US Agrifoodtech Funding Sees 14% Increase Driven by AI Investment

By Agroempresario.com

After facing macroeconomic turbulence in recent years due to inflation, high credit costs, and trade uncertainties, the US agrifoodtech sector has begun to show signs of recovery in 2024. A key driver behind this resurgence is artificial intelligence (AI), which is attracting significant investment and revolutionizing the industry.

According to AgFunder’s latest Global AgriFoodTech Investment Report, US agrifoodtech startups raised $6.6 billion in 2024, reflecting a 14% increase from the previous year's $5.8 billion. Despite this improvement, these figures remain far from the record $26 billion raised in 2021 before economic corrections and rising interest rates curbed venture capital enthusiasm. Moreover, the number of investment deals declined to 468—the lowest in a decade—indicating that investors are prioritizing startups with solid economic fundamentals.

AI-Powered Startups Leading Investment Trends

Artificial intelligence has emerged as the dominant force in venture capital, attracting over $100 billion across various industries in 2024, according to Crunchbase. AI-related startups within agrifoodtech have particularly benefited from this trend, with companies leveraging AI-powered automation to address labor shortages and improve operational efficiency.

Among the notable AI-driven startups is Monarch Tractor, a pioneer in autonomous farming equipment, and Carbon Robotics, known for its AI-based weeding solutions. Additionally, companies like Odeko are using predictive algorithms to optimize restaurant supply chains. Rob Leclerc, founding partner at AgFunder, noted that many entrepreneurs are rebranding their businesses as AI companies to capture investor interest.

Reflecting this AI boom, 13 of the top 20 agrifoodtech deals in 2024 involved companies utilizing or marketing AI-driven solutions. One of the most significant deals involved Wonder, a startup developing a "superapp" for food that uses AI to predict customer preferences and automate food ordering. Similarly, Inari, a gene-editing startup, employs AI-powered predictive design to enhance plant genetics, while Oishii integrates AI into its robotics-driven vertical farming system for high-end strawberries.

The Rise of Farm Robotics and Autonomous Equipment

Investment in Farm Robotics, Mechanization & Equipment has experienced remarkable growth, increasing from $196 million in 2023 to $345 million in 2024. This surge reflects larger, later-stage deals and growing adoption of autonomous solutions in agriculture.

Monarch Tractor and Carbon Robotics led the investment landscape, raising $133 million and $70 million, respectively, for their autonomous farming solutions. Monarch has deployed 400 machines worldwide, while Carbon Robotics has distributed over 100 AI-powered weeding robots. According to Walt DuFlock, VP of Innovation at Western Growers, weeding robots have demonstrated the most significant progress, with rising demand for automated solutions like laser weeders, precision sprayers, and harvest-assist robots.

Weeds pose a $33 billion annual challenge to US farmers, making AI-powered weeding solutions highly attractive. Traditional herbicides face increasing regulatory restrictions and consumer concerns, further driving the shift toward automated alternatives. Paul Mikesell, CEO of Carbon Robotics, emphasized that AI-powered farming is already transforming agriculture by reducing labor costs and enhancing efficiency. “This is about more than replacing herbicides—it’s about keeping farms competitive and profitable,” he stated.

AI-Driven Innovation in Restaurant and Retail Tech

The restaurant tech sector has also seen a shift in investment focus. The Cloud Retail Infrastructure category, which includes ghost kitchens, raised only $145 million in 2024, a stark contrast to its $5 billion peak in 2021. In contrast, In-store Retail & Restaurant Tech saw $1.1 billion in investments, highlighting a preference for cost-cutting and efficiency-improving technologies.

Startups like Restaurant365, which offers AI-driven automation for inventory and staff management, and Odeko, which streamlines coffee shop logistics, secured major funding rounds. These technologies may not be as flashy as ghost kitchens but play a critical role in improving restaurant operations.

Declining Investment in Novel Farming and Ag Marketplaces

Not all agrifoodtech sectors experienced growth. Novel Farming Systems, including vertical and insect farming, raised just $288 million in 2024, marking a 53% decline from 2023. Similarly, Ag Marketplaces & Fintech raised only $181 million, struggling to gain traction in the US compared to developing markets where supply chain inefficiencies are more pronounced.

The eGrocery sector faced the steepest decline, plummeting from a peak of $4 billion in 2021 to just $21 million in 2024. Market dominance by giants like Amazon Fresh, Walmart, and Walgreens has squeezed out smaller startups, making it difficult for new entrants to compete.

California Retains Its Lead in Agrifoodtech Investment

California continues to dominate US agrifoodtech investment, securing $1.9 billion in 2024, slightly up from $1.8 billion in 2023. While New York also saw significant growth, jumping from $663 million in 2023 to $1.5 billion in 2024, California remains the epicenter of agrifood innovation.

Silicon Valley’s AI expertise, coupled with California’s role as a leading agricultural producer, ensures the state’s continued leadership in agrifoodtech. However, as alternative funding models emerge, some experts question whether traditional venture capital is still the best fit for the sector.