A Decade of Progress and Challenges

Since 2012, agriculture-related gene editing startups have secured over $2.7 billion in investments, marking significant progress in the field. However, like many sectors, these startups have felt the impact of the recent venture capital downturn. Despite this, the first half of 2024 is showing signs of a potential recovery, hinting at renewed investor confidence in the transformative potential of gene editing technology in agriculture.

 

Investment Surge in 2024: A Positive Shift

In the first half of 2024, agriculture gene editing startups raised just over $161 million across six deals—a sharp increase compared to the $46 million raised during the same period in 2023. This surge represents a remarkable 206% year-over-year growth, even when excluding the $40 million deal that dominated the first half of 2024. The uptick in funding suggests that investors are regaining confidence in the sector's ability to innovate and deliver substantial returns.

 

Deal activity also saw a noticeable rise, with as many deals in the first half of 2024 as were recorded for the entirety of 2023. This is a strong indicator that the sector is regaining momentum. While it remains to be seen if 2024 will surpass the $241 million raised in 2022, the current trajectory is promising.

 

Historical Context: The Road to Recovery

To understand the significance of the recent investment trends, it's essential to look at the historical context. Investment in agricultural gene editing startups is still recovering from a post-COVID slump, with figures far below the pre-pandemic levels observed in 2018 and earlier. The only year with a lower investment figure than the present was 2017, which saw $58 million raised—a sharp dip following the $374 million spike in 2016.

 

Historically, investment activity in this sector has been relatively evenly distributed throughout the year. For instance, in 2022, the first half accounted for six out of twelve deals, a trend mirrored in 2021 and 2020. This balanced distribution suggests that 2024 is unlikely to experience the sharp decline in deal activity that characterized 2023, further supporting the narrative of a recovery.

 

Technological Advancements Drive Interest

The resurgence in investment is driven by significant advancements in gene editing technology, which have dramatically improved precision and reduced costs. Startups like Ohalo Genetics and Tropic are at the forefront of this innovation. Ohalo Genetics, for example, has developed "boosted breeding" technology that effectively prevents gene splitting in parent plants, while Tropic's gene editing-induced gene silencing (GEiGS) technology uses RNA interference to combat diseases and pathogens in crops.

 

These technologies hold the potential to revolutionize agriculture by enabling the development of new crop varieties that outperform existing ones. Gene-edited crops can be engineered to resist pests and drought, adapt to previously inhospitable environments, and increase both yield and quality. This technological edge is a significant factor in the renewed investor interest in the sector.

 

Regulatory Landscape: A Double-Edged Sword

One of the key advantages of gene editing over traditional genetic modification is that it doesn't introduce foreign DNA into crops, thus avoiding the "genetically modified organism" (GMO) classification in many regions. This regulatory distinction offers a significant advantage for seed companies, allowing them to enhance crops without triggering the stringent regulations associated with GMOs.

 

However, the regulatory environment varies globally. In the European Union, gene-edited products are still regulated as GMOs, creating a less favorable environment for investment in the region. This discrepancy in regulation is reflected in the geographical distribution of funding, with the Americas dominating the industry at 81.9% of total funding ($2.23 billion), followed by Asia at 13% ($354.31 million), and Europe trailing at just 5% ($136.69 million).

 

Despite these challenges, European institutions are beginning to recognize the importance of gene editing technology. In July 2024, the Ancient Environmental Genomics Initiative for Sustainability (AEGIS) received $85 million in funding, with $72 million coming from the Danish nonprofit Novo Nordisk Foundation and the remainder from the Wellcome Trust, a UK charity. This project aims to map the planetary genome using ancient DNA, which could serve as a foundation for developing new crop varieties based on evolutionary insights.

 

Looking Ahead: The Path to Sustained Growth

The investment landscape in 2024 shows promising signs of recovery, particularly in the United States. The three largest funding rounds in the first half of the year were all secured by American companies. In January, Inari raised $103 million, Ohalo Genetics secured $40 million in a Series A deal, and BioConsortia raised $15 million in April.

 

While investment levels are still below pre-pandemic peaks, the resurgence in funding and deal activity suggests that the agriculture gene editing sector is on the path to sustained growth. With continued technological advancements and a more favorable regulatory environment in key regions, the future looks bright for this critical area of agricultural innovation.