The $1.2 Billion reality, why restructuring Plenty, Farm Wise and Tortuga makes sense.

A significant restructuring is sweeping through the global AgriTech ecosystem, following recent shutdown announcements by Plenty®, FarmWise, and Tortuga AgTech. Alongside these developments, Yamaha Agriculture has recently acquired long term portfolio companies The Yield and Robotics Plus.

So what's really happening here?

In the words of Eminem: "The clock's run out, time's up, over, blaow! Snap back to reality, ope there goes gravity."

Despite more than $1.2 billion being collectively invested across these five companies, today's capital market reality has created a force that their business and financial models simply couldn't withstand.

While venture capital often takes the blame, the companies on this list point to broader issues in capital markets, with "restructuring" emerging as the common word across these recent announcements.

Given the scale and traction of both Tortuga and FarmWise, it's important to note that their product financing relied as much on private debt and trade finance markets as it did on venture capital.

A combination of higher interest rates, tighter lending standards, and higher operating costs has both limited access to capital and squeezed profit margins for AgriTech companies and their customers alike.

Plenty's scaling model relied on a sophisticated system of Real Estate Investment Trusts, where each new facility was financed independently through a REIT with a license to the core Plenty technology and off-take market.

It's a brilliant model, that I love —leveraging institutional capital to fund the high CAPEX costs of vertical farming, whilst leveraging private capital to fund scaleable technologies. However, margins become razor-thin when debt and public equity markets turn tight and expensive.

The snap back to reality for these companies is the gravity of the current market. We face an economic reality of higher rates for longer—a constant force that permeates every aspect of their business models.

Looking deeper at the underlying assets of these companies, there's significant value to be salvaged and customers to be served. The restructuring reflects a realisation that their current corporate structures have been compromised by business models that assumed capital would be cheap and readily available.

With investors like Driscolls, Taylor Farms, Wilbur Ellis, and Walmart involved, there's a clear opportunity for these technologies to live on in more suitable entities—making the case for restructuring quite compelling.

The technical and market achievements of each of these companies was impressive and should be celebrated. Whilst restructuring outcomes won't be ideal, they will likely provide a realistic price signal for the core technologies in agricultural robotics and vertical farming, which can be used to inform the business models of the next generation of AgriTech entrepreneurs.