Venture Capital’s View: Why AgTech Exits Are All About M&A Now

At the 2025 Tech Hub LIVE in Des Moines, IA, Kyle Welborn, General Partner at Cultivation Capital, joined CropLife for a Fireside Chat to break down the current agtech exit landscape — and the news isn’t great for startups hoping to go public.

Welborn, whose firm specializes in early-stage investments in agtech, offered a candid look at where exits are happening, how macroeconomic pressures are shaping deal flow, and where startups can still find opportunities in a tough market.

M&A Dominates the Exit Landscape

Over the last decade, agtech has seen 210 exits across segments like digital agriculture, novel crop inputs, seed genetics, and alternative food. But the path to liquidity is clear — and it’s not through the public markets.

“About 90% of those were M&A deals,” Welborn explained. “Only about 10% were IPOs or SPACs that led to IPOs.”

Even those few IPOs haven’t fared well.

“From the time of IPO to today, market caps are down over 90%,” he said. “A few of those companies are going bankrupt, and some were taken private right before they would have been delisted due to their share price falling too far below a dollar.”

The poor performance of agtech IPOs has firmly shifted investor and founder attention toward mergers and acquisitions as the preferred — and often only — viable exit route.

Within M&A activity, about a third of acquisitions come from large ag companies looking for new technologies, while the other two-thirds are “startup-on-startup” deals designed to gain scale or market position.

The Ag Market Is Still in Contraction

So why aren’t we seeing more IPO-ready companies?

It comes down to timing and where the ag economy sits within its historical cycle. According to Welborn, agriculture typically follows a 7- to 10-year cycle — beginning with expansion, followed by overexpansion, then contraction, and finally recovery.

“Right now, I think it’s fair to say we’re still in the contraction phase,” he said. “We haven’t returned to the commodity price highs we saw in 2021 and 2022.”

That contraction affects everything downstream, including startup valuations and strategic acquisition appetite. “Low commodity prices mean [farmers] need to see ROI fast,” Welborn noted. “Strategics behave the same way — they need acquisitions to be accretive almost immediately.”

And that’s a challenge for many agtech startups, especially those still deep in R&D or pre-profit stages. From founding to exit, the average agtech startup takes 9.5 years to reach an acquisition.

“Nearly a full decade of work before an exit,” Welborn emphasized. “So, companies need to find a way to finance all those years — often without profitability.”

Structural Pressures on Big Ag Are Fueling M&A

Despite the broader economic headwinds, there are structural trends pushing larger ag companies toward acquisitions.

One of the biggest is the looming expiration of patents on legacy crop protection products. “Over the last 25 years, we found at least 20 major ag products that lost patent protection,” said Welborn. “When we added up their final-year sales, it totaled over $27 billion in 2024 dollars.”

That’s a significant amount of high-margin revenue shifting to the generics market, and public markets don’t value generic producers the same way they value innovators.

“An innovative company needs $1 in sales to support $1 in market cap,” Welborn explained. “A generic company needs $2.80 in sales to do the same.”

With fewer new active ingredients entering the market — only 38 in the 2010s compared to 93 in the 1980s—many large players are looking outside their walls for innovation.

“It’s really a build-versus-buy moment,” said Welborn. “And for many large strategics, buying is going to be necessary to plug those profitability holes.”

Where Startups Can Still Win

Despite the harsh realities, Welborn sees bright spots for well-positioned startups — especially those with capital efficiency and a clear path to profitability.

“Startups that can reach profitability with less invested capital are in a strong position,” he said. “Buyers are actively looking for profitable assets.”

In some cases, partnerships with large incumbents can ease the path. “Many large ag companies now have programs to partner with early-stage startups,” he added. “These can include joint development contracts or milestone-based payments, which bring in early revenue and reduce the need for outside capital.”

For these types of startups, acquisition interest remains strong — and exit multiples can still be attractive.

Looking Ahead

While the ag cycle may currently be in contraction, Welborn remains optimistic about the future.

“The ag cycle doesn’t stay in contraction forever,” he said. “At some point, we’ll move into recovery and growth again.”

And when that happens, he believes companies with novel, IP-protected technologies and some level of profitability will be in a prime position.

“As the major ag input companies start acquiring new tech to address the patent cliffs, there should be some good opportunities.”

• Watch: Fireside Chat With Cultivation Capital’s Kyle Welborn