Report: Agricultural Startups Face Fallow Funding Field

agricultural technology

The world’s farming startups are reportedly facing problems both high-tech and low-tech.

As The Wall Street Journal reported Thursday (May 25), these companies — some of which had raised billions from investors — are now dealing with pests and other problems that farmers have long dealt with, as well as the funding drought facing other startups.

In this case, the report said, the agriculture technology industry has seen a dramatic drop in funding. During the first quarter of 2022, the sector took in a record $895 million. So far this year, that figure is roughly $10 million, the WSJ said, citing data provider AgFunder.

“Their business model was selling a vegetable, but they somehow described themselves as a technology company,” said Paul Sellew, CEO of Little Leaf Farms, a Massachusetts startup that grows lettuce using high-tech greenhouses.

Sellew said his company has avoided the sector’s troubles by prioritizing day-to-day farming over growth. The company projects sales of $100 million this year and says it is profitable.

As PYMNTS reported earlier this month, the situation is quite different in the MENA (Middle East and North Africa) region, where startups — and ag-tech startups especially — are enjoying a bountiful funding harvest.

Total investment raised by startups in MENA and the broader Gulf Cooperation Council (GCC) area surpassed $3 billion last year as investors pumped more money into promising startups despite the global slowdown.

“We’re really seeing an upward trend in terms of the amount of funding that takes place, the number of VCs that are in the region, and the number of good startups that are around,” Simon Sharp, partner at Global Ventures, a MENA-focused venture capital (VC) firm whose portfolio includes companies like Moniepoint (formerly TeamApt), Helium Health and Zid.

Sharp told PYMNTS that in recent years, sectors like HealthTech, EdTech and the Future of Work — all of which suffered during the pandemic — enjoyed a rebound thanks to the digitization wave and saw increased consumer adoption and behavior.

Ag-tech is an especially important sector for the region, where startups doing work in areas such as last-mile delivery, warehousing and fulfillment to help improve food production and reduce food insecurity are increasingly becoming hot prospects for VC funding.

“The MENA region imports about 85% of food produce, so that’s something legislation wants to change, and we’ve seen that trickle through in terms of startups that have emerged across the AgriTech value chain to try and solve that problem,” said Sharp.