Agrifoodtech investment is experiencing a remarkable surge in several developing markets, including India, Mexico, and Vietnam, as we move into 2024. This contrasts sharply with a 4% decline in global funding. However, the outlook for 2025 is becoming increasingly uncertain, impacted by what Mark Kahn from Omnivore describes succinctly as “Trump, tariffs, and trade.”
According to Kahn, “Geopolitical risks, such as the growing US-China tensions, could disrupt global commodity trade and lead to protectionist policies.” He emphasizes that food inflation and unstable supply chains may prompt governments to adopt interventionist policies that could adversely affect agrifoodtech startups across food processing, logistics, and farm-to-fork business models.
Adding to these concerns, Shruti Srivastava of Avaana Capital warns that continuing macroeconomic challenges and tightening liquidity might dampen investor sentiment, particularly impacting sectors that require long gestation periods like novel food systems and synthetic biology. This apprehension reflects a broader unease among investors regarding the stability of capital flow into agrifoodtech startups.
Meanwhile, Maurice Scheepens at the Dutch entrepreneurial development bank FMO foresees that escalating geopolitical tensions and trade restrictions will hinder businesses in developing markets. Currency fluctuations and protectionist sentiments in developed nations could foster an environment of wariness among investors, affecting their willingness to invest abroad, a sentiment echoed by John Friedman, Asia director at AgFunder.
Despite these challenges, there are grounds for optimism. Friedman notes that a robust exit pipeline in mature markets like India should bolster confidence and shift perceptions positively regarding recent adverse trends. He further highlights that South-East Asian startups are returning to foundational principles, proving their business models and successfully attracting fresh capital.
“The increasing urgency for climate-adaptation solutions, driven by escalating climate volatility, could rally additional agrifoodtech activity in developing markets where agricultural supply chains face severe challenges,” adds Kahn. The anticipation of more frequent climate disasters signals an urgent need for solutions that marry innovation with sustainability.
Where is the Smart Money Heading?
Looking ahead, Friedman believes China will likely re-establish itself as a tech leader, potentially unveiling major advancements in either capabilities or policy, if not in headline funding. Bernardo Milesy at GLOCAL also anticipates developments such as integration platforms, consolidation in precision agriculture, and pioneering data management tools tailored for farming and supply chains.
Juan Martin Ninfea from Pampa Start Venture Capital indicates that a significant portion of new activity will focus on AI and biologics across developing markets. “The trend is clearly towards AI. Beyond biologics, which is striving to achieve sustainable consolidation, some investments are being made in hardware or machinery that venture capitalists typically ignore,” he observes.
Ariadne Caballero at Latin American VC SP Ventures predicts that AI-driven agtech platforms will capture the most investor interest in 2025. These platforms, characterized by predictive analytics, interoperability, and embedded financial solutions, are expected to attract capital, as are new chemicals and biologics with a focus on regulatory readiness and demonstrable ROI.
On a regional level, 2025 is shaping up to be “the best vintage ever for agrifoodtech in Latam,” according to Francisco Jardim from SP Ventures. The interplay of capital scarcity, high-caliber entrepreneurs, and the maturity of technology trends seems to create a fertile ground for agrifoodtech growth.
A Shift from the Silicon Valley VC Model?
At the Climate Resilient Africa Fund, Sherief Kesseba predicts a transition toward an SME fund structure, diverging from the traditional Silicon Valley VC model. Agrifintech solutions are expected to evolve, offering pathways to greater outreach and influence within the African food ecosystem.
Kahn points to India’s emergence as a hardware innovation hub in 2025 as a pivotal development. This fusion of climate-adaptive agricultural technologies, advanced manufacturing capabilities, and circular economy solutions presents a model of sustainable development that aligns economic growth with environmental stewardship.
‘Super-Specialist’ Startups
Megha Okhai at British International Investment foresees a rise in highly specialized startups dedicated to addressing specific pain points within the agrifood supply chain. She argues that while full-stack platforms may seem appealing, they haven’t consistently demonstrated success due to the complexities of execution. “Founders are increasingly favoring deep solutions for targeted challenges within the value chain,” she asserts.
This shift is set against a backdrop of emerging pools of value creation along the supply chain. Okhai envisions an increased emphasis on collaboration and consolidation among founders, who are now more open to working together. This trend hints at the potential of creating an agtech super app within the Global South.
Kahn further suggests that startups from the EU and US may increasingly turn to developing markets to deploy their solutions, broadening the landscape of innovation.
The Biggest Surprise of 2024…
What could be the most unexpected development of 2024? According to Caballero at SP Ventures, it’s “the speed at which biologicals transitioned from mere promise to tangible performance in the field,” especially in nations like Brazil and India, where farmers prioritize tangible returns on investment over theoretical frameworks.
She acknowledges that entrepreneurs have become “sharper” with their business models, leading to a rewarding environment for execution-focused initiatives. As capital increasingly favors practical and established solutions, a maturation of ecosystems seems to emerge, with the most resilient participants beginning to prevail.
Investors anticipate escalating investments in agrifintech, with Srivastava from Avaana Capital forecasting numerous deals in segments such as “agriwaste-to-value and biorefinery.” She also notes a pronounced influx of capital into quick commerce grocery, particularly in India, despite the model appealing primarily to affluent urban consumers.
‘We Need to Show This Space Can and Does Make Money’
Among the significant challenges facing agrifood industries in developing markets are foreign exchange fluctuations, restricted access to capital, and a lack of sophisticated financial ecosystems that facilitate scalability. The current market pressures necessitate enhanced performance from startups, prompting a renewed focus on unit economics.
Megha Okhai observes that ongoing market adjustments are instilling greater discipline among founders and investors alike. As specialization becomes more commonplace, a wave of collaboration and consolidation appears imminent.
Despite challenges, many investors view the fragmented nature of developing markets as an opportunity to capitalize. Caballero contends that these regions present the most enticing agrifoodtech investment opportunities in 2025 due to pressing issues, engaged founders, and grounded valuations.
Ultimately, Kesseba from the Climate Resilient Africa Fund emphasizes the necessity of demonstrating profitability within this space, moving beyond reliance on grants and donations. As Kahn affirms, India’s transition from R&D-focused initiatives to commercialization-ready opportunities is ripe for private investment, marking a crucial moment for investors to get involved as these trends are likely to gain momentum in the year ahead.