Banks have a key role to play in supporting the financing of AgriTech in France. French agriculture as a whole is facing major transformation challenges (food sovereignty, the role of technology, the development of regenerative agriculture, etc.). Indeed, if the French AgriTech aims to position France as a world leader in AgriTech, this development will necessarily involve bank financing.
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AgriTech must respond to the imperatives of agricultural transformation
Agriculture and food are at the heart of the solution to accelerate the in-depth transformation of our economy guided by environmental issues. This is all the more true when they are integrated across the entire value chain, from earth to table.
In this holistic approach, an ecosystem is emerging and growing: AgriTech . Agritech brings together startups in the bioeconomy, agriculture and food sectors (agriculture, forestry, fisheries, agri-food, bio-based products, organic waste recovery, bioenergy, etc.).
The entire agricultural sector faces major challenges
Consumer and industry habits and concerns have evolved. Today, awareness of limited resources, responsibility in the act of buying and the challenges of sovereignty issues are a reality.
- Feed in quantity and quality.
The world's food needs are growing, and the Ukrainian crisis has reminded us in recent months of the interdependencies in the agricultural and agri-food chain. - Adapting to new consumers and new expectations.
The development of short-distance circuits, consideration for animal welfare, environmental sustainability, sustainable agriculture and flexitarianism are all underlying trends that mark strong new consumer expectations. - France must regain its food sovereignty.
A third of farmers are over 55. Without farmers, there can be no sovereignty. So how can we restore passion for farming and inspire new vocations at a time when the weather and energy crises are heightening concerns? - Adapting to climate change.
While climate change has raised doubts in some farming professions (arboriculturists, winegrowers, etc.), it also represents a technological challenge to which many startups are trying to provide solutions(Weenat, etc.). - The decarbonized economy: a real opportunity.
Agriculture accounts for 17% of CO₂ emissions. The agricultural and forestry sectors will be at the forefront of accelerating decarbonization. The bioeconomy (marine, agricultural, waste, forestry, bioenergy biomass) represents new opportunities for farms and will enable the transition to a biomass-based economy.
Agritech: a dynamic ecosystem to meet the challenges ahead
AgriTech must enable the development of a dynamic, pragmatic and virtuous ecosystem. Throughout the value chain Agri / Agrovalue chain, innovation is central and gives rise to dozens of new activities.
- Major strategic topics: carbon farming, genetics, biotechnologies, fermentation, artificial intelligence and robotization;
- Innovative startups backed by funding and support from the regions, giving rise to a wide variety of initiatives.
AgriTech, which brings together startups in the bioeconomy, agriculture and food sectors (agriculture, forestry, fisheries, agri-food, bio-based products, organic waste recovery, bioenergy, etc.).
- promote initiatives that will emerge throughout the value chain
- promoting the competitiveness of innovative players
- enable faster "scaling-up" to European or even global dimensions
- develop AgriTech in the most buoyant markets as early as possible to rapidly gain market share, with the help of our incumbent players, who are also internationalized
How can AgriTech be financed?
Financing is also undergoing radical change. It must enable investors to assess the impact of innovative AgriTech companies with an expert eye.
Accelerating and simplifying access to financing for startups in the AgriTech ecosystem
Conventional startup financing rules are poorly adapted to the specificities of the agricultural and agri-food sector. They have a slightly longer time horizon than the classic 5-7 year financial tool cycle.
Highlighting impact criteria
The desire for environmental, social and extra-financial impact is often behind the creation of many innovations in the sector.
It's also a question of facilitating, as soon as possible after the company's creation, the development of positive returns for health, the planet, people and animals, as a complement to the financial model.
Financing farm transformation: robotization, organic and responsible farming...
Between now and 2030, farms will accelerate their use of new technologies. Robotization and automation of some farming tasks, farm data management and the use of connected objects are just some of the technological challenges facing the farming world.
All along the value chain, dozens of new activities and professions are being invented, some of which will play a growing role in the economy. Some will even become major strategic issues, such as carbon farming, genetics, biotechnologies, fermentation, artificial intelligence and robotization.
Globally, investment has exploded to nearly $200 billion over 10 years, from 2012 to 2021.
