Now let’s examine the path to $2.5 billion. Even with agrifoodtech venture capital declining 70 percent over four years—from $54 billion in 2021 to $16 billion in 2025—annual investment has stabilized around $16 billion after totaling approximately $16 billion to $17 billion during the previous two years. For now, it is reasonable to model the next five years of venture capital at approximately $15 billion annually. That estimate falls within, but slightly below, the range of the past three years in case additional reductions occur. Based on that assumption, total agrifoodtech venture capital investment over the next five years would reach approximately $75 billion. Next, we can examine what percentage of that funding is likely to flow into automation. It should not be surprising that after investment in vertical farming and alternative proteins slowed significantly, the percentage directed toward categories solving more immediate operational challenges increased. Automation, which addresses the ongoing labor challenge, grew from 1.6 percent of total investment to 5.6 percent. If I had to project the trend, I would expect automation’s share of investment to increase rather than decline during the next five years. For modeling purposes, I used a flat allocation of 5.6 percent of the projected $75 billion. That results in approximately $4.2 billion in projected automation investment over five years. Now we can make some assumptions about the impact of that $4.2 billion based on what we have seen in other segments. We know that capital efficiency increases as a segment grows from $0 to $1 billion and then from $1 billion to $2.5 billion. This progression makes sense. The first billion dollars in revenue supports the build- out of infrastructure, while subsequent billions can leverage the installed base and ecosystem created during the development of the first phase of growth. Recall that the path to the first $1 billion in revenue was based on approximately $3 billion in agrifoodtech venture capital investment. Based on historical patterns, it is reasonable to model the next $4.2 billion as more than capable of generating an additional $1.4 billion to $1.5 billion in revenue. A simple straight-line projection from the original $3 billion investment- to-$1 billion revenue relationship
suggests that $4.2 billion would generate approximately $1.4 billion in additional revenue. I believe there is potential upside beyond that estimate because progress generated by automation startups funded through the initial $3 billion investment should create gains that exceed the baseline model. For those reasons, I believe that $4.2 billion in projected automation investment creates a clear path to $2.5 billion in annual automation revenue.
Now the next question becomes: What is required to reach $5 billion in revenue? A related question is what that level of growth would enable in terms of new business opportunities and, more importantly, what it would mean for job creation. First, let’s examine the capital needed to reach $5 billion. Based on the results from the initial $3 billion and projected $4.2 billion investments—and the earlier rationale that capital becomes more efficient as revenue grows—we know it should require less than $7.2 billion, which
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