AgTech Market Update – June 2025

Innovation and Sustainability Solutions Continue to Create Opportunity for AgTech Market M&A

Agriculture Technology (AgTech) merger and acquisition (M&A) and financing opportunities have continued to materialize for targets with cost-effective solutions that address pain points in agricultural production processes, notwithstanding challenges to adoption rates as net farm income remains subdued and interest rates elevated. At the same time, long research and development (R&D) timelines and prolonged paths to profitability have continued to discourage growth capital investments in AgTech startups, diminishing the pool of quality, scaled venture capital (VC)-backed companies available as actionable M&A targets.

We are cautiously optimistic for increased AgTech investment and M&A activity in 2025. Notwithstanding the current challenges in the farm patch, the unavoidable needs for higher efficiency and sustainability will continue to drive long term AgTech growth and investor interest.

Jerry SturgillHead of Agriculture Investment Banking at Capstone Partners

Capstone Expects Downward Pressures on AgTech Adoption Rates to Ease in 2025

Late 2024 interest rate cuts and projections for increased federal aid have helped improve farmers’ 2025 outlook. The Farm Capital Investment index, a measure of farmer sentiment regarding upcoming equipment and building purchases, has risen 13 basis points year-over-year (YOY), according to the Purdue/CME Group Ag Economy Barometer March Report.¹ Increased federal farm aid and additional Federal Reserve interest rate cuts will likely lead to an uptick in AgTech adoption and consequent renewed R&D efforts, growth capital investments, and M&A activity across the sector.

Looking back, more than two years of declining farm income and the higher-for-longer interest rates have continued to erode farm operator purchasing power needed for capital-intensive technology and equipment upgrades. U.S. inflation-adjusted farm income has declined an estimated 28% between 2022 and 2024 and interest rate expenses have risen 21.7% during the same period, according to the U.S. Department of Agriculture (USDA) Farm Income Report.² Weak demand for AgTech equipment and technology upgrades as a result of this revenue pressure has weighed on sector M&A activity to date, with many buyers deferring acquisitions of AgTech businesses until they see a sustained increase in demand. Looking forward, while lower interest rates and farm aid may improve adoption rates, progress still may be slowed by volatile and rapidly shifting global trade policies and softening (or lost) export crop demand that may negatively impact farm income.

Strong IP and Technology Assets Attract Strategic and Financial Buyers in the AgTech Market

Improved farmer sentiment and expectations for higher 2025 farm income has helped boost recent AgTech market M&A activity. Through Q1 2025, deal volume has jumped 19% over Q1 2024, with 25 transactions announced or completed. Sector deal volume is expected to continue to accelerate as farm income rebounds and interest rates ease, allowing farm operators to resume equipment and technology updates. Private equity M&A volume is up from three deals in Q1 2024 to six in Q1 2025—a trend that builds on the momentum of late 2024, when lower interest rates reinvigorated private equity buyers. Investors and buyers have continued to scour the sector for companies that help reduce food production costs, improve operational efficiencies, and address climate change, water scarcity and other long-term challenges to agricultural sustainability.

The bump in M&A activity has followed three consecutive years of declining AgTech deal flow, as the sector has battled ongoing headwinds related to reduced farm income and elevated interest rates. Declines in M&A activity in 2024 largely stemmed from a 13.3% YOY drop in deal activity for strategic buyers. Many strategic buyers have shied away from inorganic growth efforts as pressures to farm income have subdued demand for capital-intensive AgTech equipment and technology upgrades. Despite the pullback, strategics’ have continued to represent the majority (69.6%) of sector deal flow, as buyers continue to actively pursue bolt-on acquisitions of synergistic assets that expand product offerings and bolster technological capabilities.

Two notable sector deals are described below.

• CoStar Group Acquires Ag-Analytics (February 2025, Undisclosed) – In February 2025, online real estate marketplace operator CoStar Group (Nasdaq:CSGP) acquired agricultural data platform provider, Ag-Analytics, for an undisclosed sum. Ag-Analytics’ proprietary platform, AcreValue, provides agricultural land data and insights to better inform farmers, land investors, land managers, and landowners’ agricultural land investment decisions. The platform serves 1.5 million registered users including a strategic partnership with Farmer Mac, a secondary Agricultural Credit market, which leverages AcreValue’s data insights to better inform its Lending market, according to a press release.³

CoStar plans to merge Ag-Analytics’ AcreValue with its Land.com platform, marking the land-focused online real estate marketplace’s entry into the Agricultural Land market. “We have identified a massive market potential, with Farm sector real estate alone representing a $3.4 trillion asset class, creating a range of opportunities to maximize revenue and provide increased value for our clients. Together, we will set a new standard for data-driven decision-making in the Land and Real Estate market,” noted CoStar founder and CEO, Andy Florance, in the press release.

