What is FoodTech and AgTech?
FoodTech has been defined in different ways, one of the most comprehensive definitions is:
“Food Tech as the emerging sector exploring how technology can be leveraged to create efficiency and sustainability in designing, producing, choosing, delivering and enjoying food” by ForwardFooding.
On the other hand, the definition of AgTech industry comes from uniting the agriculture and technology industries. It is an emerging economic sector that can dramatically reshape global agriculture by increasing the productivity of the agricultural sector and, at the same time, reducing social and environmental costs associated with current agricultural production practices. It can, therefore, lead us on the path towards a more sustainable agricultural system.
AgTech is also associated with the concept of Agriculture 4.0, which references the digitalization of agriculture. Connectivity is the cornerstone of industrial and agricultural transformation. IoT is an enabling technology that is increasingly part of agriculture’s equipment.
Challenges facing agriculture and technology
A few decades ago, farmers could cope with a growing food demand by expanding the land they used to farm. However, this is no longer feasible. Around 50% of the world’s land is already being used for agriculture, and most of the rest isn’t appropriate to grow food. Climate change is also impacting agriculture in many ways, from changing precipitation patterns to heatwaves and increased pests’ occurrences.
Furthermore, the consumer’s behavior and their demand is rapidly changing; affluence is related with an increased demand for fruits, vegetables and animal products. While connectivity is associated with a growing market for internet-based strategies.
Here is where innovators can play a crucial role in developing the agriculture of the future. Innovations can be short-term solutions by creating waste-reducing irrigation tech. They can be long-term by developing sustainable technologies to use water smartly.
Even though the opportunities to integrate agriculture and digitalization are multiple, there are several obstacles to adopting new technologies. Among them are the mindset and practices in the agricultural sector, the challenge of standardization, and the ability to invest and modernize agricultural equipment and supporting infrastructures.
Tracing the origin of the food in a certifiable way is every day more critical. Here the implementation of technologies such as blockchain could ensure that the point of origin is known. Furthermore, the same process could be modified to include data on the product’s treatment in each stage along the food chain. This would ensure that the labeling at the point of sale is correct and that there are no frauds on the product’s quality.
The AgTech sector has enormous investment opportunities. The demand for sustainable food, fibers, fodder, and energy is projected to grow. Through most of the 20th century, a major part of agricultural innovation investment was funded with public money. However, during the 1980s, public expenditure in agricultural R&D stagnated.
During the first two decades of this century, private investment in food and agricultural innovation has steadily grown; indeed, between 2005 and 2015, the number of investment funds specializing in food and agriculture assets grew from around 30 to more than 300, with current holdings over US$52 billion. Between 2015 and 2020, global venture funding for AgTech had added more than US$15 billion. In 2020, the investment in FoodTech companies was projected to reach €15 globally.
AgTech investment in Chile
The agriculture sector is one of the main economic sectors in Chile’s economy. Furthermore, the country’s quality of agricultural exports is widely recognized, from bottled wine to fresh and dried fruits. By the early 2010s, the country’s potential for agricultural investment was being highlighted due to its farming capabilities and for being a geographic center.
In the last decade, the Chilean government started to seriously consider public and private investment in the development of agricultural innovation in the country. In collaboration with the World Bank, the government implemented a plan to fund technological agricultural innovations to project the sector into the future.
By 2017 the government had begun to work with farmers, private investors, researchers, and technology firms to develop functional ingredients and specialty additives of natural origin in Chile. This project had a public investment of US$3,600 million.
Partnerships between innovation companies, the state, and venture capitals have found fertile ground in Chile. Among the main factors to invest in the country are:
– the good reputation of its agricultural products
– the country’s institutional and macroeconomic stability that guarantees security for investors
– the support of the Chilean government that continues to invest in AgTech industry via CORFO and other institutions
– the country’s free trade agreements with more than 80% of the world’s GDP
– off-season fruit production for the Northern Hemisphere
Four successful Chilean AgTech and FoodTech startups
Many AgTech startups have appeared in Chile during the last years, thanks to the innovative partnerships between public and private capital. Below you can find more information about 4 Chilean startups that have revolutionized the foodtech industry.
NotCo is a food technology company that produces plant-based meat and dairy substitutes. It uses artificial intelligence to make plant-based food that tastes, looks, and smells the same as animal-based. The company was founded in 2015, and it has raised more than US$115 million. NotCo has a range of products that include NotMilk, NotBurguer, NotIceCream, and NotMayo. It has partnered with Burger King and Papa Johns in Chile. The company is expected to shortly scale its operations in the U.S. The most important rounds of investment for the company have been September 2020 with US$85 million lead by Future Positive, L Catterton and March 2020 with US$30 million lead by Bezos Expeditions, The Craftory
PolyNatural is based on disruptive intelligent science that is used for the first time in the fruticulture industry. Based on all-natural ingredients, the company offers unique products that benefit the quality of food. Shel-life® is a natural emulsion manufactured with natural extracts, lipids, and plant polymers to form a covering on the fruit that reduces the growth of microorganisms and dehydration, thus reducing food waste. The company’s product differs from the competition in the components used, most of which consist of synthetic waxes derived from petroleum. PolyNatural’s Shel-life® is organically certified in the European Union and the United States, so it can safely be used to protect organic apples, peaches and oranges, among other produce. The company was founded in 2015, and it has raised US$800 thousand in funding so far. The most important investment round for the company has been February 2020, with US$800 thousand lead by ChileGlobal Ventures.
Instacrops is an AgTech platform that integrates different technologies and services. It is a virtual assistant that combines IoT modules and software to optimize irrigation based on weather forecasts and can also detect diseases and pests and maximize fertilizers’ utility by giving farmers real-time recommendations and actionable insights. The Chilean startup’s services are based on Big Data and virtual assistance, the use of Plug & Play technologies, continuous research and development, and remote monitoring and control. Instacrops was founded in 2015, and it has raised US$220 thousand in investment. The most important round of investment for the company has been February 2020 with US$100 thousand lead by Thrive Agtech Accelerator.
Agrourbana is the first vertical agriculture company in Latin America, leading the foodtech industry in the region. It produces the best vegetables using cutting-edge technology as well as social and environmentally responsible processes. Vertical agriculture allows farmers to grow high-tech crops indoors. With much less space, it is possible to grow the same amount of food in only 1% of the land compared with traditional agriculture, while also saving up to 95% of water. Agrourbana’s innovation is particularly relevant when considering that most of the land adequate for agriculture is already being used. The company has raised US$1 million in investment so far. The most important investment round for the company has been February 2020, with US$1 million lead by CLIN.
Chilean AgriTech startups are leading the path towards a more sustainable agricultural system, reducing food waste, increasing productivity and, giving consumers new and healthy food choices.