HQ at Purdue Research Park in West Lafayette in 2019.
“Think of it as an autonomous solar powered crop scout and sprayer. You can spray crops [without people] but you can also use autonomy and automation to identify [issues in the field] rather than sending an agronomist. Where a problem is persistent, innovation will seek to solve it.”
TerraForce is another startup from Indiana addressing the labor shortage, he says. “[Founder] Michial Jacob saw all these watermelons growing in Knox County and would see teams of people out there harvesting them, so he went to the farms and said, Hey, this looks like a super laborious task, what would make a difference?
“So he built a robotic harvester that uses AI to identify whether watermelons are ripe and ready for harvesting and then picks the fruits [with very little human oversight]. Where companies like this can provide a clear line of sight from where they are to where they need to be, they will attract funding.”
Liberation Labs, which is building a state-of-the-art biomanufacturing complex in Richmond, Indiana, has secured significant funding over the past couple of years, both from private investors and government-backed loans, because it is providing enabling tech for the next generation of bioproducts at the scale and cost structure that’s needed, says Frazier.
“We also saw [Indianapolis-based precision spraying startup] Smart Apply get acquired by John Deere in 2023 because it demonstrated clear value.
“We also see big companies prioritizing investments in areas they know will grow. In early February, Ingredion committed $100 million to invest in its Indianapolis operation [which makes specialty starches from corn]. And that’s great for farmers growing corn.
“Same with Liberation Labs, which is using dextrose [from corn] to fuel its fermenters. Identifying new opportunities to use existing commodity crops is really important.”
Make America Healthy Again (MAHA)
As for the Trump Administration’s MAHA (Making America Healthy Again) agenda, HHS secretary RFK Jr’s crusade against seed oils has frustrated some row crop farmers in the Midwest. However, in general, it’s a bit too early to say what it will mean for Indiana’s agrifood ecosystem, says Frazier.
“I don’t think anyone knows at this point exactly what it will mean. But I do think there’s huge opportunity here for innovators, for farmers, for the ag bioscience economy at large, to benefit from this growing interest in the relationship between food and health.”
Stepping back, he says, “What is interesting in the food-is-medicine world is that Indianapolis is home to the nation’s largest medical school (Indiana University School of Medicine), the US headquarters of the second largest independent animal health company in the world (Elanco), Eli Lilly, the world’s most valuable human pharma company, Elevance Health (formerly Anthem), the nation’s second largest health insurer, and Corteva, the largest pure play ag company.
“There’s no other metro in the world that is better positioned to solve food as health. And on top of this, we have the universities… Purdue University, Indiana University, Notre Dame, The Rose–Hulman Institute of Technology, that are a stone’s throw away, so there’s a massive opportunity there.”
Regulatory bottlenecks: ‘We have to have a predictable, agile, science-based regulatory system’
That said, the regulatory environment facing innovators in food or ag remains challenging, he acknowledges.
Should RFK Jr. eliminate the self-affirmed GRAS pathway, for example, it will take longer for food companies to get new ingredients into the US market (although legal experts say this could take years and Congressional action – read more here).
Similarly, sweeping staffing cuts at federal agencies including the FDA, the USDA and the EPA have raised concerns that the regulatory process for approving new crop protection products, for example, could take even longer.
“The conversations we’ve had with leaders in animal health and plant science have identified a need to vastly improve the predictability and speed of the regulatory system,” says Frazier. “And this is something we must solve if we’re going to bring innovations to market. We have to have a predictable, agile, science-based regulatory system.”
Indiana startups to watch
There are scores of exciting startups in the agbioscience space in Indiana, says Frazier, but a few to watch include:
Insignum AgTech uses gene editing to turn on native pigments that can alert farmers to stressors impacting crops and help them take action before damage has been done.
ReproHealth Technologies (tagline, ‘We bring the IVF lab to the farm’) has developed an innovative form of Assisted Reproductive Technology (ART) for bovine production.
NanoBio Designs provides rapid, onsite, and cost-effective DNA testing services for seed suppliers and grain distributors via portable detection platforms, says Frazier. “They can do a strip test and accurately determine if this corn is GMO or non GMO. It’s basically bringing PCR level testing to a grain elevator.”
Gripp is a startup launched from DIAL Ventures, an innovation initiative launched by Purdue University with High Alpha Innovation, that has built an equipment tracking app allowing farmers and growers to log preventative maintenance schedules, routine audits, usage history, and current locations without manual record keeping.
The company recently announced a $1.5 million pre-seed round of funding to accelerate market expansion through product development, sales and marketing programs and strategic partnerships. says Frazier. “Gripp is a really interesting company that uses QR codes on equipment, on any asset on the farm, in a production system, an apple packing house or a tractor.”
Croft Technology, pitched as a ‘digital H-2A farm manager,’ is another startup to emerge from DIAL Ventures, says Frazier. “It’s a perfect example of a company seeing this labor challenge and finding a way to address it and add real value, and it experienced 2,000% revenue growth over the past 12 months.”
BioBond is a materials science company originating at Purdue University that makes plant-based adhesives, says Frazier. “We’re seeing this IP transfer from Purdue as a pipeline of talent.”
Athian is a carbon insetting marketplace for livestock that enables producers to upload data about reductions in greenhouse gas emissions and generate carbon credits that buyers can purchase through the platform.
Innovators will continue to bring new technologies to market despite turbulence and uncertainty. As the market shifts, the Agbioscience Podcast brings you conversations from leaders and innovators across food, animal health, plant science and agtech. You can subscribe to the podcast here and here
