AgriTech & Food Tech (Q3 2024): Sustainable farming fuels AgriTech momentum; Food Tech funding activity wanes amid CCM crackdown

Table of Contents

• Regulations
• Funding
• Product updates
• Partnerships
• M&A
• Value chain
• Appendices

Key takeaways

• The crackdown on cultivated meat continued, as Nebraska Governor Jim Pillen signed an executive order restricting cultivated meat across several fronts, bringing the total number of statewide anti-CCM regulatory measures to five (joining Florida, Alabama, Ohio, and Iowa). However, UPSIDE Foods, one of the first companies to get regulatory approval to sell CCM in the US, retaliated against Florida bill SB 1084, which has criminalized cultivated meat in the state.

• AgriTech and Food Tech investments decreased by 45% QoQ. However, AgriTech funding increased 230% QoQ (excluding Nutrien’s mega funding round in Q2), with tech-driven sustainable farming solutions remaining an investor hotspot. Smart Farming and Vertical Farming companies such as Monarch Tractors and 80 Acres Farms attracted substantial funds.

• PBD&E startups accounted for 47% of total Food Tech funding, with Helaina and Formo recording notable early-stage funding raises earmarked for alternative dairy protein development. Overall funding for the sector fell 29% QoQ, largely due to weak performances from PBM (-48% QoQ) and CCM (-90% QoQ).

• PBM product activity slowed (15 vs. 39 in Q2) from a two-year high last quarter. We believe this could be due to PBM startups extending their product development time frames as they gear up for Veganuary 2025. PBD&E startups saw a marginal increase and launched several industry firsts, such as quinoa-based milk and vegan spray cheese. Similarly, Smart Farming startups recorded an uptick and launched several analytical tools (Veris Technologies, EOS Data Analytics, LandScan) to enhance farming operations.

• Incumbents in both AgriTech and Food Tech ramped up activity, launching 19 products (vs. 13 in Q2). Notable launches included Nestlé’s PBM extender, Elmhurst 1925’s first alternative meat launch, Syngenta’s launch of its Cropwise AI platform, and Bayer’s new FieldView hardware.

• Gen AI, AI, robotics, and IoT integrations took the spotlight, as partnership activity saw a notable uptick (68 vs. 44 in Q2). Incumbents such as Ajinomoto, Alphabet, Fonterra, and CNH were at the forefront of these partnerships. Beyond Meat’s relaunch of its “Beyond The Orange Chicken” with Panda Express and Aleph Farms’ collaboration with Chef Eyal Shani for the debut launch of its cultivated beef product were also noteworthy. Vertical Farming startups focused on geographical expansion in the Middle East and EU regions. 

• We observed 12 deals in Q3 (vs. 4 in Q2). Tate & Lyle’s acquisition of CP Kelco for USD 1.8 billion and AIP’s USD 700 million acquisition of AGCO’s Grain & Protein division were notable. While most deals were ​​strategically driven, focusing on scaling production, improving market position, and farm activity digitization, Naplasol’s acquisition of Mycorena stood out, as it followed the latter's bankruptcy.

• AI adoption in Food Tech gathers momentum. In Q3, we saw several instances of this, such as Microsoft’s partnership with Danone to optimize supply chain operations and Shiru’s collaboration with Ajinomoto for AI-driven ingredient development. Similarly, in Q2, we saw collaborations between Aleph Farms and Bioraptor to optimize cultivated seafood production using AI, while ABB and Pulmuone teamed up to automate the research and production of lab-grown foods with robotic solutions. Food Tech companies will continue to leverage AI for product formulations, efficiency improvements, and cost reductions, focusing on addressing consumer pain points such as (1) price premiums and (2) drawing parity with traditional counterparts with regard to elements like taste and texture.

• Global climate agenda to propel AgriTech innovations: Driven by international treaties and accords such as the Paris Agreement and Kyoto Protocol, food and agri companies are ramping up efforts to reduce emissions and water usage and increase overall sustainability. In Q3, we saw several initiatives, such as Danone’s partnerships with Ajinomoto and Zoetis to develop solutions aimed at GHG emission reduction and sustainable dairy farming. Additionally, Ginkgo Bioworks collaboratively developed sustainable biocontrols for Brazilian agriculture with Vitales, Veolia launched a rock dust fertilizer claimed to help counter climate change by capturing inorganic carbon dioxide, and SweGreen developed in-store hydroponic farming systems that reportedly use up to 99% less water than traditional farming methods, eliminate the need for pesticides, and reduce transport emissions.

