Food demand keeps climbing, but farmland does not. Here is why we think ag biotech is where that gap gets closed.

Every investor in this category eventually confronts the same arithmetic. Food demand rises with population and income. Arable land does not, and the soil across much of what we already farm is losing productive capacity. What has changed recently is not arithmetic but the toolkit. For the first time, the biological methods available to close that gap are improving faster than the pressures widening it.

Consider what growers are already absorbing. Decades of chemical-intensive production have left soils depleted and biodiversity thinner. Pests, weeds, and plant pathogens continue to evolve resistance to the chemistries deployed against them, driving billions of dollars in annual crop losses and pushing growers toward higher input spending for steadily diminishing returns. Climate volatility compounds all of it, bringing more frequent heat stress, drought, and flooding, along with disease pressure in regions that have not seen it before. The cumulative effect is that each season is harder to forecast than the last, and unpredictability carries a cost of its own, separate from any yield lost.

The conventional toolkit was never designed for this pace. Traditional breeding still takes a decade or more to move a variety from cross to commercial release, and fragmented regulatory regimes further slow the international rollout of improved genetics. Chemical crop protection is losing efficacy under pressure, while regulatory scrutiny of it tightens. None of this reflects a lack of effort from the companies involved; biology has simply outpaced the tools built to manage it.

What Ag Biotech Means

Ag biotech applies genetics and biology, rather than synthetic chemistry, to the question of how crops grow. Four groups of technology account for most of what we see.

Plant genetic improvement is the most consequential of the four. Gene editing makes targeted changes to a plant’s own DNA without introducing genetic material from another organism, and it has already delivered gains in drought tolerance, disease resistance, nitrogen use efficiency, and shelf life across soybeans, tomatoes, and leafy greens. Its central advantage is speed. Editing compresses breeding cycles that once spanned decades into a matter of months, changing what a small company can accomplish in a single round of financing.

The regulatory picture deserves consideration. USDA’s 2020 SECURE rule exempted many edited plants from pre-market review on the reasoning that they could have been produced through conventional breeding. In December 2024, a federal court in the Northern District of California vacated that rule on a prospective basis. Determinations, confirmations, and permits issued before that date remain valid, but newly developed engineered plants now fall back under the pre-2020 framework, which requires APHIS to assess plant-pest risk on a variety-by-variety basis. APHIS has signaled an interim final rule intended to recover some of the lost efficiency, with publication projected for 2026. Until it lands, we underwrite editing companies on the assumption that the US path to market is slower and less predictable than it appeared two years ago, and we treat any plan that still assumes automatic exemption as a diligence question rather than a given.

Biological inputs cover biofertilizers, biostimulants, biopesticides, and microbial inoculants, which use beneficial microbes and naturally derived compounds to improve nutrient availability or buffer crops against stress. The underlying science is well established. The commercial problem has never been efficacy in a good season, but rather variance across bad ones, so the most recent innovation has focused on formulation, shelf stability, and strain selection.

RNA-based crop protection suppresses a specific pest or pathogen through its own genetics while leaving other organisms untouched. EPA registration of GreenLight Biosciences’ RNA-based insecticide was the first commercial validation of the approach and, just as importantly, established that a path through the agency exists. What makes the category interesting is not any single product but the precision. A mode of action that targets one species offers resistance-management value that broad-spectrum chemistry cannot offer.

Enabling platforms include synthetic biology, AI-driven trait discovery, high-throughput phenotyping, molecular diagnostics, and soil microbiome analysis. These generate field-level biological data that narrows uncertainty and shortens development timelines. Close attention when a single platform can support several downstream products, because that is what turns a long development cycle into a portfolio rather than a bet.

A large market, growing for structural reasons

We size the combined ag biotech market at roughly $150 billion today, with projections above $200 billion by 2030 as genetic and biological innovation gains acceptance across both commodity and specialty crops. Biological inputs are among the fastest-growing segments: still modest at $10 to $20 billion, but compounding at 10 to 15 percent a year, well ahead of conventional agrochemicals. Gene editing tools across agriculture and medicine are projected to reach roughly $40 billion by the mid-2030s.

Three drivers are driving that growth rather than merely accompanying it. Consumers continue to ask for more sustainably produced food. Governments increasingly mandate and incentivize reduced use of synthetic fertilizers and pesticides. And climate volatility pushes growers toward anything that improves resilience to drought, heat, and disease. Large seed and input companies are meanwhile investing in and partnering with earlier-stage firms to diversify pipelines they cannot fill through internal research alone. That last point matters more than it first appears, because it describes the mechanism by which most of these companies will eventually exit.

The part that requires patience

Ag biotech is the most patient category we underwrite, and the data leaves little room for argument. PitchBook records 335 venture transactions in the category between 2018 and 2025, alongside 42 exits across the geographies we target. Excluding outliers, the average exit came in at roughly $230 million, around nine times revenue, approximately $50 million of revenue, after an average of ten years. That is the longest average holding period among all our thesis categories. Those exits are overwhelmingly M&A-led, with Bayer, Syngenta, and BASF among the most frequent acquirers, and public listings have been both rare and cyclical.

The risk in this category sits in scale-up rather than invention. Technical validation, regulatory clearance, manufacturing, and grower adoption each consume time, and when stacked end-to-end, they can push commercialization beyond a conventional venture horizon. The companies that manage the transition tend to share three characteristics: partnerships with established agribusinesses that provide distribution and credibility; an early focus on high-value crops and geographies where the economics work first; and platform strategies that generate more than one revenue stream from the same underlying science.

How we underwrite it

Long timelines argue for discipline rather than avoidance. Four questions carry the most weight in our diligence.

Field data, not greenhouse data. Performance in a controlled setting tells us very little on its own. We look for multi-site on-farm trials, third-party validation and datasets large enough to support defensible conclusions about performance across seasons and geographies.

Fit with how farms already run. Growers are cost-sensitive and appropriately risk-averse, and they adopt in stages: small paid trials first, wider acreage only after consistent results. Seed traits and drop-in biologicals that slot into existing workflows move considerably faster than anything requiring new equipment or a change in practice.

A regulatory path measured in months rather than eras. We prioritize technologies that can begin commercializing within roughly one to two years of a venture round, and teams that can reuse filings and data packages across multiple products. Given the current state of US biotechnology oversight, we weigh regulatory strategy more heavily now than we did during Fund III.

Economics that work without a subsidy. Licensing and platform models in genetics can achieve gross margins above 90 percent, while manufacturing biologicals or biomaterials resembles specialty chemicals, with gross margins below 20 percent. Either can build a good business. What cannot is a product that never reaches cost and performance parity with the incumbent option.

Why SDC is spending time here

Clean Crop Technologies, which we backed in late 2025, illustrates what happens when a new tool removes an old tradeoff rather than optimizing within it. Seed treatment has long forced a choice: hot water and chemical treatments kill pathogens effectively, but they also depress germination rates. Clean Crop applies high-voltage atmospheric cold plasma, an ionized gas, to strip contaminants from seed surfaces in a dry, automated, residue-free process, which removes the tradeoff instead of splitting it. Just as important for a company at this stage, it reaches growers through the seed companies that already hold those relationships, and it fits existing supply chains rather than asking anyone to farm differently.

The constraint driving this category will not be resolved on its own. Food demand will keep rising, farmland will stay finite, and climate volatility will keep making each season harder to predict than the last. Closing that gap means getting more from the land already in production without clearing more of it, and biology, not additional synthetic chemistry, is where the leverage now sits. That is a long-horizon problem, and it is the kind we are built to underwrite.