Recent panels in the 2022 United Nations Climate Change Conference or Conference of the Parties (COP 27), have highlighted the full extent of the issue of food insecurity; 193 million people faced crisis or worse levels of acute food insecurity across 53 countries or territories in 2021. Unfortunately, those looking to make progress on this issue face powerful headwinds: climate change threatens to upend agricultural ecosystems across the globe and contract the availability of arable land. Food demand, on the other hand, continues to rise, powered by strong population growth in developing nations which has taken the global population to over 8 billion people as of October 2022.
Nevertheless, innovative founders continue to look for ways to alleviate this crisis, using tech advances to solve agricultural problems. This thesis surveys the entire AgTech value chain from plant and soil to the growing process, distribution, financing and sale of agricultural produce. We highlight innovative companies, both globally and in the MENA region, that promise to provide robust solutions to key issues and identify gaps in the market where we’d like to see growth and investment take place. We’ve come away with the following seven key takeaways:
1) In the short-term, tech will penetrate where it is least disruptive, with SaaS for farm management and B2B marketplaces. These innovations add value for growers and consumers and cut out middlemen with limited frictions for key stakeholders.
2) As incumbents flood the space with capital for acquisitions, startups should position themselves to add value to existing players and aim for shorter times to exit.
3) The African market is wide and varied but filled with opportunities. We see both rollups taking advantage of cheap arable land, and low-tech SaaS with innovative business models as key disruptors in the near future.
4) Labor replacing disruptions are on the horizon but needs critical funding model advancements to proceed. In the meantime, labor management solutions, particularly those that can help workers upskill, will solve fundamental problems for growers worldwide.
5) Data collection and precision agriculture will drive better decision making across the board, demystifying and optimizing the farming process. Companies that solve these problems provide particular value to incumbents.
6) Biotech solutions, commercializing advancements in Next-Generation Sequencing and gene editing will power immense productivity gains in the early value chain. The best companies will be those that create new platforms capable of quickly integrating fast-paced improvements in these fields.
7) The MENA region, not traditionally seen as a leader in the AgTech space, can become an exporter of solutions to key challenges. This is especially relevant as climate change causes agricultural conditions in other nations to resemble the arid environment in the region.
This introduction to our thinking was put together by our Analyst Intern; Muhammad Munshi, along with feedback from Nuwa’s network within the Agtech space, including Aydi’s Hassan Fayed and Tazah’s Abrar Ul Haq.