The GuidePost: Where are the AgTech exits?
An analysis of trends in liquidity events for AgTech and Regenerative Agriculture
Market Signals
$20 - $60 per acre in revenue: Research from McKinsey shows that applying regenerative agriculture practices to U.S. corn and soy farms could provide returns of an average $20 to $60 per acre annually for the first ten years.
Three quarters of American adults. A new study has found that nearly three-quarters of American adults are now obese or overweight. Heart disease, Type 2 diabetes, cancer, dementia, and irritable bowel syndrome are all connected to a diet high in ultra-processed foods.
50% of ingredients through regenerative farming by 2030. Nestlé’s Purina has committed to sourcing 50% of its ingredients through regenerative farming by 2030 for its European pet-care sectors.
4% decline in net farm income in 2024. The U.S. farm sector continues to be squeezed by high costs. Net farm income declined 4% in 2024, but this decline was far less than the 20% decline in 2023.
Where are the liquidity events?
Where are the liquidity events in Agtech and regenerative agriculture?
It’s a common question we hear, so let’s break it down.
More M&A than IPO: The trends for liquidity events for AgTech and Regen Ag in 2024 mirror the trends across all venture-backed companies: mergers and acquisitions have been more common than IPOs. For example, in 2023 there were 28 AgTech exits and every one was an acquisition. The number of exits in 2024 grew by 32% for a total of 37 AgTech exits. Once again, all but one exited through acquisition (with one going public on the NASDAQ). This trend is partially due to unfavorable IPO conditions across the broader tech landscape, as 2024 was a slow year for tech IPOs, but with adjusted pricing expectations we expect the IPO window to open further.
Strategic vs. PE buyers: Strategics have been more active acquirers recently given challenges faced by private equity buyers in a high interest rate environment. Strategic acquisitions have generally been motivated by pursuing something truly disruptive to a buyer's business versus just incrementally improving it. Meanwhile, private equity buyers are making attractive acquisition roll-up plays by finding earlier stage tech companies that are growing fast, but not fast enough for VC (i.e. 50% YOY vs. 200%). This has translated into a broader trend across all industries of liquidity events happening at earlier stages. In the first two quarters of 2024, 70% of all startup acquisitions (not just AgTech) occurred before a startup raised its Series B.
Food & AgTech’s big exit potential. Not only are there at least six $1+ billion private companies in the on-farm (upstream) segment of the value chain (with big IPO potential), but we’ve also seen at least 8 exits ranging in value from $1.2-$8.5 billion since 2020 in the downstream sectors of the food & ag value chain, where faster iterations can lead to bigger outcomes from an expanded buyer universe. All fall within the Trailhead mandate.
~~~
It’s easy to fixate on the trends of when the IPO window will reopen or how interest rates will impact PE firms looking to make acquisitions. But the best predictor of big outcomes and greater opportunities for liquidity is a return to the fundamentals: investing in outstanding founders building important, scalable businesses all along the value chain.
Founder Fundamentals
How to fight entropy as you scale. A growing company will inevitably slow as more people, more processes, and more friction creates entropy inside an organization. But the vigilance to fight entropy in a fast-growing company sets apart the best executives. An article in First Round Review outlined two domains where leaders can fight entropy: by 1) leveling up their organization and 2) leveling up their personal leadership acumen. Here’s what stood out to us from the article:
Wield impatience: “Impatience is about accountability. It's about challenging assumptions and asking somebody why something can't be done faster, sooner, or better.”
Maintain ultra-high standards: Identify every opportunity to show what a standard of excellence looks like to your team.
Maximize decision-making reps: “As an executive, think of yourself as an LLM. With every decision you make, you are constantly training yourself with inputs.”
Portfolio Updates
Before we get into portfolio updates, we want to share that Andrew Keesee has parted ways with Trailhead. We would like to express our deep gratitude for all of the tremendous work Andrew has contributed over the years to help launch and grow Trailhead. We will all sincerely miss him.
While we are sad to see Andrew go, we are excited to announce that a new colleague has joined our Trailhead team: Sarah Hovde, our new Head of Investor Relations & Operations. Sarah brings extensive experience in the venture capital space and we are confident that her expertise will greatly benefit our team, our portfolio companies, and our limited partners.
Now on to our portfolio updates!
CleanCrop was highlighted in an article in Foodbytes on strategic capital allocation and how startups can prolong their runway in the current investment climate.
Trailhead’s Mark Lewis was featured in an ImpactAlpha Q&A with RSF Social Finance.
LandTrust wrote an article on how America's farming revolution affects your plate and wallet.
An article on Local Line’s website highlighted how Roche Bros uses Local Line for their multi-million dollar local food program, which helps put over 400 local products on shelves.
HowGood is helping to organize the Regen House in Davos this month.
What We’re Reading
Podcast on holistic health and the harm of processed food. Calley Means and his sister Dr. Casey Means went on the Joe Rogan podcast last year to discuss holistic health, reversing chronic diseases, and the harm of processed food. The Joe Rogan Experience.
Top 5 AgTech Trends for 2025. An article in The Global Ag Tech Initiative outlined what’s Next for Regenerative Agriculture and five major trends in Agtech, including data-driven regenerative agriculture analytics, digital twins, and technologies that optimize field trial outcomes and drive innovation in agricultural practices. The Global Ag Tech Initiative.
Podcast on the food, nutrition, and environment connection. A podcast by S2G Ventures profiled Sam Kass, a Michelin-star restaurant-trained chef, a White House Senior Policy Advisor, an investor, and author. It outlined a pragmatic guide to a better food system. S2G Ventures. For more from S2G, check out their lessons learned from 10 years of investing.
What is the future of venture capital? Two Silicon Valley firms—Andreessen Horowitz and Benchmark Capital—are pursuing very different strategies: one less is more, one more is more. Their approaches signal not just a difference of philosophy, but differing views on the future of American innovation. The New York Times.
The FDA has updated the 30-year old definition of “healthy” for packaged foods. Food manufacturers will have until February 2028 to comply with the FDA’s new criteria for “healthy.” Fast Company.