If 2020 was the year agri-food tech investment took off, 2021 saw explosive growth in the field. Investments in agri-food tech totaled $51.7 billion last year, according to Agfunder's inclusion. This growth has been most pronounced in the fresh grocery e-commerce services category, which is by far the largest investment agri-food segment.

  Startups in the upstream category of agri-food tech, covering production technologies for agriculture and food and solutions between farms/labs and retail terminals, received a total of $18.2 billion in funding across 1,846 financing deals. Meanwhile, companies in the downstream category, those with direct consumer contact, received a total of $32.1 billion through 1,241 financing deals. The remaining $1.4 billion in investment went to midstream categories and other agri-food-related companies.

  As you can see, the agri-food tech category remains the most popular with investors in response to the COVID-19 pandemic. Investment in cloud retail infrastructure, including on-demand support technologies, cloud kitchens and delivery robots, increased 97.5% year over year to $4.8 billion, accounting for more than 9% of all investment activity. Total investment in alternative protein-based innovative food categories increased 103% year-over-year to $4.8 billion.

  We also found that, in many cases, the pandemic has prompted an increase in investment activity, particularly in grocery e-commerce.

  In 2021, investment in fresh grocery e-commerce will reach US$18.5 billion, accounting for more than 35% of the annual investment in agri-food technology, an increase of 188% from 2020. "Fresh Grocery E-commerce" refers to online stores and marketplaces that sell and deliver processed and/or unprocessed produce to consumers.

  Globally, startups in this category have received huge 8-, 9- and even 10-figure funding rounds, driving the growth of the field considerably. This includes a huge $3 billion round of financing from Chinese group-buying platform Xingshengyou, the largest venture capital investment in the agri-food tech industry in 2021. In addition, three more companies have raised more than $1 billion. Of the $7.3 billion raised by Chinese agri-food tech companies in 2021, 75% went to fresh grocery e-commerce.

  Outside of China, the rising stars of fresh grocery e-commerce have also achieved good financing results, such as Gopuff in the United States, which raised $1.5 billion, and Getir in Turkey, which raised $555 million. Other notable deals include two German rivals: Gorillas and Flink. Xingsheng Preferred, Gorillas and Gopuff have each had multiple rounds of financing of more than $200 million in 2021.

  Investments in the rest of the world remain largely downstream. In 2021, non-U.S. agri-food technology companies will receive a total of $30.7 billion in investment, of which 70% will go to downstream companies; 44% will go to fresh grocery e-commerce. In contrast, the U.S. rate is only 24%, indicating that the U.S. agri-food tech market is relatively mature.

  Grocery e-commerce was not an essential service for most people until 2020, and the Covid-19 pandemic is often seen as a major driver of consumers' online grocery shopping habit. Today, buying food and groceries online is so ingrained in consumer behavior that new entrants to the space are not only building brands that are “convenient,” but also offering near-instant delivery.

  This is evident in the rise of startups like Gorillas and Gopuff, which promise ultra-fast deliveries of staples and groceries like flour, ice cream, toilet paper, and groceries in under 10 minutes and, in some cases, alcohol. Aided by micro-distribution centers located in densely populated urban areas, these services offer busy consumers a tantalizing prospect: last-minute access to goods without leaving their homes, comparable to the time it takes to walk to a local market same.

  Such large-scale investment in such startups has also raised many questions, is grocery e-commerce a short-lived trend, or a long-term sustainable industry? It's too early to say whether this business model will work in the long term, at least for now, investors seem to be betting on it.