After a few turbulent years marked by persistent inflation, costly credit, and ongoing trade uncertainties, the US agrifoodtech investment scene appears to be charting a cautious recovery. In 2024, startups in this sector raised a total of $6.6 billion—up 14% from the previous year’s $5.8 billion—as investors increasingly place their bets on artificial intelligence (AI) to solve long-standing agricultural challenges. Despite the overall funding remaining well below the exuberant highs of 2021, when US agrifoodtech raised a staggering $26 billion, the current trends suggest that AI is not just a buzzword but a transformative force shaping the future of farming, food production, and restaurant technology.

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Navigating a Challenging Macro Environment

The macroeconomic landscape of recent years has forced many industries to reassess their strategies and growth expectations. The agrifoodtech sector is no exception. Over the past few years, global markets have been rocked by macroeconomic turbulence—from persistently high inflation rates and expensive credit markets to uncertainties in international trade policies. These factors have pushed venture capitalists to be more selective, resulting in fewer deals overall. In fact, the number of transactions in 2024 dropped to a decade-low of 468, underscoring a cautious investment approach.

Despite the contraction in deal numbers, investors have turned their attention to companies with solid unit economics and clear paths to profitability. The current funding environment, while more restrained compared to the previous years of cheap money, signals a deliberate shift toward quality over quantity. In this context, the emerging convergence of agrifoodtech and AI is proving to be an area where capital is not only abundant but also strategically deployed.

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AI: The Catalyst in Agrifoodtech Investment

A significant trend driving this cautious resurgence is the rapid integration of AI technologies. Across various industries, AI has attracted over $100 billion in funding in 2024 alone—about one third of all venture capital raised during the year. Within agrifoodtech, AI is powering innovations that tackle labor shortages, boost operational efficiency, and enable precision agriculture. Venture capital is increasingly flowing toward startups that either incorporate AI into their business models or brand themselves as AI-centric—a phenomenon that AgFunder’s founding partner Rob Leclerc captured succinctly when he noted, “AI is eating VC dollars.”

The infusion of AI into agrifoodtech is not limited to one segment. For instance, farm robot pioneers such as Monarch Tractor and Carbon Robotics are deploying AI-powered automation to overcome labor challenges and efficiency gaps. Monarch Tractor, now in the midst of its Series C funding round with $133 million, has deployed 400 autonomous machines globally, revolutionizing how modern farming tackles the challenges of scale and labor scarcity. Similarly, Carbon Robotics, with over 100 LaserWeeder units delivered to date, has pushed forward the frontier of robotic weeding technology—an area of critical importance given that weeds cost US farmers an estimated $33 billion annually in lost yields and control expenses.

In a world where farmers face rising input costs and shrinking margins, these technological innovations offer a lifeline. By minimizing reliance on chemical herbicides—which are increasingly under regulatory and consumer scrutiny—these AI-driven solutions are paving the way for more sustainable and efficient farming practices.

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Reinventing Food and Supply Chain Management

The ripple effects of AI are also being felt far upstream and downstream in the agrifoodtech ecosystem. On the consumer-facing side, startups like Wonder are transforming the dining experience through a “superapp” for food. With a whopping $700 million raised in 2024, Wonder is developing an AI-powered platform that not only suggests meals based on user preferences but also automates the ordering process. CEO Marc Lore has remarked that an overwhelming majority—between 85% and 90%—of his own meals are “AI derived,” a testament to how deeply these technologies are integrating into everyday life.

Similarly, supply chain optimizers such as Odeko are harnessing predictive algorithms to streamline restaurant logistics. These innovations are critical in an era where supply chain resilience has become a competitive advantage. With disruptions ranging from labor shortages to global shipping delays, the ability to forecast demand and optimize delivery routes can significantly reduce overheads and improve service quality.

Adding another layer of sophistication, gene-editing startups like Inari are employing “AI-powered predictive design” to explore new genetic pathways. Their goal is to enhance plant performance by predicting where and how to make targeted edits in plant DNA. This intersection of biotechnology and AI holds the promise of developing crops that are not only more resilient to environmental stressors but also capable of higher yields. Similarly, companies like Oishii are revolutionizing urban agriculture through robotics-equipped vertical farms, growing high-end strawberries that cater to niche markets and gourmet consumers.

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The Rise of Farm Robotics, Mechanization & Equipment

One of the most dynamic segments within agrifoodtech is farm robotics, mechanization, and equipment. While early investments in this area were modest—Carbon Robotics, for example, raised just $33 million in 2020—the sector experienced a massive surge during the funding peak of 2021. Although the number of deals has since cooled, the total capital invested in this segment has grown significantly. In 2024, funding reached $345 million, up from $196 million in 2023 and $305 million in 2022, signaling a maturation of the market with larger, later-stage deals.

This upward trajectory in funding is emblematic of the market’s shift from early-stage experimentation to commercialization and scalability. Investors are increasingly backing companies that have moved beyond the pilot phase and are demonstrating real-world deployment. Monarch Tractor and Carbon Robotics are prime examples. Their recent funding rounds have enabled them to expand production, refine their technologies, and achieve greater market penetration. For farmers, these developments are crucial. The ability to deploy autonomous tractors and weeding robots not only reduces reliance on manual labor but also addresses issues like declining crop yields due to ineffective weed management.

