As the world's largest region in both geography and population, with a vast network of smallholder farmers combined with dense urban settings and food sovereignty concerns, Asia-Pacific is a hotbed of opportunity for food and agriculture technology startups.
But in 2023, downstream food delivery and restaurant startups, once the darling of the region’s agrifoodtech ecosystem, fueling tens of billions of dollars of investment, are no longer so attractive to investors.
The new star of the ecosystem is upstream innovation, reveals a new report from leading agrifoodtech venture firm and research platform AgFunder, in collaboration with the Bill & Melinda Gates Foundation, Omnivore and AgriFutures Australia.
The report provides exclusive insights into the Asia-Pacific agtech landscape. In 2022, upstream agtech investment increased by 24%, surpassing downstream funding for the first time in years, benefiting smallholder farmers. India briefly overtook China in agrifoodtech investment, while Southeast Asia demonstrated significant potential with $1.7 billion in funding. Categories such as Ag Biotechnology and Innovative Food showed remarkable growth. The report also delves into stage-wise funding trends and highlights startups in key markets.
While total funding to the farm-to-fork agrifoodtech ecosystem dropped 58% year-over-year (YoY) to $6.5 billion in 2022 from the record-breaking $15.2 billion raised in 2021, investment in startups operating upstream increased 24% YoY. This increase appears to be continuing in 2023, according to preliminary data on 2023 funding flows.
This is good news for the 450 million smallholder farmers producing about 80% of the region's food. For the first time in years, upstream funding, which provides technologies to farmers and primary food producers, overtook downstream investment. The former raised $3.2 billion in 2022 versus the latter's $2.7 million, according to the report.
The Ag Biotechnology category was particularly buoyant in the Asia-Pacific region in 2022, bringing in $813 million in funding, nearly half the amount raised globally in this category in 2022. While a couple of very large deals contributed to these totals, there was also greater deal activity in this segment, which includes on-farm inputs for crop & animal agriculture," confirming investors’ growing interest in this space.
Innovative Food – the category housing the alternative protein industry – bucked the global decline in funding to the segment, with investment actually increasing year-over-year to $527 million, albeit over fewer deals.
Similarly, Farm Management Software, Sensing & IoT ($334m), Farm Robotics ($252m) and Novel Farming Systems startups ($254m), which include indoor farming and aquaculture and insect farming, brought in more funding across fewer deals.
China, meanwhile, lost its lead to India as the country attracting the most funding in 2022, likely due to the loss of downstream mega-deals that propped up China's agrifoodtech investment in 2021. India's lead looks to be short lived, however; in H1 2023, China grabbed the top spot back, raising $861 million.
The report includes deep dive sections on investment to startups in Australia, China, India, Indonesia and Southeast Asia and spotlights on startups Zetifi, Integriculture, Eratani and Tablepointer.
India has long been one of Asia’s top-funded countries for agrifoodtech. Past years have seen the country’s downstream startups — particularly those in food delivery — thrive off multi-million deals, and 2022 was no different. All of the top deals went to so-called “instant delivery” startups pedaling groceries and ready meals to consumers. However, India is also home to a growing number of upstream startups developing farmtech tools as well as marketplaces that connect the country’s many smallholder farmers more directly to both customers and farm supplies.
Some key insights include:
This report was produced by AgFunder in collaboration with the Bill & Melinda Gates Foundation, Omnivore and AgriFutures Australia.
About AgFunder
AgFunder is one of the world’s most active foodtech and agtech VCs. We’re rethinking venture capital for the 21st century. Born in Silicon Valley in 2013, we use technology, media and our global network to invest in and support transformational founders and technologies. With the world’s only truly global agrifoodtech investment portfolio, we’ve invested in more than 60 companies across six continents.
About AgFunderNews
AgFunderNews reports on the evolution of the global food and agriculture system. By going beyond the headlines, we analyze the people, companies and technologies aiming to improve human and planetary health. A multimedia publication with a subscriber-base of 90,000+, AgFunderNews is a division of AgFunder Inc.
AgriFutures growAG.is the gateway to Australia’s agrifood innovation system. AgriFutures evokeAG. is Asia Pacific’s premier agrifoodtech event.
About Omnivore
Omnivore is a venture capital firm based in India and is the only impact investor in South Asia focused entirely on agriculture and food systems. Since 2011, Omnivore has backed over 40 agritech startups. Every day, Omnivore portfolio companies drive agricultural prosperity and transform food systems across India, making farming more profitable, resilient, and sustainable.