• The US CCM industry is at a standstill: The repercussions of restrictive CCM regulations introduced in Q2 were felt during Q3. All CCM funding rounds originated outside the US, and product activity was limited to ingredients and technology, which did not fall under the scrutiny of the aforementioned regulations. In the past 12 months, we observed several companies, including Gourmey and Vital Meat, applying for regulatory approval in the EU and the UK, while Meatable and Mosa Meat held approved cultivated meat tasting events in Europe. With the market for cultivated meat poised for growth amidst favorable reforms, CCM companies are likely to shift their focus to Europe until regulatory headwinds in the US are settled.

Regulation: CCM startups push back against restrictive laws

Analyst Take: The executive order to restrict cultivated meat in Nebraska was reminiscent of last quarter’s anti-CCM regulations, which saw the likes of Alabama and Florida criminalizing the production and sale of lab-grown meat. Nevertheless, companies like UPSIDE Foods have started to push back against these restrictive regulations, ​​similar to the legal campaigns against PBM labeling laws a few years back. Between 2021 and 2023, PBM companies like Upton’s Naturals and Tofurky challenged such laws in several states, with Tofurky succeeding in Louisiana, Missouri, and Arkansas. CCM companies are now seeking a similar outcome.

• The regulatory crackdown on alternative meat continued: Nebraska Governor Jim Pillen signed an executive order prohibiting state agencies from procuring cultivated meat, mandating state contractors to not discriminate against conventional meat producers, and requiring clear labeling and separate placement of cultivated meat products in stores. Similarly, Chile is considering a new bill to regulate the Food Tech industry and establish fair competition between traditional and plant-based food companies.

• Companies pushed back against restrictive CCM regulations: UPSIDE Foods has filed a lawsuit challenging bill SB 1084, which criminalizes the production and sale of lab-grown meat in Florida. The lawsuit, filed in federal court, seeks to declare the ban unconstitutional and to obtain preliminary and permanent injunctions against the law. The company argues that the law intends to protect the state's cattle industry from out-of-state competition rather than address food safety concerns, as claimed.

• Across other industries, several companies gained regulatory approval from their respective governing agencies. Approvals for the use of drone technology in farming operations (Rantizo, Corteva) and Generally Recognized as Safe (GRAS) status for alternative proteins (The Better Meat Co, Solar Foods) were prominent. GRAS status is an FDA designation indicating that a substance added to food is considered safe by experts under its intended use, facilitating quicker market entry while ensuring consumer safety.

Key regulatory approvals (Q3 2024)

Funding: AgriTech remains an investor hotspot; CCM funding slumps amid regulatory headwinds

Analyst Take: AgriTech funding continued to outpace its Food Tech counterparts, raising USD 583 million during the quarter (~67% of total AgriTech and Food Tech funding), compared to USD 291 million for the latter. This strong performance by AgriTech players reflects sustained investor interest in tech-driven farming solutions—such as vertical farming (~25% of total AgriTech & Food Tech funding), smart farming (~23%), and crop biotech (~16%)—that aim to address food security and sustainability needs.

The slowdown in Food Tech funding was largely due to the tightening US CCM regulatory landscape and a lack of mega deals in PBM (such as Meati’s USD 100 million Series C round, which accounted for ~57% of total funding in Q2). CCM funding plummeted to a two-year low (USD 11 million in Q3 vs. USD 82 million on average for the past eight quarters). Furthermore, all three CCM funding rounds this quarter were outside the US. Meanwhile, PBD&E and Food Waste startups recouped some of the lost investor interest and contributed more than half of Food Tech funding during the quarter.

AgriTech & Food Tech funding summary (Q3 2024)

• AgriTech and Food Tech startups raised USD 875 million in Q3, down 45% QoQ. The decrease was largely due to an inflated Q2, stemming from Nurtien’s USD 1 billion post-IPO round, excluding which aggregate funding increased 49% QoQ and 87% YoY.

• AgriTech funding outperformed Food Tech, similar to recent quarters. AgriTech startups accounted for 67% of total funding raised in the quarter, led by Vertical Farming (USD 220 million), Smart Farming (USD 201 million), and Crop Biotech (USD 143 million). Meanwhile, PBD&E and PBM startups accounted for ~80% of total Food Tech funding, raising USD 141 million and USD 91 million, respectively. AgriTech startups have raised, on average, 37% more funding than Food Tech startups over the past eight quarters.

• The number of funding rounds reached its highest level since Q1 2023. The most notable spike was observed in Crop Biotech (one round in Q2 2024 vs. seven in Q3 2024). Funding rounds across PBM, PBD&E, and Vertical Farming also increased.

