Written by: Leanna Sweha, JD
Investment in agtech reached a record high last year. According to Crunchbase data, investors made nearly $5 billion in 440 funding deals to VC-backed startups in 2021. That’s a fifty percent increase over the $3.3 billion invested in 2020.
Both animal health and supply chain integrity came into sharp focus as critical issues during the COVID pandemic. At the same time, Environmental, Social, and Governance (ESG) standards are emerging as a critical investment screening tool.
What factors will dominate animal agtech investment in 2022, and where will investors focus their capital?
This question was addressed at the Animal AgTech Innovation Summit in March in San Francisco by a panel of high-profile, strategic investors. Mareese Keane, co-founder of Opengate, a partner in The VINE network, moderated the panel.
Opengate works at the intersection of startups and corporates in agtech, helping with startup growth strategy and corporate engagement strategy. Mareese and her co-founder Elif Ceylon also run accelerator programs with partners around the world.
We asked Mareese about the biggest takeaways from the panel.
She first described how animal production has been under scrutiny due to its environmental impact. This makes it harder to attract capital, although there is significant opportunity to invest in technologies to improve environmental impact.
Biosecurity was a big theme, as highlighted by two panel members. Michael Helmstetter, Founder and President of TechAccel, expected an increased investment focus on biosecurity risk and preparedness. Start-ups focused on digital biological monitoring, early disease detection, vaccines and therapeutics, and gene-editing, will be popular for investors.
Aaron Schacht, President and CEO of MBRD and former EVP at Elanco, USA, anticipates a big opportunity to replace older technologies like antibiotics. In the past animal health technology innovation tended to emerge from human health technology innovation. Today, however, with new data analytic techniques, animal health technology innovation can stand on its own and can drive innovation that can lead to potential human health outcomes.
As the pressures in the food production economy grow stronger due to inflation and the possibility of economic recession, Kate Danaher, Managing Director of S2G Ventures, noted that the industry will need digital technologies and analytics that will optimize productivity at the farm level and into the supply chain.
Finally, Mareese discussed the growing impact of ESG targets on animal agriculture. Panelist Rich Shuler, Operations Director at Paine Schwartz Partners, highlighted the seriousness with which corporates are now taking ESG targets. All types of investors will soon demand insight and accountability along these metrics. Therefore, startups that can help quantify and document ESG metrics should become more attractive to investors.
Mareese noted that one of Opengate’s clients, VYLA, is working in this area, by breaking down data silos across the dairy supply chain. VYLA’s neutral, 3rd party tech platform connects data securely and with permissions from the producer across all stakeholders in the dairy supply chain to optimize production and drive transparency and traceability in the supply chain.
We asked Mareese what she sees as the role of The VINE network and partners like Opengate in accelerating and de-risking investment in animal agtech.
She believes that the VINE’s innovation ecosystem model, which brings together startups, corporations and universities, is the future for making rapid progress in animal agtech. Achieving environmental goals and climate targets will require a lot of cooperation, and The VINE network can provide this collaboration.
She emphasized the unique role of the university partners in The VINE and their powerful role in independent ground truthing. For example, the UC ANR research and extension centers play a critical role in field testing new technologies. Similarly, she noted that UC’s extension services are critical to continue to bring best practices to farms.
Opengate is assisting in The VINE initiative called Climate Smart AgTech for Dairy to support industry road mapping and progress to understand innovation gaps and how to overcome current technology challenges.