Investors poured a record $6 billion into China's agri-food tech industry in 2020

Investors poured a record $6 billion into China's agri-food tech industry in 2020

Staff Writer
Staff Writer
Pinduoduo Content Team
April 15, 2021

Investors poured a record $6 billion into the agriculture and food tech sector in China in 2020, as the world’s most populous nation accelerated its drive to achieve food security and agricultural modernization.

The investments marked a 66% jump from a year earlier, underlining the resilience of the agriculture and food sector through the Covid-19 pandemic. In contrast, total private equity and venture capital funding across all sectors in China dropped by 50% from 2019 levels, according to AgFunder’s China 2021 AgriFood Investment Report.

The flood of money into agriculture and food included $1.4 billion in upstream technologies such as agri biotech and automated farming, and $4.6 billion in downstream categories such as online grocery shopping.

In line with global trends, upstream innovations gained a greater share of the funding to take 23.7% of the total investment across the sector, up from 13.6% in 2019. The rapid rise in upstream funding indicates a clear shift in investor interest toward technologies that boost agricultural efficiency and food self-sufficiency.

The largest investment in upstream categories was agricultural drone company XAG’s $174 million Series C extension round, which shattered China’s record for the largest agtech deal to date.

The momentum in farm robotics is helped by China’s drive to address rural labor shortages and farming input inefficiency by consolidating smallholder farms into industrialized operations. According to the report, between 2019 and 2020, state-owned enterprises and other corporates increased their investment in large agricultural projects by 43.6% to reach $79 billion.

The growing scale and economic resources available to China’s farming operations have created fertile ground for technology upgrades.

“In a market where investments have long skewed heavily downstream, this breakthrough hints at how China’s agrifood sector is evolving and the opportunities ahead in 2021,” the report says.

With $3.6 billion raised, eGrocery remains the main target of China agrifood investments. The pandemic boosted online grocery sales by 147% in gross merchandise volume during the first half in 2020, helping sustain investor optimism in the category. Some of the largest eGrocery investments came from internet giants JD and Tencent, as well as provincial governments.

The report was compiled in partnership with Bits x Bites, an agri-food tech VC investing in startups tackling food system challenges in China.

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