The uncertainty of tariff policy, the roiling of markets, and the potential for economic slowdown or recession has caused some investors to pull back from the venture space, including agtech. At the same time, there are investors who see the current climate as one of significant opportunities in the agtech sector. Serra Ventures has operated in this sector since 2011, with its most recent two venture funds making a significant bet on this space. In fact, we’re more convinced than ever that investing in early-stage agtech companies will make meaningful impact worldwide while producing great returns.
In her recent article published on the UpstreamAg platform -- Agtech VC: Bear Case, Bull Case, and what comes next -- Sarah Nolet (Co-Founder & General Partner — Tenacious Ventures) perceptively describes these two very different viewpoints. See below for an excerpt from Nolet’s article:
…There are powerful reasons to believe agtech is still one of the most important—and investable—areas for innovation and non-concessionary impact. But only if we can align funding models with how value is actually captured in agriculture.
1. Agriculture Is Enormous
While TAMs may have been exaggerated, the amount of money that flows through the global ag system is still staggering. Inputs, equipment, logistics, finance, and data infrastructure collectively represent trillions of dollars. Shifting even a few percentage points of value in subsets of these markets—through automation, efficiency, or new business models—can yield major returns.
2. Climate Pressure Is Real and Rising
Forget carbon markets and sustainability-linked revenue streams. Think water stress. Heatwaves. Changing growing zones. New pests and disease risks. Market access restrictions. Climate resilience is no longer an abstract future issue—it’s a present-day operating constraint. That means new demand for adaptation tools, decision support, and risk mitigation.
3. Labor Shortages Are Structural
From horticulture to livestock to broadacre crops, every region is facing labor constraints. Immigration policy, demographic shifts, and quality-of-life issues make labor access and affordability issues existential for agriculture. That opens the door for automation, augmentation, and human-in-the-loop technologies, services, and the new practices and paradigms they unlock.
4. Margin Redistribution Is Already Underway
As technology improves and becomes more affordable, the traditional cost and value capture structures in agriculture are being rewritten. Autonomy can shift margins from equipment to platforms. Precision tools can reduce chemical inputs and shift value from volume to accuracy. Success in these new paradigms will be delivered through external innovation, creating opportunities for incumbents to be customers, partners, and acquirers.
5. The Biology Revolution Is Just Beginning
Biological and synbio tools are coming into their own—driven by improved regulation, decreasing production economics, the juggernaut of advancements in AI, and accelerating customer familiarity. This isn’t just finding a new set of blockbuster molecules—it’s a shift to build discovery engines, or platforms that continuously identify, validate, and adapt new biological modes of action. With this, we’ll also see a transition from chemistries to treat symptoms (kill pests, boost yield), to digitally-enabled biology and practices that work with natural systems—changing how plants grow, how microbes interact, how nutrients cycle – and are incorporated earlier, not just applied as a fix after problems emerge.
Agtech, like agriculture itself, is shaped by harsh conditions. Volatile markets. Cyclical funding. The whim of nature. The investors, founders, and models that survive will be those that adapt—to the terrain, not the theory.
This next chapter in agtech investing will belong to those who learn fast, test assumptions, and evolve. To investors and operators who:
Replace one-size-fits-all capital with humility and models designed for biological and market realities
Are clear-eyed about what success looks like—across timelines, return profiles, and value capture
Stay close to customers, close to the land, and close to the system dynamics that actually matter
