Precision agriculture funding experiences a 71% increase, surpassing agriculture biotechnology for the first time since 2017, according to Pitchbook's latest report.
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In the second quarter of 2025, a significant shift in investor priorities was observed in the agtech sector. Precision agriculture startups have gained the spotlight over ag biotech companies, with the former attracting more funding due to immediate operational challenges in farming labour and efficiency.
According to the latest data from PitchBook, precision agriculture funding jumped over 71% compared to the previous quarter, raising $580 million versus $270.6 million for ag biotech. This marks the first time since 2017 that precision ag companies outpaced ag biotech startups in funding.
The pressing need for automation, robotics, and smart farm equipment, driven by labor shortages in agriculture, is a key factor behind this shift. An aging workforce and stricter immigration policies have exacerbated the labor shortage, creating a pressing need for technology solutions that precision agriculture provides. This trend is likely to attract sustained investment.
Advancements in AI and IoT are also enhancing the capabilities of precision ag tools such as drones, imagery analytics, autonomous robots, and farm management platforms. These technologies offer more tangible near-term benefits, making them attractive investment opportunities.
Investor frustration with ag biotech's slower commercial impact and the "gap between lofty promises and practical outcomes" has dampened enthusiasm for the biotech segment. For example, indoor farming startups have seen steep funding declines after a previous peak.
Two large funding rounds for drone/imagery analytics companies, Muon Space (raising $146 million in Series B funding) and Quantum Systems (raising a $178 million Series C in Germany), heavily skewed the capital inflow towards precision ag in Q2 2025, reflecting interest in scalable digital farming solutions with potential to reduce labor reliance.
PitchBook defines precision ag to include drones and imagery analytics, robotics and smart field equipment, farm management software, and field IoT. Ag biotech raised $270 million in Q2, 2025, marking a 72.5% decline quarter over quarter.
The overall agtech VC funding is down in volume, but the relative priority is clearly shifting toward technologies that address immediate operational challenges in farming labour and efficiency rather than longer-term biological innovations. PitchBook expects significant investment to continue in the precision ag sector due to labor shortages and advancements in AI.
As advancements in AI filter down to agricultural applications, such as autonomous farm robots, the trend towards precision ag is expected to accelerate. The cautious stance by investors, which has been the norm for more than a year now, has not deterred this shift in focus.
Despite the steady contraction in deal volume since the market's high in Q1 2022, the second quarter of 2025 saw agtech VC deal activity total $1.5 billion across 117 deals, marking quarter-on-quarter declines of 22.8% in value and 22.9% in deal count.
The trend of funding precision ag over ag biotech may stem from growing frustration over the gap between the lofty promises of ag biotech and the practical outcomes achieved so far. As precision agriculture continues to address acute labor constraints through digital and autonomous technology, it is set to remain a more compelling investment focus than ag biotech in the current market environment.
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