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 and attracted substantial funds.

• PBD&E startups accounted for 47% of total Food Tech funding, with and 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. four 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 price premiums and 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 amid favorable reforms, CCM companies are likely to shift their focus to Europe until regulatory headwinds in the US are settled.