Why leading VCs are rethinking their food investments
- Media Manager
- Nov 9, 2023
- 1 min read
Funding for innovation in food and agriculture systems is due for a reality check after years of startup overvaluation.
GreenBiz
Written By: Seth Olson
Published: November 9th, 2023
Photo Credit: Unsplash/CC0 Public Domain
In his keynote presentation at VERGE 23, Shayle Kann, a partner at Energy Impact Partners, described climate tech investing as a wave: Either you are building a wave or you are riding one. Over the last five years, the secluded surf spot known only to agrifood specialist investors was overrun with generalist venture capitalists looking to catch the next big wave.
But then the macroeconomic tides shifted — 85 food and beverage companies filed for bankruptcy in the U.S. in the first half of 2023 — and venture capitalists got spooked.
Total investment in agrifood tech dropped by 44 percent from 2021 to 2022. Overall, funding for decarbonizing the food system remains embarrassingly low: Only 10 percent of venture capital in agrifood technology, around $2.3 billion, went toward climate solutions from 2019 to 2020.
Meanwhile, governments’ investments in agriculture and food continue to be misguided by antiquated policies born in the 20th century that don’t match the food system decarbonization challenge:
90 percent of agricultural subsidies in the world harm the climate, nature and human health, according to the U.N. Food and Agriculture Organization.
Only 5 percent of climate funding from the Inflation Reduction Act in the U.S. will go toward food and agriculture decarbonization.
A mere 3 percent of government support for the agricultural sector in Organization for Economic Cooperation and Development countries goes toward innovation.
