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Is AI a Boon for AgTech VCs? Or Will Value Primarily Accrue to Incumbents?

Incumbents in software and hardware are best positioned to leverage AI for deeper moats.

Author

Shane Thomas
January 10, 2026 • Read Time: 2 minutes

Index

  1. Overview

  2. Software

  3. IoT and Hardware

  4. R&D

  5. Where is there Optimism?

Overview

One thing that stood out to me was the view that AI brings opportunity for investors in agriculture. (Note: There are a lot of different applications for AI: machine vision on equipment, genAI in software and R&D discovery as just a few examples. I will try and address the latter two).

It is hard to ignore the buzz surrounding AI in agriculture, and this article highlights why investors are paying attention. I agree that AI is bringing functional value to users in the industry and on the farm.

However, for investors, the outlook to derive returns seems more nuanced. While AI is likely to continue to drive utility at the farm level, the path to venture-scale returns seems less obvious.

Instead of a greenfield of new startups, we might be looking at a landscape where the primary beneficiaries are incumbents leveraging AI to deepen their moats.

For example, one comment from PitchBook Analyst, Alex Frederick, shares the following:

In 2025, investors continued their flight to quality, moving towards late-stage agtech companies, as many shifted their investment focus towards AI – a broad investment trend in 2025 – Alex Frederick, senior research analyst at PitchBook, told AgTechNavigator.

‘Farmers and VCs, in general, are excited about areas where AI is having immediate value,’ he said. ‘A good example is farm management software — all of the IoT all over the farm — and being able to use AI to make sense of all of that data.’

Let’s first consider the software side of AI in ag.

Software

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