Why agtech startups could collapse in record numbers in 2026

The agrifoodtech sector is entering a critical phase in 2026 as investors, including EcoTech Capital’s Adam Bergman, warn of a surge in startup failures driven by a lack of exits, shrinking capital and structural weaknesses in the funding model, particularly in key hubs like the United States.

The agrifoodtech investment landscape is facing one of its most challenging moments in recent years. According to investor Adam Bergman, the sector could see a record number of bankruptcies, restructurings and fire sales throughout 2026, marking a turning point after years of aggressive funding and high expectations.

Speaking to agfundernews, Bergman described a growing population of so-called “zombie startups”, companies that have survived on continued investor support without achieving meaningful commercial traction. “Those zombie companies probably are going to come to an end,” he said, pointing to repeated internal funding rounds that failed to deliver real progress.

The situation reflects a deeper issue within the ecosystem: a lack of exits. Without successful acquisitions or public listings, investors are struggling to recover capital, creating a negative cycle that limits new funding across the sector.

A funding cycle under pressure

The absence of exits has triggered a broader contraction in available capital. Many funds are reaching the end of their lifecycle without strong returns, making it difficult to raise new money. At the same time, investors are prioritizing support for existing portfolio companies instead of backing new ventures.

This dynamic has significantly reduced the flow of capital into early-stage startups. Bergman noted that even promising companies are finding it difficult to secure financing in the current environment. “The financing market is not changing, and it is closed for most companies,” he said.

The impact is amplified by the lack of buyers. Large agricultural corporations, historically key acquirers in the sector, are facing their own financial and strategic challenges. This has reduced acquisition activity and further weakened the exit environment.

From hype to reality

During previous investment cycles, particularly between 2017 and 2021, several agtech companies achieved high-value exits despite relatively low revenues. However, that trend has not continued.

Today, acquisitions are smaller and often focused on talent rather than business scale, commonly referred to as “acqui-hires.” This shift reflects a more cautious market where buyers prioritize profitability and proven business models.

As a result, many startups that were funded with expectations of rapid technological breakthroughs are now under pressure to demonstrate real-world viability. Some may succeed with more time, but others are unlikely to build sustainable businesses.

A long road to recovery

Despite the current downturn, Bergman maintains a long-term positive outlook for the sector. He argues that agrifoodtech is driven by powerful global trends that will continue to create opportunities over time.

Among these are food security, which has gained prominence due to geopolitical disruptions, and health and nutrition, an area increasingly linked to innovation in food systems. He also highlighted the importance of sustainable agriculture, as the industry seeks to produce more with limited natural resources.

Another key driver is the integration of technology and biotechnology developed in other industries. These innovations, including artificial intelligence and automation, are expected to improve efficiency and reduce costs across agriculture and food production.

However, Bergman cautioned that progress will take time. “This is not a five to ten year horizon,” he said. “It’s more like ten to twenty years.”

Rethinking the funding model

The current crisis is also prompting a reassessment of how agrifoodtech startups are financed. Traditional venture capital may not always align with the long development cycles typical of agriculture and food innovation.

Alternative funding sources are gaining attention, including non-dilutive grants, corporate partnerships and family offices. These options can provide more flexibility and reduce pressure on startups to deliver rapid returns.

At the same time, sector-specific investors with deep industry knowledge may play a crucial role in building more resilient companies.

What comes next

While 2026 may bring a wave of failures, it could also mark a necessary correction. The companies that survive are likely to be more disciplined, focused on profitability and better aligned with market realities.

In that sense, the current downturn may help reset expectations and lay the groundwork for a stronger, more sustainable agrifoodtech ecosystem.

As Bergman suggests, the challenges are significant, but so is the long-term potential. The sector’s future will depend on its ability to adapt, innovate and align capital with the realities of agriculture and food production.