• VC interest in the industry continued, raising USD 529 million (34% QoQ and 221% YoY), with funding across all stages (seed, early, and growth) increasing both QoQ and YoY. However, non-VC rounds, such as grants, debt financing, and post-IPO equity (collectively referred to as “other”), accounted for the majority of funding activity (~58% of total rounds), consistent with recent quarters.

AgriTech

• AgriTech funding increased by 230% QoQ (reaching USD 583 million), excluding Nutrien’s mega funding round in Q2. Mega deals from Smart Farming and Vertical Farming startups as well as a notable funding uptick in Crop Biotech were pivotal in this performance.

• Crop Biotech, Smart Farming, and Vertical Farming funding reached their highest levels since Q1 2023. These industries each raised over USD 100 million in funding, with the push to improve farming operations through tech-driven solutions remaining a hotspot. Notable funding rounds included 80 Acres Farm’s USD 140 million raise via public bonds (Vertical Farming), Monarch Tractor’s USD 133 million Series C round (Smart Farming), and Pairwise’s USD 40 million Series C round (Crop Biotech), all of which were earmarked for enhancing operational capabilities and product pipelines.

Food Tech

• Food Tech funding decreased by 29% QoQ after increasing for four consecutive quarters. This was largely due to declines in PBM (-48% QoQ) and CCM (-90% QoQ) funding. The decrease in PBM can be attributed to companies shifting focus toward sales growth and customer collaborations, aiming to increase product availability rather than pursuing additional capital (see the Partnerships section for more details). Meanwhile, the drop in CCM funding is likely due to restrictive regulations imposed in the US during Q2 2024.

• All three CCM funding rounds were outside the US, including Meatable’s USD 8.6 million credit facility and LabFarm’s USD 2.3 million grant from the Polish government, further indicating the low investor confidence in the US CCM market. 

• PBD&E funding recovered following a dip in Q2. Funds raised by PBD&E startups accounted for 47% of total Food Tech funding, with Formo’s USD 61 million and Helaina’s USD 45 million Series B rounds being the largest contributors. Nearly all PBD&E companies that raised funding focus on developing alternative proteins, such as animal-free casein through techniques like precision fermentation, while Helaina has developed a novel protein solution for lactoferrin, a protein found in human breast milk.

• Alternative Ingredients funding also declined, raising only USD 33 million (-51% QoQ) across six rounds. There was a notable lack of early- and growth-stage funding, with Plant-Ex Ingredient’s USD 11.7 million minority investment taking the top spot.

Product updates: Activity slumps as PBM startups gear up for Veganuary 2025

Analyst Take: PBM product activity slowed (-62% QoQ) after reaching a two-year high last quarter. We believe this could be due to PBM startups extending their product development time frames as they gear up for global events like Veganuary 2025 (slightly ahead of time, as we typically see this seasonal decline in Q4) while focusing more on leveraging existing products and expanding market reach through sales and customer collaborations in the interim. CCM activity also declined (-50% QoQ) largely due to the tightening regulatory landscape in the US. CCM startups seem to have shifted focus from launching alternative meat products to developing technologies (novel bioreactor systems by Mission Barns) and ingredients (non-GMO cell lines and 3D fiber scaffolds from CytoNest and Unicorn Biotechnologies) amidst regulatory headwinds.

In contrast, the AgriTech space sustained momentum, reaching a two-year high in product launches. AgriTech startups have sought to align with the global climate agenda through technology-driven solutions, focusing on water conservation (Veolia), energy efficiency (Conviron), emissions reduction (SweGreen), and more. Moreover, in Smart Farming launches, we saw several notable crop data analytics solutions, such as Syngenta’s Cropwise AI and Bayer’s FieldView, as companies aim to enhance farming operations, yield, and crop resilience through data-driven solutions. 

• We tracked 66 product updates in Q3 2024 (vs. 79 in Q2 2024). Food Tech launches accounted for 68% of total activity with 44 product updates, while AgriTech recorded 21. The drop in product activity was largely due to lower PBM and CCM launches compared to recent quarters.

• PBM and PBD&E carried 15 launches each, while AgriTech reached a two-year high in product activity led by Smart Farming product launches (11).

• Incumbent-led product launches saw an uptick (19 vs.13 in Q2) and were almost evenly split between Food Tech (10) and AgriTech (9).

• Lidl and Nestlé launched PBM products, while Elmhurst 1925, traditionally a PBD&E incumbent, entered the PBM category with its innovative TerraMeat product.

• Ingredion Incorporated and Concepta Ingredients, two incumbents from the Alternative Ingredients space, launched novel protein solutions, while PBD&E incumbents launched vegan ice cream (Comprital), butter (Arla Foods), and egg (Olga) products.

