#GoodMarkets_08: Precision Agriculture
Precision agriculture (‘Precision-Ag’) is a farming technique that uses technology to improve the efficiency and output of crop production sustainably. It involves collecting data on soil conditions, weather patterns, and other variables to better manage farming practices. The goal of precision agriculture is to enhance yield through more efficient use of critical inputs, such as land, water, fuel, nutrients, and pest-control.
It has several benefits, including:
- Environmental sustainability: Farmers who use precision agriculture technologies use less to grow more, reducing both cost and environmental impact. [Aem][US Wheat]
- Increased crop production: Farmers using precision technology saw a 4% increase in crop production, 7% increase in fertilizer placement efficiency, 9% reduction in herbicide and pesticide use, and 6% reduction in fossil fuel use. [US Wheat]
- Efficient use of resources: Precision agriculture gives farmers the ability to more effectively use crop inputs including fertilizers, pesticides, tillage, and irrigation water. [Univ Missouri][USDA]
- Reduced fertilizer loss: Precision nutrient management, paired with cover crops, natural buffers, and wetlands, is key to reducing the environmental impact of fertilizer. [EDF]
The overall Agriculture-Tech (AgTech) market is projected to reach $19.24 billion by 2030, making it a promising area for investment. [GlobalAgTech]. The global precision farming market size was valued at USD 9.48 billion in 2022 and is expected to reach USD 10.50 billion in 2023. [Grandview]
The Venture Opportunity in Precision-Ag
Precision agriculture is a rapidly growing market for venture capitalists (VCs). In 2021, precision ag startups attracted more than $2 billion in funding through 159 deals, a 42.6% increase year-over-year [Pitchbook]
The segment also experienced a significant increase in exit activity, in key areas such as:
- Farm management software
- Robotics and smart field equipment
- Field IoT
- Drones and imagery analytics
In the fourth quarter of 2021, precision ag startups attracted $696.5 million in VC, a nearly 69% increase in deal value from the previous quarter. [Pitchbook]. The increased level of funding in the AgTech sector has been particularly transformative, with approximately 20 times more capital invested in new AgTech ventures in 2021 than in 2012. [McKinsey]
However, AgTech in general has seen a relative decline in relation to all US VC, as exhibited above in recent years, but shown steady growth for nearly a decade.
There are numerous VCs investing in PrecisionAg and AgTech both, including S2G Ventures, Syngenta Ventures, Omnivore Venture Partners, Finistere Ventures, Middleland Capital, Y Combinator, and Khosla Ventures. The goal of these VCs is to support startups that use technology to improve the efficiency and effectiveness of crop production, with a focus on enhancing sustainability through more efficient use of critical inputs such as land, water, fuel, fertilizer, and pesticides.
Recent funding was announced by Supply Change Capital with their inaugural $75M raise. [TechCrunch]
Recent Exits
Recent Raises
Copyright 2023, All rights reserved, by Zecca Lehn via @posi2ive. No advice given here (e.g., financial / legal / business / other). All views expressed represent those of the author personally at the time of writing, and not those of any external business entity nor organization.