- Half of these investments were allocated to e-commerce and delivery startups;
- A quarter to AgriTech projects
- A quarter on FoodTech topics
French AgriTech to make France the world leader in AgriTech
French AgriTech is a brand label for the French innovation ecosystem. It is marked by a shared vision and a willingness to collaborate in order to bring together, drive, acculturate, promote and raise the profile of bioeconomy innovations and startups, in France and internationally.
France ranks in the top 6 worldwide in terms of investment, with over €650 million invested in 2020 and almost €1 billion for the first time in 2021. In 2021, France will have more than 250 AgriTech start-ups.
- Contrary to global trends, France has created few projects (and attracted little investment) on the subjects of >e-commerce or delivery, which will set it back in the 2021 European rankings.
- France leads the way in industrial insect farming, algae cultivation technologies, agricultural robotics, farmer advisory technologies, as well as digital services for the catering and anti-waste industries.
To make French AgriTech a concrete reality, several objectives for 2030 have been defined, some of which relate directly to the financing of this ecosystem.
La Ferme Digitalean association representing the world of AgriTech in France, of which iQo is a member, is in charge of piloting and coordinating this mission. :
- See the emergence of 5 new French funds at over €200 million
- Participate in the creation of a European late-stage mega-fund to finance the industry's future unicorns.
- Encourage the deployment of more than 100 French AgriTech startup experiments
- Represent €1 billion in cumulative annual international value for the French AgriTech ecosystem, its partners and customers.
How can banks help finance AgriTech?
To make French AgriTech one of the global flagships of tomorrow's agriculture, by fostering the emergence of leaders, funding sources must follow and be aligned with this strong ambition.
Accelerating and simplifying access to financing for Agritech
The integration of innovation is one of the keys to the future of the agricultural sector. It fosters competitiveness, adaptation and resilience, and enables them to adapt to the many changes and challenges they face.
An innovative project in its seed phase needs financing to develop.
Seed-stage financing must take into account the POC experimentation phase inherent in all innovation projects. This phase lasts from 3 to 5 years, or even longer, depending on the type of innovative project the startup is carrying out. Thanks to seed funding, experimentation by French AgriTech startups will be multiplied.
Highlighting impact criteria and devising new forms of financing
We need to think up new forms of financing that involve stakeholders and savers, such as a seed capital fund with plural governance commensurate with agricultural and environmental challenges.
Part of the general public's Livret A savings should be channeled into seed investments in agricultural and food projects. This could be achieved by creating a "Livret AA" savings account, managed in coordination with the Banque des Territoires.
Miimosa has become the leading participatory financing platform in France and Europe for the transition of the agricultural world. It offers a 50 million euro debt fund based on crowdfunding, dedicated to directly financing the modernization and transformation of farms towards sustainable agriculture.
Other avenues for new forms of financing innovation in agriculture also include.
- Impact financing and ESG criteria in the selection of innovative projects and support for the transformation of conventional agriculture
- European funds and dedicated programs to pool funding from different structures (public, private, etc.) : e.g. DIVA (Agri Sud Ouest Innovation) and Breizh Up programs.
- New forms of financing involving players and investors : Create a large-scale seed capital fund open to VCs with a multi-stakeholder governance structure.
How can iQo help banks meet the challenges of AgriTech?
There are many opportunities for banks to participate in financing AgriTech and transforming the world of agriculture. We have listed several value-creation levers for the banking world to explore.
To find out more, discover our expertise in Financial Services.
- Supporting farm renewal and transfer (including land financing)
- Move from feeder farmers (CAP) to entrepreneurial farmers (income diversification, local channels of excellence/AOC, etc.)
- Financing new production methods (inputs, regenerative agriculture, etc.)
- Financing energy efficiency on farms (agrivoltaism) and capturing new opportunities in the bioeconomy
- Supporting and developing carbon farming (the ability of soils to store carbon) by supporting changes in agricultural practices.
- Innovate financing methods to support development (impact loans, leaseback, CT, etc.), acquire stakes in crowdfunding platforms, etc.
- Cover climate risks differently (parametric insurance, data exploitation)
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