Venture Capital

Modern Drones and robots pull VCs back to agtech

Growth-stage agtech companies undoubtedly had a challenging 2023.

Buzzy plant biotech company Indigo Ag and indoor farming leader Bowery both swallowed down rounds in the second half of the year, and a flurry of high-profile startups including Infarm and AeroFarms filed for bankruptcy.

But one area of agtech has fared remarkably well: Precision agriculture technologies, from drones to farm software, have ballooned as a share of VC activity in agtech.

Explore the growing precision ag segment by clicking on the teal tile.

Spotlight: Precision agriculture

Sixty-seven precision ag companies pulled in $687.7 million in Q4 2023 across four verticals:

  • Drones and imagery analytics: Aerial technology that tracks and collects data on harvests and resource distribution as well as detects disease and pests.
  • Farm management software: Marketplaces, platforms and software for labor sourcing, commerce and data analysis.
  • Field IoT: Internet-of-things technology that facilitates crop, water, weather and pest management.
  • Robotics and smart field equipment: Machinery that enables automation of fieldwork like seeding, irrigation, weeding and harvesting.

Precision agriculture involves any technology that helps with yield and profitability without using more land or wasting resources. Compared to other areas of agtech, it has fared relatively well in the VC pullback and is poised for further acceleration as startups combine two areas of interest for VCs: climate sustainability and generative AI.

Precision ag startups Quantum Systems, Pachama and LiveEO—all drones and imagery analysis companies—closed eight-figure VC-backed rounds in Q4.

Up rounds aren’t as assured in Silicon Valley as they used to be. Still, two robotics agtech startups—Carbon Robotics and Burro—raised late-stage rounds in Q4 with significant valuation bumps of 1.6x and 1.3x, respectively. These votes of confidence reveal how much progress has been made in precision agriculture robotics, according to PitchBook data.

Agtech deals dropped from 2021’s peak of $13 billion, but investment in 2023 was still higher than any year before 2020. In Q4, startups brought in $1.4 billion across 181 VC deals, including large rounds for farming marketplace FBN and Bowery.

Agribusiness marketplaces brought in the most dollars of any category in Q4, while drones and imagery startups recorded the most deals. Increasingly, generative AI applications for agriculture and regenerative methods are driving innovation and investor interest in the vertical.

Investors are also increasingly cognizant of the critical role that climate adaptation and emissions reduction technologies have in pushing the agriculture industry forward on its net zero ambitions.

The industry finished the year out strong with a major public listing and several significant M&A transactions: Shiyue Daotian, a plant biotech company, went public on the Hong Kong Stock Exchange in a $2 billion exit; Rockwell Automation acquired robotics equipment startup Clearpath Robotics for up to $615 million; and Innoval acquired AI agriculture startup ITK for €45 million (about $49 million).

Agtech companies enjoy a smaller group of potential strategic acquirers than other VC-backed technologies: CNH Industrial, Hydrofarm and Deveron have led the M&A scene with five closed deals apiece since 2021.