• In the AgriTech space, Smart Farming incumbents launched several autonomous farming equipment and solutions aimed at improving farming operations. These included autonomous grain cart retrofits, AI-based crop management platforms, and agricultural drones.

Key incumbent-led product launches (Q3 2024)

Food Tech

• PBM (15) and CCM (three) launches declined compared to recent quarters. Both industries fell below the past eight-quarter average (29 for PBM and five for CCM) and recorded QoQ declines (-62% for PBM and -50% for CCM). The CCM decrease was on the back of the tightening regulatory landscape in the US, while the slowdown in PBM was likely attributable to companies focusing on sales and customer collaborative efforts rather than immediate product development.

• Beyond Meat led PBM product activity with the launches of Beyond Sun Sausage and a whole-cut mycelium-based steak alternative. Hooked Foods expanded its portfolio with new plant-based chicken products, and Squeaky Bean launched a new ready-to-eat vegan bacon.

• PBD&E startups launched several unique products. NIUKE Foods and Credo Foods launched industry-firsts with QMILQ, a quinoa-based milk alternative, and Spray Cheeze, an oat-based canned cheese product. Milkadamia launched its 2D-printed flat-pack oat milk in the US, while plant-based egg producers such as Fabumin and Revyve introduced novel egg replacement products.

• Alternative Ingredients focused on novel protein solutions, while Convenience Foods startups launched new meal options. Notable launches in the Alternative Ingredients space included Ingredion’s VITESSENCE Pea 100 HD, Concepta’s premium protein range, and ExSeed’s sunflower protein isolate for plant-based alternatives. Meanwhile, Convenience Foods products were concentrated on new frozen-to-fresh meal offerings such as seafood items and snack foods from companies like Evol Foods, Clean Eatz, and Feel Good Foods.

AgriTech

• Smart Farming launches focused on crop data analytics. Veris Technologies introduced CoreScan, an automated soil sensor probe, and EOS Data Analytics added a Variable Rate Application (VRA) Map Builder feature to its EOSDA Crop Monitoring platform. In addition, LandScan, a company specializing in agricultural technology and precision farming solutions, secured a patent for its digital twin technology in precision site characterization.

• Crop Biotech and Natural Fertilizers solutions aimed to enhance sustainability and crop resiliency. Lavie Bio commercially expanded Yalos, its bio-inoculant product, to winter wheat, which claims to help reduce crop abandonment rates and increase farm productivity. Meanwhile, Veolia introduced a new natural rock dust product called "Pro-Grow Rockdust," which reportedly boosts soil health and helps counter climate change by capturing inorganic carbon dioxide.

Partnerships: Technology integration takes center stage in a busy quarter

Analyst Take: Technology integration through collaborations was a key trend in AgriTech, with Vertical Farming and Smart Farming leading the way. Robotic solutions by companies like BlueWhite, Sabanto, and Monarch Tractors were particularly notable. Meanwhile, there were also upticks in Gen AI integration (CropIn) and AI/ML technologies (Nature Fresh Farms, FarmWise), reflecting increasing interest in leveraging advanced tech for agricultural efficiency. Even in Food Tech, where adoption of such innovations has been historically limited, companies are embracing technology to improve critical areas. For instance, Shiru and Danone partnered with Ajinomoto and Microsoft to enhance product formulation and supply chain management through AI.

• We tracked 68 partnerships in Q3 2024 (vs. 44 in Q2). Food Tech partnerships remained broadly flat (36 vs. 32 in Q2), with a marginal increase in PBD&E partnerships. In the meantime, AgriTech activity more than doubled (32 vs. 12 in Q2), led by increased collaborations in Vertical Farming and Smart Farming. Product collaborations were the most prominent (39), followed by customer collaborations (16) and sales collaborations (13).

AgriTech & Food Tech partnerships by type (Q3 2024)

• Incumbent partnerships increased 2x (25 vs. 12 in Q2 2024), with a notable focus on technology integration across AI/ML.

Key incumbent tech integration partnerships (Q3 2024)

AgriTech

• Crop Biotech and Livestock Biotech partnerships focused on advancing crop production and sustainability. MyFloraDNA partnered with MaxGene BioScience to develop non-allergenic peanuts using CRISPR technology, while Ginkgo Bioworks and Vitales joined forces to launch sustainable biocontrols for Brazilian agriculture. Additionally, Danone partnered with Ajinomoto to reduce dairy greenhouse gas emissions through a novel feed supplement and with Zoetis to advance sustainable dairy farming practices through genetic innovations.

