Leaps by Bayer: We’re looking for agtech zebras, not unicorns

“I often joke in our industry we’re rarely looking for unicorns, we’re looking for zebras. Just a little bit rarer than a horse,” says PJ Amini, senior director of agriculture venture investments at Leaps by Bayer, the CVC arm of German pharmaceutical and biotech company Bayer, on the CVC Unplugged podcast.

While having a stable food supply for a growing global population is an imperative, investment in startups innovating on that front has been weak in recent years. But we are likely going to see some big winners emerge again in the next couple of years, says Amini.

“Between the end of 2025 through 2027 I think we have a chance to see a couple of those winners shine because they made it through the darker days.”

Agtech investment has been in significant decline since the the beginning of the decade – somewhere in the range of 30-40% decline year-on-year, according to Amini, which came after what had been a big spike in activity before 2018. At that time, a disparate range of investors – healthcare, tech, biotech and other funds – wanted to wade into the agtech waters, but eventually stepped out when confronted with the difficulties it posed.

But ag companies have been raising big rounds in recent months – like indoor farming company 80 Acres Farms with a $115m round, gene-modified seed designer Inari’s 144m series G or automated weeder producer Carbon Robotics with its $70m series D – and as startups get back into positive EBITDA territory, their exit options become a lot more lucrative.

One of the biggest challenges was that, for all the advances in technology, food production still hinged on the earth’s position around the sun.

“ What you realise when you come into agtech specifically, is that this is a seasonal business. A lot of your former notions of venture capital don’t quite fit this model the exact same way. If I go and I test my product out in the market, I really – if I’m growing in North America – have one season to try that out and then I have to wait a whole other year before I try it out again,” says Amini.

“This isn’t software where I can iterate with people week over week, do this agile model and iterate on it. Really, you only get a few shots.”

It is also hard to create monopoly positions in agtech, unlike with healthcare – the other pillar of Leaps by Bayer’s investment focus. If a health tech company develops a first-or-best-in-class product they can likely build a leadership position, but a best-in-class agricultural technology may not even make it to market. Reaching mass scale for an agtech company means convincing retailers and distributors to stock it, posing a massive logistical challenge. 

A new age of genetics

One of the areas creating new excitement in agtech is plant genetics. There are relatively very few plants whose entire genomes we’ve mapped out, but just from those reference genomes, we’ve been able to breed plants that bring in far higher yields – nearly ten-fold – without even having to change the code, says Amini.

“ That kind of 10X growth is the thing that venture dreams are made of. That was just being able to read,” says Amini. “The ability to write and to test through writing is going to be something that rapidly scales our scientific understanding of plants in the future.”

The newest kid on the block is epigenetics – the ability to change not the DNA itself, but the way certain traits are expressed, giving producers control over the plant without splicing it.

“A lot of us are familiar with genetic modification, which is me saying I’m taking a sentence from another book and putting it into this book here. Gene editing is saying I’m taking this one word in the book and tweaking it into a different word that’s already in the book as well,” says Amini.

“Epigenetics is not moving things in, it’s not changing what’s there in the DNA sequence, but it’s like highlighting certain sentences of the book.”

Because epigenetics is not technically what we would typically associate with genetic modification – you are not introducing foreign DNA or rewriting the genetic code, but rather choosing which parts of the organism’s existing code are expressed – it can avoid some of the thornier issues – regulatory and of public perception – surrounding genetic modification.

The farmers, for their part, can sell a product that benefits from enhanced features – often at a premium – without having to label it as genetically modified.

AI effects

Agriculture, like every other sector, is also seeing an impact from generative AI, says Amini. Whether it takes the form of virtual agronomists who can assist small farmers in developing markets make the most out of their one or two-acre harvests, or in helping in small molecule drug discovery.

Automation and drone technologies that help with labour shortages – which are a bottleneck to production – are also attractive, with drone use in particular having grown some 2-3x year on year, according to Amini.

Getting traction

It’s hard to get uptake when you’re selling in a fragmented market that has many farmers, distributors, and other stakeholders, each of which is also dependent on a seasonal model. A farmer, says Amini, might get 30 “at bats” through their lifetime – 30 chances to go grow a crop. Getting them to depart from what is tried and true for one of those 30 is a tall order.

If a startup’s technology fails, it will have to wait a year to try again and see if its improvements work, during which time it may well run out of money.

Big success stories are also few and far between, further reducing new investors’ appetite to enter the space. There had been some big IPOs while the public markets were still active, but many did not work out. Startups like aquaculture developer AquaBounty Technologies or crop biotechnology company Arcadia Biosciences, which listed in 2017 and 2015 respectively, have both seen their stock price evaporate post-IPO, while others like synthetic biology startup Calyxt, which went public in 2017, also saw its stock price crash and then merged with seed developer Cibus in 2023.

“ A majority of those companies that went public got reduced and either had to be taken back private or were devalued so significantly on the stock market that it was more or less a write-off type situation.”

If agriculture startups want to prove themselves, now is the time. With decades-low commodity prices for crops like corn and soy, farmers’ margins will have taken a beating. They’ll be more open to working with new technologies, especially if the startups, as they sometimes do, agree to underwrite the farmers’ tech risk and partake only in the upside, should there be any.

All of a sudden, says Amini, farmers’ ROI calculations look a lot better, and they’re more amenable to bringing startups in and advancing their route to market. For the startups, if they’re able to help producers be more efficient when commodity prices are low, then that is a great indication their solution will work when they are higher.

“ If your business model works in $3.50-a-bushel world, it will work anywhere,” says Amini.

The path to disrupting an agtech industry dominated by companies who have built their infrastructure over more than a century, is for startups to work within the system first and only rock the boat once they are big enough, says Amini. Otherwise they will end up burning a lot of cash pointlessly.

Emerging market opportunity

Geopolitically, the spectre of higher tariffs in developed markets like the US and Europe can open up more opportunities in emerging markets like Brazil, has an accelerated regulatory path to bringing new products to market.

Emerging markets are also a great place to be because they are less dominated by a small number of big players, as is the case in the US.

“The thing you end up realising is that sometimes it’s easier to disrupt in a space that doesn’t have as set infrastructure. So it’s easier for me to roll out a new business model in Zambia than it would be to come and to disrupt in the US,” says Amini.

“ It’s very difficult to disrupt these markets without a significant amount of capital and a significant amount of connection in that space.”

Diversification is crucial here. There is a premium for startups whose technology is dual use, and for those who are active in multiple geographies to straddle the seasonal divide.