How can investors and entrepreneurs work together to attract more capital for animal protein production in the next 12 months and beyond?

With venture capital scaling back across all sectors, we spoke with seasoned industry investors to gather their insights on new investment and funding models required to support start-ups and scale-ups in reaching commercialization as well as the evergreen investment opportunities that will grow the industry. 

Stephen Murray, AVP, MERCK ANIMAL HEALTH VENTURES: “In 2024, we anticipate a continuation of the challenging funding environment for businesses reliant on venture funding, although we continue to be excited about and committed to working with start-ups that are bringing practical and innovative tech solutions for global livestock producers to market. The drivers around precision livestock management are accelerating and more innovation is needed to unlock this potential – innovation across technologies, business models and funding models.”

James Caffyn, Partner, LEVER VC: “The supply and demand balance for capital in the animal agtech space will likely remain tight, perhaps easing slightly through the second half of the year. The continued flow of high-quality companies in the space creates a favorable environment for investors.

Thematically, a few key areas are expected to draw the most attention. The focus on carbon will only intensify, driven by the escalating push from end buyers to curtail scope 3 emissions. Technologies that drive efficiency gains through the animal ag supply chain from feed and health inputs to genetics and farm technology platforms will play a pivotal role, driven in part by the increased pressure inflation and global demand dynamics are having on the industry.

This will be overlayed by increasingly active legislative bodies that, whilst aiming to drive greater sustainability in the industry, will look to implement measures that create further cost and operational pressures for the industry. Technologies that can alleviate some of these challenges will be key.”

Rob Trice, Founding Partner, BETTER FOOD VENTURES: “We are all expecting less VC money deployed in 2024 – into venture capital generally, into the category of agrifoodtech and the subcategory of animal agtech. Perhaps one silver lining for animal agtech ventures is that, in contrast to some other areas in agtech venture e.g. vertical farming there have not been as many high-profile failures.”

Dave Summa, Venture Partner, GENOA VC: “Animal AgTech trends we are watching include the following below:

  • Continued application of new enzyme and protein therapies to meet very large unmet animal and aquaculture diseases.
  • Use of AI and analytical instrumentation that unlocks producer yield improvements.
  • Use of alternative crop chemistries to displace current pesticides, including peptides and other natural product metabolites.
  • Products that improve producer productivity and reduce GHG, from fertilizers to anti-methanogens.

How can investors and entrepreneurs work together to attract more funding, and more funding types into animal protein production?

Cristina Rohr, Managing Director, S2G VENTURES: “For attracting diverse and increased funding in animal protein production, the emphasis is on developing technologies with

solid unit economics and profitability. Innovations that demonstrate clear economic benefits are more likely to attract a broader spectrum of investors, including those new to the agtech sector. The key is not only in creating innovative solutions but also in showcasing their economic viability and scalability to potential investors, thereby facilitating a wider range of investment opportunities.”

Duane Cantrell, CEO & Managing Partner, FULCRUM GLOBAL CAPITAL: “To attract more funding into animal protein production we must increase the pool of funds targeting production animal opportunities. Fundamentally that is done by broadening the appeal to tech funds (AI, ML), other Ag funds to include animal, impact funds (genetic markers identified for lower methane emissions, feed efficiency and water consumption), human health funds (platform technologies that apply to human health issues e.g. respiratory).

Additionally, the industry must do a better job of attracting non-dilutive funds, especially early in technological development. These funds help keep valuations lower and improve the likelihood of venture returns in a highly integrated industry that has historically limited exit valuations.

Venture capital will follow returns, so we must increase the competition for emerging technologies, keep the valuations at reasonable levels for investment or better articulate the global impact of these technologies.”

Jan Bouten, Partner, INNOVA: “Early partnering with customers is super important in the agtech space, as this is really the best (and only) way to build a credible ROI story that farmers and producers will trust. And when I say partnering, I don’t mean putting a face and name on a slide deck, but truly co-developing the product with them in the field or barn and incentivizing the farmer / producer with equity in the company. Getting your hands and boots dirty. We see too many entrepreneurs in this space that have not spent enough time on the farm to truly understand the problem they are solving. Coming to the table with a partnership like that will play well with investors. It will also allow the start-up to possibly tap into USDA or NSF SBIR grants.”

Rob Trice, Founding Partner, BETTER FOOD VENTURES: “Embrace pre-competitive collaborative activities, particularly to help create standardized, interoperable, machine-readable data to break down data silos and unlock the potential of tools like AI. Universities and international partnerships should be better leveraged on this end. Wrangle in more money from animal agriculture veterans and their companies to fund innovation to solve real-world problems. These veterans will also have realistic return expectations that may be less than a standard VC needs for a fund return.”

We look forward to hearing more from our investors on their panel sessions at the summit, book your place now to join them:

Day 1:

2.40pm: Lightning Talks // Applying AI to Animal Ag: Intelligent Insights for Improved Care
Rob Trice, Founding PartnerBETTER FOOD VENTURES

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4.30pm: Start-Up Showcase
Jan Bouten, Partner, INNOVA
James Caffyn, Partner, LEVER VC

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5.15pm: Investor Panel // Finding the Right Funding Models for Start-Ups in Animal AgTech
Cristina Rohr, Managing Director, S2G VENTURES
Duane CantrellCEO & Managing Partner, FULCRUM GLOBAL CAPITAL

VIEW SESSION

Day 2:

9.05am: Workshop 1: Accelerating the Digital Transition of Animal Agriculture
Stephen Murray, AVP, MERCK ANIMAL HEALTH VENTURES
Rob Trice,
Founding PartnerBETTER FOOD VENTURES

VIEW SESSION