State of VC in agtech: Will 2026 be the year funding — finally — rebounds?

Venture capitalists pushed back from agtech in 2025, as interest began to shift from biologicals to precision ag and robotics, boosted by interest in AI. However, systemic issues — including suppressed exits and a challenging start-up environment — will continue to shape the space for the foreseeable future.

Overall, agtech funding reached its lowest level in several years in 2025. VC deal counts and dollar sizes both dropped in 2025, with $4.799 billion raised across 735 deals, according to 2025 PitchBook data through Dec. 23. This compares to $5.099 billion across 913 deals from the previous year.

In 2025, investors continued their flight to quality, moving towards late-stage agtech companies, as many shifted their investment focus towards AI – a broad investment trend in 2025 – Alex Frederick, senior research analyst at PitchBook, told AgTechNavigator.

“Farmers and VCs, in general, are excited about areas where AI is having immediate value,” he said. “A good example is farm management software — all of the IoT all over the farm — and being able to use AI to make sense of all of that data."

Physical AI companies — those that offer machine learning technology integrated into chips and systems — are not just driving hype, but they are also creating pathways for agtech companies to easily build solutions, Danny Bernstein, founder of agtech accelerator and venture capital firm Reservoir, told AgTechNavigator.

“We are in this physical AI moment, and the Nvidias, the Oracles, and the AMDs of the world are putting out exceptional new platform technologies that make it easier than ever to launch a physical AI company. Those physical AI founders will look for impact, and they will look for legacy industries, and more and more will make their way to ag,” Bernstein elaborated.

Robotics rising: A new model emerges for early-stage start-ups

In 2025, ag robotics and automation have started to outpace biologicals, as the former is being touted as a solution to labour challenges, and the latter faces continued scrutiny over their effectiveness.

Precision ag companies received $533.8 million across 27 VC deals in the third quarter of 2025, compared to crop inputs and enhancements (including biologicals) raising $23.9 million across 16 deals during the same period, according to PitchBook data.

Companies, like Carbon Robotics and Ecorobotix, are raising Series C and D rounds, indicating a maturing market, Bernstein noted. Additionally, many of these ag robotics companies are finding opportunities in the specialty crop market, without having to dip their toes in the broad-acre market, he added.

Early-stage agtech companies are struggling to raise capital, with many either bootstrapping or relying on public funding before seeking venture capital, Bernstein said. However, this means that many start-ups are getting to the fundraising stage with a tested prototype in hand, allowing for a smoother scale-up process, Bernstein added.

“Tric Robotics, BHF Robotics, and Bud Break Innovations — these are three companies that are basically bootstrapped, and now they are starting to talk about pre-seed. And that is a really big change in the market because,” Bernstein elaborated. “When I really began looking at this segment two years ago, ... companies were raising a pre-seed to build a prototype versus having a prototype on which they were raising their pre-seed. And we think that becomes the norm.”

Could an AI cold war between U.S., China spur investments?

As trade relationships between the U.S. and China soured in 2025, the two world powers were entering a technological cold war over AI. U.S. companies, like Open.Ai, Google, Palantir, and others, were the first to make a market splash, but China quickly followed with AI from Alibaba, DeepSeek, and TikTok’s parent company, ByteDance.

China’s government is prioritizing AI as a matter of industrial policy with a focus on robotics and automation, including in its agriculture sector. Last year, China’s Ministry of Agriculture and Rural Affairs released its National Smart Agriculture Action Plan 2024-2028, which included investing in digital planting technologies, smart farms, and intelligent breeding platforms.

The Chinese government is also set to release its 15th Five-Year Plan, which runs from 2026-2030, with the country seeking to become an AI and green tech leader, using the technology to modernize its economy, according to the World Economic Forum.

“China is a tailwind in the sense that it will rouse action — call it defensive action — from incumbents. They will start to see more and more demos out of China that look like what is happening in self-driving cars, where China has $28,000 Waymo-equivalent self-driving electric cars, etc. And we have not really seen, yet, the behaviours that we will see from incumbents when it comes to the kinds of defensive moves they will make as a result of China,” Bernstein noted.

As a result, “defensive M&A becomes a default,” as Wall Street will demand legacy ag companies in the U.S. to keep pace with ag innovation overseas, Bernstein explained.

In 2025, John Deere acquired several precision ag companies, including autonomous spray company GUSS Automation and aerial field scouting start-up Sentera. Other global OEM companies like Kubota are partnering as opposed to acquiring, working with companies like Agtonomy and Kilter.

Exits continue to be suppressed in agtech, with 35 global exits worth $129.87 million in 2025 (through Dec. 23), compared to 33 exits in 2024 for $37.09 million, according to PitchBook data.

Agtech exits in 2025 were largely between start-ups acquiring other smaller start-ups, Frederick pointed out. For instance, agtech start-up Bonsai Robotics purchased modular robot maker Farm-ng for an undisclosed amount of money in July 2025.

Robotics alone will not solve labour challenges

U.S. and China tensions over AI could inspire “foamy talk,” but rhetoric does not necessarily mean that investments will follow, Connie Bowen, founding partner at Farmhand Ventures, told AgTechNavigator.

