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Focus on Life Sciences & Technology: First Half 2016 AgTech Funding Highlights

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AgFunder’s “AgTech Investing Report – Mid-Year 2016” was recently released. Here are some of the highlights we gleaned from the report.
August 16, 2016

AgFunder’sAgTech Investing Report – Mid-Year 2016” was recently released. Here are some of the highlights we gleaned from the report.

Agtech investment trends are in line with overall VC investment

Like overall U.S. venture capital (VC) activity, agtech VC activity in the first half of 2016 displayed some positives and negatives. Capital invested in the first half of 2016 ($1.8 billion) is down from the first half of 2015 ($2.2 billion), similar to overall VC activity (see our 2016 Venture Capital – Second Quarter Update). However, on a positive note, deal activity is up. The first half of 2016 saw 307 reported deals vs. 245 in the first half of 2015. Overall, while amounts invested in 2016 probably won’t exceed 2015’s total of $4.6 billion, 2016 is still on pace to be a very good year, in particular when compared to longer term historical levels.

Deal size is lower as earlier stage companies took a larger share of investment

Earlier stage companies captured a larger share of the total investment pool in the first half of 2016 versus 2015, reflected in smaller average deal sizes. In fact, deal size was lower than virtually any period over the past two-and-a-half years. Seed, Series A and Series B stage companies captured over half of capital invested so far in 2016. In 2015, those earlier stage companies only captured about one third of total investment. Here is deal size over the past couple of years.

average-deal-size.jpg

Investment is spread across a broad spectrum of technologies

The AgTech Funding Report tracks investment across a number of sub-sectors, with 10 of those subsectors attracting $50 million or more in investment in the first half of 2016. Food ecommerce is the leader among subsectors, but biotech and precision agriculture subsectors round out the other 4 of the top 5 subsectors:

  • Food Ecommerce: 32%
  • Biomaterials / Biochemicals: 14%
  • Soil & Crop Technology: 9%
  • Decision Support Technology: 8%
  • Drones & Robotics: 8%

Observing the trends in agtech and agtech investment over the past few years has been very encouraging. Despite a relative slowdown recently in overall VC activity, which seems to be impacting agtech investment too, overall factors and trends remain positive for the industry. Investment, both capital invested and deals completed have exploded over the past couple of years and a variety of technologies are being supported that should benefit the food and agri-business industry up and down the value chain.

Companies of all sizes are benefiting too, in particular earlier stage companies. The growth of early stage funds and accelerators is helping support this. For example, The Yield Lab, an agtech accelerator, was one of the most active investors highlighted in the AgFunder report. Increased support at the earlier stages of the innovation chain should help sustain the trends we are currently observing in the future.

RubinBrown has a dedicated Life Sciences and Technology Services Group that works with local, national and international companies to provide advisory, assurance and tax services for entities participating in or supporting life sciences and technology industries.

 

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