• Granite Creek Capital Acquires Ritchie Industries (January 2025, Undisclosed) – In January, private equity firm Granite Creek acquired Ritchie industries for an undisclosed sum. Ritchie manufactures automated livestock watering products for cattle, horses, sheep, goats, and other livestock. Its watering equipment solutions are manufactured in Iowa and range from single stall waterers to fountains that can accommodate up to 500 cattle per unit, according to a press release.⁴ Granite Creek’s acquisition of Ritchie was supported by a financial investment from the Rural American Fund and a rollover investment from Ritchies’ management team and employees. As part of the acquisition, Granite Creek will support Ritchie’s growth initiatives focused on product innovation and market share expansion.

Strategic Buyers Exploit Current Conditions to Pursue Vertical and Horizontal Acquisitions

To date, a rising number of M&A exits across the AgTech market has followed operational stress caused by the absence of easily accessible growth equity. Strategic buyers looking for synergistic horizontal and vertical acquisition opportunities have capitalized on these situations. Growers pursuing vertical acquisitions have targeted assets that can easily reduce food production costs while strategic horizontal acquirers have prioritized assets with next generation technologies that expand existing offerings.

For example, vertical farming operator, Oishii, has acquired key intellectual property (IP) and assets from harvest robotics startup, Tortuga AgTech (March 2024, undisclosed). The luxury, premium-priced Japanese strawberry grower made the acquisition after a $150 million funding round in late 2024 (led by Resilience Reserve and Nippon Telegraph & Telephone (TSE:9432)). In contrast to the broader Controlled Environment Agriculture (CEA) segment, Oishii has bucked segment funding trends with its profitable, slow-but-steady go-to-market strategy, internal technology development, and attractive, premium product offerings. For Tortuga, after receiving funding in April 2021 (Series A, $20 million) and July 2023 (Series A1, $20 million), a lack of new growth capital interest pushed it to explore M&A exit opportunities and ultimately sell to Oishii.

“With the downturn in AgriTech venture capital, we realized that the ethos and team at Oishii offered the best fit for creating the most immediate and valuable opportunities for all parties involved. Oishii also stands out as an innovator that has uniquely gotten real products to market,” noted Tortuga AgTech CEO and cofounder, Eric Adamson, in a March interview with AgFunderNews.⁵ Oishii plans to integrate Tortuga’s robotic solutions, including its proprietary artificial intelligence (AI) models, robotics software, and custom hardware, with its in-house-built harvesting solutions. Oishii expects the integration to quickly and efficiently scale its automated harvesting capabilities and reduce its labor and harvest expenses by 50%, enabling the vertical farm to offer more accessible prices for its fruit over time, according to the AgFunderNews interview.

In the absence of growth capital, vertical and horizontal M&A of financially strapped startups will likely continue in the near term as larger industry participants seek to acquire next generation technology and equipment.

AgTech Market Equity Financing Environment Shifts Focus from Quantity to Quality

Investors have continued to deploy capital to AgTech market players and solutions that have proven economies of scale, financial value proposition, and the ability to address industry challenges such as climate change and food scarcity. As a result, equity capital invested in the sector increased 8.7% YOY in 2024, totaling $3.8 billion compared to $3.5 billion in 2023. This has also continued in Q1 2025, with total capital invested up 25% YOY from $1.1 billion in Q1 2024, to $1.3 billion in Q1 2025.

Wariness and dissatisfaction with lengthy R&D and profitability timelines have otherwise continued to subdue equity investor interest. Growth capital deal volume declined for the second consecutive year in 2024, down 21% YOY to 811 transactions. In Q1 2025, growth equity deal volume has declined 40.8% from 262 deals in Q1 2024 to 155 in Q1 2025.

Risk-averse investment strategies have led investors to pursue larger deals, targeting mature startups with clearer exit visibility. This has been evidenced by the median pre-money valuations increasing from $12.7 million in 2023 to $17 million in 2024—or from $143 million in 2023 to $225 million in 2024 when looking at equity financing deals valued $25 million and above.

