The Evolution of UK Agritech

A decade ago, the UK government launched its ￡160m ‘Agri-tech Strategy’ to transform the agricultural sector using the UK’s world-leading scientific research.

The aim was to ensure that innovations in data science, satellites, sensor technology and precision farming would be applied in ways that benefited society, the economy and the environment.

To address the ‘valley of death’ between agritech innovation in the lab and the marketplace, a number of initiatives were focused on supporting agritech startups.

These included a ￡70m agritech catalyst to fund projects - collaborations between startups, research institutes and agriculture or food companies - with a view to accelerate commercialisation.

UK agritech was already well-established, with farmers and food producers applying data-led techniques to drive efficiency across the agriculture supply chain, which in 2013 contributed around ￡96 billion to the economy and employed 3.8 million people.

But how much has changed for agritech innovators since then, and where is the sector heading now?

What’s changed?

2013 marked a shift in agritech investment globally, according to reports, in part due to advances in big data and sensor technologies which quickly opened up new opportunities across the agricultural sector.

Among the global uplift in both activity and investment in agritech, the UK showcased its strength in leveraging the potential of new technologies for both food and agriculture. In 2014 three of the top 10 startup funding rounds in agritech globally were for UK startups, including the highest valued round: $100m for SunDrop Farms.

By 2017, the UK was the third most active country for agritech startup funding, raising over $500 million across 69 deals, according to AgFunder data.

The boom continued through to 2022, when UK agritech startups raised $1.3bn across 188 deals. While the total funding put it behind other countries like China and Germany, the UK had a greater number of agritech investment deals than both countries - demonstrating the health of the UK’s agritech startup ecosystem and the range of startups with significant commercial potential.

In fact, the UK’s focus on scaling agritech startups has seen the number of active companies quadruple in the last decade - from around 50 in 2013 to more than 200 in 2023. A healthy proportion - just under 20% - have reached mid- or late-stage growth, with more than three quarters representing a strong pipeline of seed and early-stage startups.

In the last decade the relationship between research and commercial applications for startups has deepened, in part due to four agri-tech centres set up for this purpose, including an agrimetrics institute providing a data marketplace for startups to use.

Public interest in agritech has also rocketed, with pressure on food security and climate change driving agritech up the agenda. This can be seen not only through the continued funding initiatives and competitions - like the UKRI’s Farming Innovation Programme - but also in the proliferation of crowdfunding for agritech startups alongside specialised VC firms.

Two crowdfunding platforms - Seedrs and Crowdcube - are the top ‘investors’ for UK agritech startups, if treated equivalently to VC firms. The past five years in particular have seen a surge in the establishment of sectorally niche investors; the fourth highest investor by number of deals is agritech specialist Agfunder, which is the top investor by value of those deals.

All of the changes - from a narrowing ‘valley of death’ to the huge growth in the agritech startup ecosystem - will have an impact on what the next decade looks like for agritech startups in the UK. So what can we expect?

Where is UK agritech heading?

The explosion of big data and open data has opened up more and new possibilities for agritech startups working in the UK,

Already this has enabled precision farming to flourish in the UK, with companies and stakeholders across the farming and food supply chains using satellite data, sensor data and other data sources to drive efficiency and lower environmental impact.

Currently, there are 65 UK-based precision agriculture companies, most of which have a B2B focus. This burgeoning area will only continue to grow, particularly as advances are made in AI and machine learning with the potential for better insights and automation.

Although historically UK agritech has been more weighted towards vertical and urban farming, the focus now and for the foreseeable future is on ‘deep tech’ applications in agriculture i.e. using data insights and automation, biotech and genetic engineering methods.

Both the number of startups and the amount of investment in these areas are expected to grow, with particular hot spots around applications for food security and reducing environmental impact.

In just the last two years, funding for biotech and agricultural engineering has increased dramatically - making it the most active agritech subsector in the UK.?

Recent recipients of public funding for agritech cluster in these areas, including projects using automation and robotics for precision wheat sowing and dairy cubicle cleaning;? AI-enabled pest management and drone-based tree management; and using satellite data to increase nutritional quality of farmed algae.

While 30% of agritech startups are currently based in London, there are already signs that UK agritech will be more evenly distributed across the UK within the next few years. The national network of both research and industry innovation centres is increasing, driven by existing startup ecosystems, university and farming hubs and concerted government efforts.?

Among the Department of Business and Trade’s ‘High Potential Opportunities’ - regions promoted to foreign investors due to their strength in specific growth areas - are a number of agritech hubs: vertical farming in Yorkshire; animal health in Hampshire; food processing automation in Lincolnshire; sustainable aquaculture in Dorset; and nutritional innovation in Norfolk and Suffolk.

With the majority of agritech startups currently at an early stage, the agritech ecosystem is ripe for huge growth as companies scale, exit and key players then go on to form a new generation of agritech companies and investors.?

UK agritech companies cumulatively account for ￡2.86bn in turnover, and just under 6,500 employees, but as the urgency builds to find novel solutions to food security and environment challenges, the UK agritech sector will become even more influential and essential around the world.