Lately, there’s a lot of chatter suggesting agtech and venture capital are fundamentally incompatible. 

Some argue agtech’s long development cycles, fragmented markets, and regulatory hurdles make it a bad fit for venture capital (VC). Others claim VCs just don’t “get” agtech—too impatient, too software-biased, too Silicon Valley.

Both arguments miss the point. 

The real story is in the nuance—and that’s where the opportunity lies.

Why the friction exists

Agtech has characteristics that challenge the traditional VC model. Biological timelines don’t care about your funding runway. Farmers are discerning customers—neither fully B2B nor B2C—and aren’t easily dazzled by tech for tech’s sake. Scaling isn’t about adding servers or increasing ad spend; it’s about logistics, distribution, business model design, and navigating government policies.

But that doesn’t mean venture capital can’t work for agtech. It just doesn’t work when we apply a one-size-fits-all playbook, failing to design for the sector’s unique dynamics.

A one-size-fits-all view of VC is destined to fail

Venture capital was designed to fund specific kinds of risk: fast-scaling, disruptive technologies with the potential for massive returns. In agtech, we often see investors applying this playbook to companies that don’t fit that mold—and then blaming the sector when it doesn’t pan out.

We’ve seen this when equity is used for prolonged funding of capex, versus solely for early technical de-risking and proof of product-market fit (ahem, vertical farming). We’ve seen this when exit expectations are disconnected from the realities of market comparables (ahem, conventional food companies trade at 4-6x EBITDA). And we’ve seen this when fund managers optimize for increasing funds-under-management, rather than aligning with their investors and investees on what good outcomes look like and where they’ll come from. The list goes on. 

It’s time to learn from these mistakes - not by walking away, but by applying the model when appropriate, and finding or building other solutions when the standard VC template is not a fit. 

What needs to change

I appreciate the irony - and perhaps risk - of writing this article while raising and deploying not just one but two agtech VC funds. But it’s precisely from our lived experience across investing, consulting, and ecosystem-building at Tenacious Ventures that I gain conviction in where and how VC is a fit for agtech and where it’s not (and what might be, instead or in addition). 

Here’s where I see opportunities for more alignment, nuance, and change to ultimately unlock more impact and returns in agtech. 

Investors: Rethink the playbook. 

Not every agtech company will be the next Uber for agriculture—and that’s okay. Investors need to adjust their assumptions around timelines, capital requirements, exits, fund size, and support. Agtech outcomes—whether impact, returns, strategic value, or a mix—follow different paths. Invest accordingly.

Founders: Be clear on fit. 

There are agtech companies that are well-suited to VC-backing. But not all are. Agtech founders will benefit from being clear-eyed about what VC can and can’t do. If your business relies on long-term infrastructure plays or niche markets, maybe venture isn’t the right fit or the only fit—and that doesn’t make your business any less valuable! Whatever profile of investor you are speaking with, ensuring there’s alignment on the expected return profile and timeline is critical. For VC, this might be 10x equity returns, which may or may not be a fit for your company and market. Plenty of other investors will be thrilled with healthy dividends. There’s no right answer other than alignment.  

Corporates and Industry: Stop playing VC - play to your strengths. 

Corporates and industry bodies often mimic VC strategies, setting up funds without the incentives or expertise to match. The result? Misaligned investments, missed opportunities, and diluted impact. Yet these organizations have superpowers that VCs don’t: deep market knowledge, existing customer networks, supply chain influence, and technical expertise. Instead of competing with VCs, they can focus on models that utilize their unique strengths, such as:

• R&D collaborations to de-risk early-stage technologies before they even reach VC territory
• Strategic partnerships that accelerate go-to-market for startups
• Pilots and procurement that validate products in real-world environments

Rather than act like a VC, these organizations can be the critical bridge between innovation and industry adoption.

Governments: Catalyze more capital. 

Governments often step in where private capital is lacking or where there’s strong alignment with national priorities and strengths, but inadvertently either crowd-out investors or fall prey to the same limitations of non-sector-specific models. Instead, governments can catalyze capital through mechanisms such as blended finance, grants, fund of fund and co-investment structures, and policy frameworks.    

New Capital Models. 

We need more hybrid approaches- models that free fund managers from the traditional VC constraints; new, blended capital stacks; revenue-based financing and first-of-a-kind mechanisms; and more. These models can complement VC, filling the gaps where traditional models fall short and unlocking more value for all. 

The bottom line in the agtech vs. VC debate 

The “agtech vs. VC” debate isn’t about incompatibility. It’s about alignment. And opportunity. When we stop trying to force square pegs into round holes, we can start having more productive conversations—ones that recognize the complexity of agriculture and the diversity of capital needed to drive impactful innovation at scale.

So, is agtech broken for venture capital? Only if we assume investors and founders can’t adapt—or aren’t willing to try.

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