As the Agtech sector matures and the value proposition of digital data-driven solutions becomes ever clearer, sector analysts are expecting M&A activity to further increase. A notable example is the recent acquisition of Granular by DuPont to accelerate its "Digital Ag Strategy". It's logical that various industry players will start to strategically align or pursue acquisitions to solidify their technology offerings. Here is a good read from Pitchbook on expected M&A trends in the sector - Agtech to Yield More M&A.
Agtech is a relatively small but rapidly growing vertical market of the Industrial Internet of Things (IIoT). Like many other inefficient industrial sectors we track, the agriculture industry is seeing an acceleration in the creation and investment in digital Agtech companies. This infographic captures the key companies and startups in the various segments of the Agtech universe. The number of players is increasing but in proportion to other industrial segments, Agtech is not an overseeded field just yet.
Our view is that the macro pressures remain strong for the adoption of technology that drives efficiency and cost reductions in agriculture. The power of data and software is equally as strong in farming as it is in digital manufacturing as an example. The large incumbents have strong market penetration and reach and are seeking digital product extensions or up-selling opportunities. Combine this with the fact that the limited number of credible Agtech startups can be described as healthy competition at best and the result is that industry consolidation has already begun. The race to digital in Agriculture is on.
Founders of McRock Capital.