While Capstone anticipates headwinds related to risk-averse investment attitudes to persist in the near-term, long-term tailwinds and ever-present demand for agricultural innovation will likely continue to support AgTech equity financing activity for the foreseeable future, particularly as pressures to farm revenue subside. Key growth equity transactions in the AgTech market are outlined below.

• 80 Acres Farms Raises $115 Million in Development Capital (February 2025) – 80 Acres Farms, an Ohio-based vertical farming operation, secured an additional $115 million in capital (February 2025), bringing the company’s post-money valuation to $1.2 billion. The capital raise was led by returning investor, Atlantic Capital. The funds will be used to expand 80 Acres’ retail capacity, grow its ingredients channel, and complete its Kentucky expansion. The funds were also used to help finance its concurrent acquisition of Israeli Biotechnology company, Plantae Biosciences (February 2025, undisclosed). Plantae will merge with 80 Acre’s subsidiary, Infinite Acres, where it will help further plant breeding technology innovation focused on enhancing CEA crops’ flavor, texture, and nutrition.

“Our ability to raise capital in today’s market speaks to the confidence investors have in the need for controlled environment agriculture and our vision and execution. New funding has allowed us to broaden our technology platform, grow our retail footprint, and develop an ingredients channel, all to meet customer needs. We’re able to make plans for the long term while delivering results today,” noted Mike Zelkind, 80 Acres CEO and co-founder, in a press release.⁶

• Applied Carbon Secures $21.5 Million in Series A Financing (July 2024) – In July 2024, automated biochar machinery developer, Applied Carbon, raised $21.5 million in Series A financing for a post-money valuation of $55 million. The funding round was led by new investor, TO VC, with participation from returning investors Congruent Ventures, Elemental Impact, S2G Investments, and Wireframe Ventures. The funding will be used to deploy Applied Carbon’s machines that convert in-field agricultural waste into biochar across Texas, Oklahoma, Arkansas, and Louisiana.

“We’ve been looking at the Biochar sector for over a decade and Applied Carbon’s in-field proposition is incredibly compelling. The two most exciting things about this approach are that it profitably swings the Agricultural sector from carbon positive to carbon negative and that it can get to world-scale impact, on a meaningful timeline, while saving farmers money,” noted Congruent Ventures co-founder and Managing Partner, Joshua Posamentier, in a press release.⁷ 

Product Innovation and Alternative Revenue Strategies Create Opportunity for CEA Segment Amid Funding Decline

The CEA segment has experienced a pull-pack in growth capital, pushing many sector participants to diversify revenue streams. Mirroring broader sector equity financing trends, the CEA segment saw funding deal volume decline 20.5% YOY to 58 deals in 2024, the third consecutive year investors have pulled back from the segment. However, where the broader AgTech sector saw an increase in total capital invested in 2024, the CEA segment continued to decelerate, falling 25.2% YOY to a total of $328.5 million in 2024. This represents a stark contrast to the segment peak of $2.5 billion in total capital invested in 2021—when many CEA startups utilized rapid-growth, rapid-returns business models to successfully raise financing from investors attracted to the segment’s long-term prospects and growth potential. However, evidenced by the recent bankruptcies of segment unicorns, Plenty and Bowery Farming, elusive profitability and costly, hard-to-scale operating models have since deterred growth in equity financing activity across the segment.

“To appeal to investors, [many vertical farming companies] put together business plans and financial models that in hindsight were unachievable. Plenty raised roughly $1 billion, and today they have only one strawberry farm operating, and that only just is scaling up. The return to Plenty’s investors on $1 billion of capital is not going to get future investors excited about vertical farming,” noted EchoTech Capital Managing Director, Adam Bergman, in a March interview with AgFunderNews.⁸

To combat the ongoing investor pull-back and profitability struggles, the CEA segment has explored new revenue opportunities and innovative technological solutions to reduce operational costs and boost revenue growth. Of note, struggling to generate both revenue and profits since its initial public offering (IPO) in 2021, AgriFORCE Growing Systems (Nasdaq:AGRI) has since pivoted its CEA-only business model to now include Bitcoin mining operations. The pivot enables the CEA operator to utilize the heat and carbon produced from energy-intensive bitcoin mining operations to fuel its indoor farming operations. AgriFORCE plans to leverage the revenue generated from its mined bitcoin to offset energy-intensive operational costs. “By repurposing waste energy from flare gas-powered generators, the facility reduces environmental impact and drives multiple revenue streams, including bitcoin mining and agricultural operations such as micro-greens, red seaweed, and white-legged shrimp farming,” noted AgriFORCE CEO, Jolie Kahn, in a recent press release.⁹

