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.
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.
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.
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.
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).
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