“We’ve definitely seen it in our business,” he said on Wednesday at the World Food Prize Foundation’s Borlaug Dialogue in Des Moines, Iowa. “Farm profitability — that is the barometer for willingness to adopt technology.”
The slowdown is creating another hurdle for ag tech companies, which have seen capital deployed plunge in the past three years. Venture capital funding for agrifood businesses dropped 65% from its 2022 peak, a recent PitchBook report showed. The number of new VC fund launches also shrank to 17 last year from 49 in 2023, according to the financial data platform for private capital markets.
It’s a stark turnaround for an industry that was until just a few years ago the darling of investment managers. But with crop prices falling to multiyear lows and grain set to pile up at US farms due to President Donald Trump’s trade war with China, funding is now harder to come by.
“The ability to raise capital 10 years ago was reasonably sufficient to really drive a lot of innovation,” said Jason Cope, founder of PowerPollen, which developed a technology to collect, preserve and apply pollen on-demand to help improve productivity. “Good times lie ahead, but for now it’s just buckling down and surviving through a change in the commodities as we see them today.”
The agriculture industry needs to find ways to continue to fund technology and bridge differences between the strict guidelines capital allocators face, Abbott said in the panel discussion, which was moderated by Bloomberg News. Most investment managers have a 10-year timeline to build, launch and deploy capital to investors.
“If our look at our business and other growth businesses, 10 years is almost no time,” he said.
Cope added that the agriculture industry needs to be more creative and tap other sources of funding including federal, state and individual investors.
“Tariffs are a situation where there’s change in the marketplace and you have to be innovative on how you work with it,” he said. “It really takes grit in agriculture to drive a vision and a technology forward.”
— By Isis Almeida and Erin Ailworth (Bloomberg)
