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Latin America’s importance to worldwide agriculture is immense, and venture-capital investment seems to be catching on.
The region houses Brazil, which is the fourth-largest food producer and No. 2 food exporter in the world, according to venture-capital firm AgFunder’s inaugural Latin America AgriFoodTech Investment Report. Latin America also holds the distinction of being the world’s foremost soy producer, while also sporting 23% of global beef and buffalo output and 20% of global poultry production. The region is also a major producer of crops like cacao and coffee.
The report dove into the current state of ag-tech investment in the region, which has been historically underfunded, only receiving 5% of what it calls “global agri-food tech” venture-capital investment in 2022.
The region’s agri-food tech startups have raised $7.3 billion since 2018, the report showed, but investors pulled back in 2022, with startups only raising $1.7 billion, a 39% drop from the previous year’s $2.8 billion.
Despite the YoY decrease in funding, investment in the industry was up 183% in 2022 compared to 2020, with 153 food-tech and ag-tech companies in Latin America raising funds last year.
The categories that received the most funding were “eGrocery” and “cloud retail infrastructure,” which raised $404 million and $270 million, respectively.
At the opposite end of the spectrum, farm robotics, mechanization and equipment only raised $2 million, while the “home and cooking” category pulled in just $1 million.
The report also examined a “newly created category” called conservation tech, dedicated to tracking funding for efforts around conservation and reducing deforestation in Latin America, which holds nearly 60% of all terrestrial life and is home to the world’s largest rainforest. Four deals in this category each raised over $10 million, as part of an overall $147 million raised.
Brazil was the biggest market for agri-food tech startups and investment in 2022, leading the way with 86 deals worth $765 million and accounting for nearly 50% of the region’s market share. Brazil was particularly buoyed by Agrolend, a platform for agricultural loans, which raised nearly $100 million.
In terms of market share, Mexico trailed in a distant second, accounting for 14.2%. Grocery-ordering platform Jüsto’s $152 million Series B funding round contributed to the 25 deals worth $272 million raised in the country.
“Latin America is an interesting dichotomy of highly advanced and productive large-scale agricultural organizations,” the report noted, “while most if not all of its countries are still considered developing…with 14 million smallholder farmers producing 50% of the region’s food.”
The report cites “rapidly accelerating connectivity,” “a growing ecosystem of dedicated investors,” and “creativity” as reasons to be bullish on the region.