Today: Apr 23, 2024

Valuation shakeup ahead, but agri-foodtech VCs brace for harder hit.

4 months ago
  • Agrifoodtech startup valuations are predicted to continue their correction into 2024, as per a survey conducted by AgFunderNews. Around 30% of the 28 leading agrifoodtech investors who were surveyed believe the worst is yet to come for startups trying to raise capital.
  • Several startups in sectors like alternative protein and vertical farming, which are primarily supported by generalist venture funds, witnessed a larger number of failures and down-rounds in 2023 than some investors expected.
  • On the other hand, some survey respondents were surprised that there has not been more market consolidation, especially given the numerous failing companies with attractive valuations.
  • According to Yoni Glickman, managing director of FoodSparks, the industry, particularly the alternative protein sector, has moved from an overhype cycle to overcorrection. He believes that entrepreneurs are still unrealistic about valuations.
  • AgFunder partners Rob Leclerc and Tom Shields expressed disappointment over continuing high valuations and predicted that startup founders would not be satisfied with where they could raise funds next year.

The market correction in agrifoodtech startup valuations, a trend being witnessed across tech industries, is predicted to continue into 2024, according to almost all agrifoodtech venture capital investors surveyed by AgFunderNews. Approximately 30% of the 28 leading agrifoodtech investors who responded to the survey believe that the most difficult times are still ahead for startups that are trying to raise capital. Meanwhile, about 44% of the respondents view the situation more optimistically, believing that startup valuations have reached their lowest point, while 11% think the worst is over.

Despite the facts pointing towards a challenging 2024 for startups trying to raise funds, some investors have expressed astonishment about the magnitude of failures and down-rounds in 2023, especially in the alternative protein and vertical farming sectors. These sectors, which are most commonly supported by generalist venture funds, witnessed many of those funds retreating in 2023. Some respondents were shocked that there has not been more consolidation in the market, particularly because of the numerous failing companies with attractive valuations.

Yoni Glickman, the managing director of FoodSparks, believes that the industry, particularly the alternative protein segment, has moved from a period of overhype between 2020 and 2022 to a phase of overcorrection. He mentioned that in spite of the correlation between startup failures and valuation recalibrations, entrepreneurs remain unrealistic about valuations. Rob Leclerc and Tom Shields from AgFunder also registered their disappointment concerning persisting high valuations. They predicted that startup founders wouldn’t be pleased with their fundraising prospects in the coming year.

AgFunder partners and several other investors expressed their concerns about founders who do not accept the reality of the market. They noted that such an attitude may lead to operational failures and could potentially turn off venture capitalists who might otherwise be interested in investing in their businesses. As the fundraising landscape evolves in the near future, it could become even more important for startups to focus on valuations and adjust their business strategies accordingly.