Walt DuFlock, VP of innovation at Western Growers, explains that while the deal count may be low, the focus is squarely on the quality and scalability of technology. “It does not necessarily mean progress is slowing, only that funds are moving towards later stage activity,” he notes. In this climate, where the costs of traditional herbicides and labor continue to rise, investment in robust, AI-powered mechanization provides a clear path toward sustainable profitability.

Moreover, the deployment of weeding robots is one of the few segments where tangible progress is evident. With more than 100 LaserWeeders already in operation across three continents, companies like Carbon Robotics are proving that AI-driven solutions are not just experimental ideas—they are practical, market-ready innovations that are reshaping agricultural operations. These robots help farmers reduce labor costs, improve crop quality, and minimize the environmental impact of chemical herbicides. As consumer demand for “cleaner” food intensifies, such technological advances are becoming increasingly vital.

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Transforming Restaurant Technology: From Ghost Kitchens to In-Store Efficiency

Not all innovation in the agrifoodtech space is confined to the fields. The restaurant technology sector is undergoing its own transformation, albeit at a more measured pace. During the pandemic, the concept of ghost kitchens took center stage, attracting nearly $5 billion in global funding in 2021. However, as the initial excitement faded and consumer behaviors shifted, ghost kitchens found themselves supplanted by more enduring technology solutions.

Today, US restaurant tech funding is dominated by in-store retail and restaurant management platforms rather than flashy, short-lived business models. The Cloud Retail Infrastructure segment, which once revolved around ghost kitchens and at-home dining technologies, raised a modest $145 million in 2024. In contrast, the more traditional but essential In-store Retail & Restaurant Tech category garnered $1.1 billion in investments. This category—often dubbed the “picks and shovels” of the restaurant industry—is focused on streamlining operations, reducing costs, and enhancing efficiency.

Companies like Restaurant365 and Odeko are at the forefront of this trend. Restaurant365, which recently secured $175 million at a valuation exceeding $1 billion, offers an all-in-one platform that uses AI to automate everything from scheduling and inventory tracking to financial management. Meanwhile, Odeko, with its $150 million raise, caters specifically to small businesses like coffee shops, providing tailored solutions that help them manage day-to-day operations more effectively. While these innovations may not generate the same viral buzz as consumer-facing apps, they are quietly revolutionizing the restaurant industry by ensuring that businesses can operate more profitably in an increasingly competitive market.

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Emerging Challenges and Underperforming Sectors

While the overall trend in agrifoodtech appears positive, not all segments are experiencing the same momentum. Novel Farming Systems, which encompasses innovative areas such as insect farming and vertical farming, saw its funding plunge by 53% in 2024 compared to the previous year, raising just $288 million. Similarly, Ag Marketplaces & Fintech—sectors that have traditionally thrived in developing markets—raised a modest $181 million in the US, reflecting a broader trend of cautious investment in categories that have yet to prove their resilience in more mature economies.

Perhaps most striking is the dramatic fall in the eGrocery sector. Once a darling of venture capital with $4 billion raised in 2021, eGrocery startups saw their fortunes decline sharply over the past few years. In 2024, US eGrocery companies managed to raise only $21 million, as industry giants like Amazon Fresh, Walmart, and even Walgreens have come to dominate the space. The once promising startup Instacart, which held around 20% of the market share in recent years, now finds itself operating in an environment where innovation is overshadowed by the dominance of established players. The lesson here is clear: without a disruptive, novel offering that can outcompete incumbents, niche segments may continue to struggle in attracting meaningful capital.

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California, Silicon Valley, and the Regional Dynamics

Geographically, the epicenters of agrifoodtech investment continue to be California and New York. California, home to Silicon Valley and a significant portion of the nation’s specialty crop production—including strawberries, almonds, and olives—remains the leading state for agrifoodtech funding. In 2024, the Golden State raised $1.9 billion, a slight increase from $1.8 billion in 2023, though still a far cry from the $6 billion observed in 2022. New York, traditionally trailing behind California, showed a marked improvement with $1.5 billion in deals in 2024 compared to a mere $663 million in 2023.

This regional dynamic is partly driven by the continued innovation and robust infrastructure in California. Silicon Valley’s concentration of venture capital and tech talent is fueling the so-called “AI revolution,” not just in software but also in sectors like agrifoodtech. As AI technologies mature and become more integrated into everyday farming operations—from precision irrigation and yield prediction to autonomous machinery—California’s role as an innovation hub appears secure. Furthermore, state-level initiatives and partnerships with agricultural associations are bolstering the region’s status as a leader in sustainable farming practices and tech-enabled agriculture.

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Policy, Sustainability, and the Future of Agrifoodtech

Beyond the immediate dynamics of funding and technology, broader policy shifts and sustainability trends are set to influence the agrifoodtech landscape in the coming years. With increasing consumer demand for organic and “clean” food products, regulatory bodies at both the state and federal levels are tightening standards around the use of synthetic herbicides and pesticides. In response, farmers are looking for viable alternatives that not only reduce chemical inputs but also improve long-term soil health and productivity.