USDA Secretary Brooke Rollins “said very early in this presidential term that they would be investing and putting money out for ag automation,” she pointed out. However, the agency has not made a serious investment in these technologies.

Ag robotics could solve labour challenges, but the level of investments needed to shift to an all – or mostly – robotic ag workforce would be massive, Bowen noted.

“None of the robots are ready to replace humans yet, and there is not enough capital being injected in the right robotics companies right now that I’m seeing to solve that problem expeditiously — let alone quickly enough,” she elaborated.

However, robotics play a crucial role in augmenting the skills of farmers, and humans and robots must work together to create a more efficient and sustainable agriculture industry, Bowen explained.

“We need automation, and we need people working in fields, and we need those two systems working together,” Bowen stressed.

She added, “I do not want people to have to harvest strawberries outdoors in the future. It is labour that you cannot do past the age of 35-40 because your back gets so wrecked. And I want to ensure that the people who are currently harvesting strawberries have quality jobs when the robots are ready, and the robots won’t be ready overnight.”

Betting on biologicals: Corteva Catalyst taps into LatAm opportunities

Despite deal declines in biological, corporate venture firm Corteva Catalyst was heavily active in investing in innovative crop inputs in 2025, highlighting Latin America as a key market of strategic interest. Corteva Catalyst invested in Latin America (LatAm) for the first time in 2025, investing in biological companies Symbiomics and Puna Bio from Brazil and Argentina, respectively.

“Brazil is a leading applier of biologicals. They have transitioned to using biologicals at a scale that really outpaces the U.S. today. And so it is good to be in the geography finding companies that are really on the cutting edge,” Tom Greene, senior director and global leader of Corteva Catalyst, told AgTechNavigator. “It really is about how we continue to build more efficacious and durable biological systems, so that we are really continuing to drive outcome and output for growers.”

Over the last decade, “biologicals have really matured,” with the science on how to discover, develop, and deliver these inputs improving over the years, Greene said. The U.S. lags countries like Brazil in biological adoption, but a new model that marries new biologicals, agronomic advice, and proper positioning, he added.

“The U.S. was on the early leading edge of biologicals and got burnt a little bit with some of the early biologicals that maybe did not deliver as expected,” Greene admitted.

Additionally, the surge in synthetic crop input prices could “drive more immediate adoption” of biologicals, but regulations in specific countries can slow down usage, Frederick noted.

What will Corteva’s split mean for Catalyst?

Looking ahead to 2026, Corteva Catalyst will spend the first quarter evaluating opportunities under its four key investment pillars, data analytics, automation, AI, and precision phenotyping, but does not expect to move away from those core pillars, Greene explained.

Biostimulants were a major focus of Coterva’s investment strategy in 2025, but other areas might become a higher priority in the new year, he added.

The corporate venture arm — as well as the broader Corteva organization — is gearing up for a major transformation as the ag giant splits its seed and crop protection businesses into two distinct units, under the banners of SpinCo and New Corteva, respectively.

“There may be some fine-tuning post-spin on how we think about leveraging external innovation to drive our research priorities,” Greene said.

Start-ups with resource efficiency benefit set to gain amid volatility

2025 proved to be a challenging year for the overall farm economy, as numerous commodity prices remained historically low, and crop input and labour costs rose. The Trump administration rolled out $12 billion in financial assistance to U.S. farmers, who were impacted by market volatility and rising costs, as AgTechNavigator reported.

However, the rising input cost prices are creating opportunities for innovative start-ups that are finding ways to reduce costs for farmers, Francis Villante, VP of the food and agriculture investment team at S2G Investments, told AgTechNavigator. S2G has invested in numerous resource-saving companies, like Moleaer, which uses nanobubbles to improve aquaculture and reduce water resources.

“Resource efficiency is such an important investment theme because it is not only relevant to the farmers’ personal economics — and the broader agricultural economy — but also related economies. So, you can think of other infrastructure, data centers, etc., that really rely on critical natural resources that in some sense can be served within the agricultural community,” Villante elaborated.

Does Singapore’s backtrack on ’30 by 30′ plan spell trouble for CEA?

The controlled-environment agriculture (CEA) industry closed 2025 with yet another major blow, with sector darling AeroFarms shuttering its door, nearly two years after emerging from bankruptcy.

Additionally, Singapore backtracking on its 30 by 30 plan — which stated that the country would domestically produce 30% of its food by 2030 — demonstrates that investing in agrifoodtech might not be the only solution to food security, Frederick explained.

Singapore is now aiming for 20% of its fibre (beansprouts, fruited and leafy vegetables, and mushrooms) and 30% of protein to be produced domestically by 2035, according to a government press release.

“Some places, like Singapore, are realizing it just makes more sense to — instead of trying to grow themselves — provide food security by diversifying their supplier list. So, if there is a supply chain disruption, they are not totally cut off. They can import from elsewhere,” Frederick elaborated.

However, CEA is finding footholds around the world — including Canada, the Middle East, and parts of the U.S. — but the underlying unit economics and overall business model are still challenging.