Rob Appleby, Founder, Chief Investment Officer
What goes around in capital markets tends, eventually, to come around. As a farmer and an investor with more than thirty years dedicated experience, the pattern has been remarkably consistent. Major financial and economic shocks take about four to five years to work their way through the system. Initially, asset prices remain detached from intrinsic value. Banks and lenders “pretend and extend,” equity holders look for an exit and private capital often behaves as if nothing has changed. After a familiar emotional arc (anxiety, anger, then grudging acceptance) comes capitulation; marks get taken, restructuring advisers are hired, zombie companies with little to no product market fit and often more hat than horse, are wound up and the better businesses quietly reinvent themselves as the next cycle begins.
Pundits in the food and agtech sector would have one believe we are now at that point in the cycle. The sector was hit by a rapid succession of shocks: Russia’s weaponisation of natural gas, pandemic driven disruption, supply chain dislocation and extreme volatility in input prices. For a period, the industry sat in a kind of stasis, sustained by venture capital willing to fund capex heavy models with long, expensive J-curves and undercooked business plans. Four years on, the cracks are visible. Companies that never adapted their cost base, never solved for unit economics and remained reliant on successive VC rounds have been the first to go, forced into flat, down or pay-to-play financings or, failing that, the bankruptcy courts. With a few notable exceptions, much of the first wave of “novel farming” particularly among vertical farms, RAS fish projects and insect facilities, has been relegated to the case study file. Gone too are the hucksters with tech “solutions” divining and then solving problems for the imaginary “farmer”.
As Confucius reminds us, where there is chaos there is also opportunity. The capital rotation now under way has left a cohort of genuinely strong businesses hitting or exceeding operational metrics, solving real problems on farm and in the supply chain, starved of an audience. The tourist investors who came in search of a quick valuation arbitrage between private and public markets have gone. So have most of the generalists and the aspirational investors who were backing a narrative rather than a unit-economic reality. What remains, particularly in food and agtech, is a space where informed, patient investors can back high-quality companies at attractive entry points, precisely because the broader market has moved on to the next fashion.
The enabling technologies are also arriving on cue. The collapse in the cost of computing and sensing, combined with the rising cost and scarcity of traditional inputs, is opening a new frontier of “physical AI” in agriculture. Think UV rigs on autonomous carriages moving through strawberry fields at night, suppressing powdery mildew and red spider mite. Think autonomous almond shakers able to operate safely in dust brown-outs, or electric tugs ferrying plants from nursery glasshouses to packing areas without human intervention. In high-value horticulture, robots are starting to take on low-touch, repetitive greenhouse tasks (picking, sticking, grafting, planting) that are essential to productivity but increasingly shunned in favour of other gig-economy work. All of this relies on optics, sensors and AI compute applied to very practical, on-farm constraints.
Seldom have these forces aligned in quite this way: a late-cycle shake-out, a thinner but more serious capital base and a step-change in what is technically possible on farm and in controlled environments. For a CIO with a five-year lens rather than a quarter-to-quarter
fixation, this is not a time to retreat; it is the moment to lean into the parts of food and agriculture where real assets, real cash flows and real technologies can compound together.
*Article originally published in Agri Investor.