Government agencies such as the USDA have begun to roll out initiatives aimed at promoting sustainable agricultural practices. These programs include grants for research into precision agriculture, subsidies for farmers adopting AI-driven mechanization, and incentives for companies that pioneer eco-friendly technologies. The convergence of these policies with market demand creates a fertile ground for innovation. Startups that can align their technologies with both regulatory requirements and sustainability goals are poised to reap significant benefits in the near future.

At the same time, the challenges posed by climate change—ranging from unpredictable weather patterns to prolonged droughts—are forcing the agricultural sector to innovate rapidly. AI and robotics, with their ability to collect and analyze vast amounts of data, are becoming indispensable tools for predicting crop performance and optimizing resource use. Whether it’s refining irrigation systems to reduce water consumption or developing new crop varieties that are more resilient to extreme weather, technology is at the heart of the solution.

Industry experts suggest that the current phase of agrifoodtech investment is more than just a reaction to temporary market fluctuations. Instead, it represents a long-term strategic shift toward leveraging technology to build a more resilient, efficient, and sustainable agricultural system. With AI at the helm, the industry is poised to overcome traditional challenges and set new benchmarks for productivity and sustainability.

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Looking Ahead: The Road to a Technologically Empowered Agriculture

As we look toward the future, several key trends will likely shape the trajectory of agrifoodtech investment and innovation:

1. Deeper Integration of AI: The momentum behind AI is not waning. We can expect more startups to embed advanced machine learning algorithms into various aspects of the agricultural value chain, from seed selection and soil management to post-harvest logistics. The continual improvement in AI models will help farmers optimize resource allocation, improve crop yields, and reduce environmental impact.
   
2. Expansion of Autonomous Machinery: The success of companies like Monarch Tractor and Carbon Robotics signals a broader trend towards automation in agriculture. With further advancements in sensor technologies, robotics, and computer vision, autonomous machinery will likely become a standard tool for modern farming operations. The focus on developing end-effectors capable of delicate tasks—such as harvesting fruits and vegetables—remains a challenging but critical frontier.
   
3. Sustainability as a Business Imperative: With increasing environmental regulations and a growing consumer base that values sustainability, agrifoodtech companies will need to prioritize eco-friendly solutions. Technologies that reduce the reliance on chemical inputs, lower carbon footprints, and promote biodiversity will be in high demand. The integration of AI with sustainable practices offers a pathway to achieving these goals while maintaining profitability.
   
4. Enhanced Supply Chain Transparency: In a world where supply chain disruptions have become the norm rather than the exception, AI-powered logistics and predictive analytics are more important than ever. Tools that can forecast demand, optimize delivery routes, and manage inventory in real-time will be critical for both farmers and restaurants. As the technology evolves, we may see a convergence of agrifoodtech and fintech innovations that further streamline the food distribution network.
   
5. Evolving Funding Models: The traditional venture capital model is under scrutiny in many sectors, including agrifoodtech. With increasing interest from strategic investors, family offices, and government-backed funds, alternative funding models are emerging. These models emphasize long-term value creation and may offer more stability to startups that require significant capital for R&D and scaling.
   
6. Cross-Sector Collaboration: The intersection of agrifoodtech with other high-growth industries such as biotechnology, IoT, and renewable energy is set to foster an environment of cross-pollination. Collaborative efforts among startups, academic institutions, and large agribusinesses will accelerate innovation. Such partnerships are likely to yield breakthroughs that address not only efficiency and productivity but also broader issues such as food security and environmental sustainability.
   

Concluding Thoughts

The US agrifoodtech sector is clearly at a turning point. While 2024’s funding figures may pale in comparison to the peak exuberance of previous years, the strategic shift toward AI-driven innovation represents a solid foundation for long-term growth. Investors are increasingly drawn to technologies that offer measurable benefits—whether it’s the precision of autonomous tractors, the efficiency of weeding robots, or the comprehensive management capabilities of modern restaurant tech platforms.

In a challenging economic climate, where every dollar counts, the ability of AI to reduce costs, improve operational efficiency, and promote sustainable practices is proving to be a game changer. As startups continue to scale and deliver real-world results, the narrative around US agrifoodtech is shifting from one of speculative exuberance to one of strategic, transformative progress.

From the sprawling fields of California’s specialty crop production to the bustling innovation hubs of Silicon Valley and New York, agrifoodtech is poised to redefine what it means to feed a growing population in a rapidly changing world. With AI as both a catalyst and a cornerstone, the future of farming, food production, and restaurant management is not only being reimagined—it’s being revolutionized.

As industry stakeholders, investors, and policymakers look ahead, the message is clear: the era of AI-powered agrifoodtech has arrived. And while challenges remain—from regulatory hurdles to the complexities of scaling new technologies—the potential benefits are too significant to ignore. With each new funding round, every technological breakthrough, and all the collaborative efforts underway, the US agrifoodtech landscape is setting the stage for a more sustainable, efficient, and prosperous future.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

14th March, 2025