• Geographical expansions took prominence across Vertical Farming partnerships. Plenty entered several partnerships, including with Mawarid to establish five farming facilities in the Middle East over the next five years. In addition, it teamed up with 7-Eleven to supply indoor-farmed lettuce to 1,300 stores across the US. Meanwhile, iFarm and Hygrow aimed to launch a vertical farm in Switzerland, and Elevate Farms partnered with Cultivatd to support its expansion across Europe.

Food Tech

• Uptick in customer and sales collaborations amongst PBM and PBD&E startups. In Q3, we tracked 17 customer and sales collaborations (vs. nine in Q2), signaling a growing interest in plant-based food solutions across food service venues. Customer partnerships focusing on plant-based cheese products were prominent in PBD&E collaborations, whereas PBM startups concentrated their efforts on quick service restaurants (QSRs), supplying a variety of PBM options.
  • Beyond Meat relaunched its “Beyond The Orange Chicken,” a vegan version of the famous American-Chinese dish Orange Chicken, in partnership with Panda Express. This relaunch was driven by overwhelming consumer demand after the dish sold out within two weeks of its limited debut in 2021. Reportedly, over 7,000 patrons signed a petition on Change.org calling for its return.
  • Steakholder Foods secured its first commercial order for its premix blends (SHFish) in the US from Bondor Foods. This partnership followed Steakholder Foods’ MoU with Bondor’s sister company Premazon to develop new plant-based fish products using SHFish.
  • Aleph Farms, which received approval for its cultivated beef product last quarter, partnered with renowned Chef Eyal Shani to debut its beef product.

• Innovations in flavor, sweetness, and color from Alternative Ingredients partnerships. Exter and Lallemand formed a joint venture named Exter North America Inc. to develop bespoke yeast-based flavor solutions, while Ajinomoto partnered with Shiru to develop sweet proteins for beverages using Shiru’s proprietary AI-driven discovery platform. GNT Group collaborated with Plume Biotechnology to create novel color solutions for food and beverage applications via fermentation.

M&A: Activity heats up as Food Tech deals dominate

• We observed 12 deals in Q3 2024 (vs. four in Q2 2024) across PBM (five), PBD&E (three), Alternative Ingredients (one), and Smart Farming (three). PBM deals focused on enhancing and scaling production processes (Above Foods, MAASH, Naplasol), while PBD&E acquisitions aimed to bolster market position (Refresco, Zydus Lifesciences) and expand distribution (Califia Farms) across various channels. Smart Farming deals were mainly geared toward digitizing farming activity through technology integration to improve yield, efficiency, bottom line, and sustainability (Kubota, AIP, PatternAg).

• Tate & Lyle’s acquisition of CP Kelco in the Alternative Ingredients space was notable, with the deal valued at USD 1.8 billion. This acquisition aligns with Tate & Lyle's strategic shift toward a healthier portfolio and would enable the company to provide comprehensive solutions for product formulations, such as sweetener solutions with pectin or gums for mouthfeel and stabilization through combined solutions.

• Naplasol’s acquisition of mycoprotein producer Mycorena also stands out, as it followed the latter's bankruptcy due to financial struggles. Naplasol will continue producing Promyc, Mycorena’s flagship ingredient, at its Belgium facility. In addition, the company plans to expand its portfolio by offering a wider range of sustainable protein solutions, further leveraging Promyc’s potential to meet the growing market demand for eco-friendly protein alternatives.

Key M&A deals (Q3 2024)

Value chain: Agri and farming operations surge while food production and processing slows down

Analyst Take: Agri and farming operations saw a dip in funding, despite an increase in the number of rounds. This was largely due to the inflated funding levels from the last quarter, led by Nutrien’s USD 1 billion round. Product and partnership activity saw an uptick, supported by increased collaborations and product launches in the Smart Farming and Vertical Farming industries. R&D investments (although from a smaller base) increased 80% QoQ, reaching USD 7 million, led by funding in CCM and PBM. The two industries collectively accounted for approximately 94% of total R&D funding. R&D-focused partnerships also saw a marginal increase, mainly due to Food Tech-related activities (Fonterra, Innocent Meat).

Food production and processing recorded a broad-based downtrend except for M&A activity. Product activity suffered due to tightening CCM regulations in the US, leading to an overall lower performance by CCM startups. Furthermore, PBM companies focused more on improving sales performance and product availability, causing new product launches to lose momentum (-62% QoQ for PBM and -28% QoQ for aggregate Food Tech launches).

Appendices

Appendix I: Funding rounds in Q3 2024

Appendix II: Product updates in Q3 2024

Appendix III: Partnerships in Q3 2024

Appendix IV: Value chain definitions