Other segment innovations have focused on technologies like direct air capture (DAC) and carbon sequestration to reallocate either atmospheric or emissions-related carbon for CEA growing and reduce the segment’s high energy costs and carbon footprint. Notably, Dutch DAC technology developer, Skytree, raised $25.1 million in Series A financing led by Division Q, the investment arm of Dutch cress grower, Koppert Cress (April 2025). Funding will be used to install Skytree’s DAC units at Koppert Cress’ vertical farming operations as part of the growers’ mission to be climate positive by 2026. Already attracted to the sector’s ability to address long-term food-scarcity headwinds, Capstone expects these innovations and strategies to help reinvigorate equity financing activity across the segment—particularly if CEA providers can prove their sustainable and scalable growth potential for the long-term.

AgTech Value Proposition Reinforces Long-Term Demand Despite Recent Headwinds

Despite buyer and investor skittishness and sector headwinds, demand for operational efficiency improvements and sustainable agricultural practices have continued to fuel AgTech adoption. AgTech providers with solutions offering social and economic benefits that outweigh the upfront financial investment costs are expected to continue generating interest from farmers, buyers, and investors alike. Capstone expects solutions that address climate change, water scarcity and other long-term agricultural challenges, will continue to be adopted as farmers aim to mitigate associated operational risks and satisfy increased regulatory and environmental requirements.

To discuss AgTech innovation and its influence on M&A and equity financing activity, provide an update on your business, or learn about Capstone’s wide range of advisory services and AgTech market knowledge, please contact us.

Izzy Jack, Associate, was the lead Market Intelligence contributor to this article.

Endnotes

1. Purdue University, “Farmer Sentiment Rises as Current Conditions Improve on U.S. Farms,” https://ag.purdue.edu/commercialag/ageconomybarometer/farmer-sentiment-rises-as-current-conditions-improve-on-u-s-farms/, accessed April 23, 2025.

2. U.S. Department of Agriculture Economic Research Service, “Farm Sector Income & Finances – Farm Sector Income Forecast,” https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/farm-sector-income-forecast, accessed April 23, 2025.

3. CoStar Group, “CoStar Group Acquires Ag-Analytics, Augmenting Land.com Services and Capabilities,” https://investors.costargroup.com/news-releases/news-release-details/costar-group-acquires-ag-analytics-augmenting-landcom-services, accessed April 23, 2025.

4. Granite Creek, “Granite Creek Capital Partners Announces Acquisition of Ritchie Industries,” https://www.granitecreek.com/news/granite-creek-capital-partners-announces-acquisition-of-ritchie-industries/, accessed April 23, 2025.

5. AgFunderNews, “Oishii Acquires Tortuga Agtech’s IP, Assets, and Engineering Team to ‘Supercharge’ its Vertical Farms,” https://agfundernews.com/oishii-acquires-tortuga-agtechs-ip-assets-and-engineering-team-to-supercharge-its-vertical-farms, accessed April 23, 2025.

6. Newswire, “80 Acres Farms Announces 2024 Capital Raises and Acquisitions,” https://www.newswire.com/news/80-acres-farms-announces-2024-capital-raises-and-acquisitions-22516419, accessed April 29, 2025.

7. Applied Carbon, “Applied Carbon Raises $21.5 Million to Deploy Groundbreaking Biochar Technology that Increases Soil Health and Sequesters Carbon,” https://www.appliedcarbon.com/news/applied-carbon-raises-21-5-million-to-deploy-groundbreaking-biochar-technology-that-increases-soil-health-and-sequesters-carbon, accessed April 23, 2025.

8. AgFunderNews, “Plenty, an Autopsy: it Promised the Moon, but Plants Don’t Run on Pitch Decks, Say Experts,” https://agfundernews.com/plenty-has-an-opportunity-to-succeed-say-some-vertical-farming-experts-what-happens-next, accessed April 23, 2025.

9. AgriFORCE, “AgriFORCE Growing Systems Acquires Alberta Bitcoin Mining Facility, Unlocking Revolutionary Synergies in Technology, Agriculture, and Sustainability,” https://www.globenewswire.com/news-release/2024/12/03/2990703/0/en/AgriFORCE-Growing-Systems-Acquires-Alberta-Bitcoin-Mining-Facility-Unlocking-Revolutionary-Synergies-in-Technology-Agriculture-and-Sustainability.html, accessed May 12, 2025.