It’s a trend that could benefit emerging agricultural technology or ag-tech companies within the cannabis space. Many of these companies either began indoor growing with traditional products like lettuce or started in cannabis only to see a future beyond the confines of a pseudo-legal product.
Pitchbook News issued a new report that found funding for ag-tech companies jumped to a record high in the third quarter of 2021. Their data showed that this group raised $3.2 billion across 201 deals. This was an increase of 57% over the second quarter and annually, deal values hit $7.8 billion year-to-date. It will beat 2020 by 21.3%, with just one quarter remaining in the year. Pitchbook also said that the deal count totaled 545 deals in 2021 year-to-date, on pace to reach a decade high.
While none of the companies mentioned in the Pitchbook report come from the cannabis industry, it does bode well for them and makes their fundraising story a bit easier to tell. The big kahuna was Pivot Bio which raised $430.0 million Series D in the third quarter led by Temasek Holdings. According to Crunchbase, it has raised $616 million to date and has a post-money valuation in the range of $1B to $10B as of Jul 19, 2021, according to PrivCo. The company has developed a method to replace synthetic nitrogen that farmers use with a proprietary microbial technology that supplies the daily nitrogen cereal crops require.
Pitchbook said, “Investors are focusing on tech solutions that reduce atmospheric carbon, either by mitigating factors that lead to carbon emissions, such as enteric fermentation, or improving soil health and other carbon-capture tools and strategies.” The report also said that ag biotech startups attracted the majority (39.6%) of quarterly venture capital funding, while precision ag startups drew the majority of deals by count (34.4%).
Of course, most venture capital investors aren’t in it for the long haul. Most of them want to know the way out the door before signing the check. Pitchbook said that the largest exit of the quarter was Ginkgo Bioworks’ $1.7 billion SPAC merger. The report said, “The company’s cell editing platform is used to pursue livestock feed innovation and microbiomics alternatives to synthetic agricultural chemicals, among other objectives.” Pitchbook reported that other key companies that exited in the third quarter included Benson Hill (NYSE: BHIL), Bear Flag Robotics, and American Robotics.
Some of the leading names in cannabis Ag-tech are:
- Agrify Corporation (NASDAQ: AGFY)
- Urban-gro Inc. (NASDAQ: UGRO)
- Hydrofarm Holdings Group Inc. (NASDAQ: HYFM)
- Scotts Miracle-Gro (NYSE: SMG)
- TSR Grow (Private)