Meat alternatives, indoor farming, robotic food delivery and cloud kitchens were last year’s hottest trends among agri-foodtech startups, according to a new industry report.

But while the sector has grown 250% over the past five years, venture capital funding dropped 4.8% last year to $19.8 billion, according to the annual report from AgFunder, the online venture capital platform for the agri-foodtech industry. The number of deals done also decreased by 15%.

Innovative food startups mostly alternative meat and dairy groups — were the brightest spot, with investment doubling to $1 billion, the report showed. Novel farming systems also jumped  38% to $745 million. Three deals worth $100 million or more each were done in vertical and insect farming, it said. That’s literally growing crops in vertically stacked layers and breeding insects as livestock, either for themselves or the products they produce.

Upstream startups that were closest to the farm, rather than the retailer, had their highest second-half numbers ever, driven mostly by alternative proteins and vertical farming.

On the decline? Consumer food delivery services, which the report dubbed “oversaturated.” That industry fell 56% in 2019 “as the more mature players extended their dominance.”

Geographically, California continued to dominate the U.S., with its startups raising more than those in all other U.S. states combined. Meanwhile, European funding almost doubled and Latin America had “a breakout year,” raising $1.4 billion in agri-foodtech startup money, more than its entire venture capital industry in 2017.

  • Impossible Foods, a Silicon Valley-based meat alternative startup, raised $300 million last May from institutional investors and celebrities as fast-food chains scrambled to fulfill the public’s increasing desire for plant-based replacements.
  • California-based food tech startup Perfect Day, which makes animal-free dairy products, raised $140 million in December, aiming to commercialize their offerings and expand to multiple continents, the Financial Times reported.