The Robots Are Coming
Why Agricultural Equipment Will Be the Only Growth Area in US AgTech This Year
One of the only areas of growth in US agtech in 2025 will be in agricultural robotics and equipment.
This will occur both in venture investment and on-farm tech adoption.
Why will adoption increase?
We have a labor crisis in US agriculture. There are simply not enough people willing and able to do the work at the costs that farm operators are willing and able to pay for that work. This was true and worsening during the relatively immigration-friendly Biden administration; worsening due to a variety of factors including declining birth rates, especially in Mexico, low unemployment rates, and increasing climate volatility (fires, excessively hot days, extreme rain events…) making outdoor ag labor less attractive. There aren’t enough farmworkers, and smart farm operations are focused on retaining their existing, skilled workforce. At the same time, the costs of labor keep climbing in key production regions, and farmer profits aren’t increasing at the same rates, putting pressure on farm operations to do whatever it takes to decrease labor costs.
Trump promises to deport millions of immigrants. So far, his administration is deporting people at a slower rate than Biden’s did, but they are grabbing headlines with moves like invoking the Alien Enemies Act to disappear alleged Venezuelan gang members (without trial) and arresting pro-Palestine college students and professors. He recently mentioned some sort of agricultural exemption, but that plan has yet to be clearly defined and the idea of deporting people and letting them back in seems tough to implement.
Anecdotally, ICE is more present in Central Valley CA than they were this time last year. Farm operators are spending time preparing for raids and ensuring that their operations are compliant and their workers know their rights. There’s fear amongst farmworker communities, and there’s a real question of how that’s going to impact who does or doesn’t show up for work. In conversations I’m having with major specialty crop farm producers and shipper/packers, I’m noticing a real shift from “robots seem cool and we want them when they’re ready” to a much more panicked “are those robots ready, because we need them asap!”
NOTE: Broad acre row crops and a few specialty crops look a bit different, because farm profits are down without any line of sight on improvement (in fact, quite the opposite.) I talked with my grandma recently about whether to sell or hold our corn (we grow corn and beans in NW Central Iowa), and we’re going to be happy at this point if we break even this year with slightly above average yields on corn and beans. I’m very concerned that this will contribute to a lag in technology adoption, so long as tariff uncertainty and USDA/DOGE unpredictability continues. I do think it's probable that Rollins will try to use Commodity Credit Corporation (CCC) funding for a farmer bailout, which might artificially give growers an opportunity to buy equipment with taxpayer dollars - who knows. That said, it’s worth noting that Project 2025 says they’d like to get rid of the CCC, aka the USDA’s slush fund, and the CCC, which is refilled annually via Congressional appropriations, is running low on funds with only ~$4B available (as context, the last Trump administration used the CCC for a ~$28B bailout.)
Why will investment increase?
In an ideal world, I’d love for this section to exactly mirror the above section. However, if I’ve learned anything over the past decade, it's that VC investment trends tend not to align as well with reality on the ground as I would hope. Investment in ag robotics will increase, and part of that will be because of a high level understanding that the above is true.
Continued “slow & steady” ag equipment investment
Funding for five specific categories over the past 5 years. Note that Farm Robotics, Mechanization, and Farm equipment has hovered just under $1B consistently. Source: AgFunder News 2025 Agrifood Investment Report I have written previously that ag equipment investment is a reliably slow and steady subsector of agtech investment. Since that writing (published in Oct 2024), AgFunder’s 2025 Agrifood Investment Report, more or less substantiating my observation that investment in this category is pretty consistent (it dropped 2% YOY between 2023 and 2024…effectively flat.) This will continue.
The AI generalists are coming
Smart climate investors should be increasing their ag allocations right now. In a world where “climate change” is on the National Science Foundation banned word list, agtech is an obvious opportunity to decrease US greenhouse gas emissions without directly investing in “climate for the sake of climate.” Farmers save money when they use less inputs and saving money matters in commodity markets with razor thin margins. Lower inputs generally correlate with lower emissions. I was asked the other day if my investment thesis at Farmhand Ventures intersects with climate, and I replied with: “duh!” Not the most eloquent response on my end, but, it seems to me that it’s a given that, if you are investing in agtech in the year 2025, you are also investing in climate tech. Ag is responsible for somewhere between 10-33% of global emissions, depending who’s counting and how, and it is a low margin industry that uses massive swaths of land and other resources. The name of the game is resource efficiency, and every decent farm operator fundamentally understands this.
Moreover, I think that the non-climate people are going to jump over to robotics. Anecdotally, I keep hearing top investors talk about their bullishness on B2B SaaS AI for dirty industries. In a world in which, every day, everyone is skimming the headlines to see if Trump has turned the tariffs on/off, domestic manufacturing is top of mind. Domestic manufacturing will only happen with automation and robotics. People in the US cost too much.
You can think about agriculture as a sub-category of manufacturing - it’s food+fiber+fuel manufacturing. Farms manufacture food/fiber/fuel, and those commodities get further value-added throughout the supply chain. The top VC firms are going to see these trends and dip their toes in the ag robotics pool.
As generalist investment piles on, overall ag robotics investment will increase. Don’t get me wrong - it’s going to continue to be gruelingly difficult for hardware founders to raise money. I’m not talking about a 10x year-over-year increase in ag robotics investment, but I do think that we’ll see at least a 2x increase in the category.
More investment in ag robotics - that’s a good thing right?
You’d think I’d be stoked about more investment going in to ag robotics. Expanded follow-on/co-investment opportunities de-risk my portfolio, and we need more money to solve the labor problem. To some extent, I do want to see more dollars flow here. I’m also worried, though. Here’s why:
Tech bros fixing farms >>> Tech bros fixing farmworkers
I have been talking about tech bros fixing farms for years. I think we’ve gotten better as an agtech industry at flagging this as an ineffective way to build an agtech company, but, some of the tech bros who are new to the ag party still take this approach. Unfortunately, I think this problem might actually get worse.
Today, the most extreme version of tech bros fixing the farm essentially includes a dude with a Tesla and a degree from Stanford rolling up to someone’s farm business and saying hey, you don’t know how to operate your business as well as I do, let me fix it for you with my widget, which I’ll be so kind as to sell to you at a price that doesn’t make sense in the context of your operation. Unsurprisingly, this is not a terribly effective product development or sales strategy. It’s insulting to farm operators everywhere.
A worse version of this would be the same tech bro rolling up to a farm and saying hey - your employees are expensive, inefficient, and unskilled, and my robots can do everything they’re doing but better and cheaper.
If humans weren’t relational beings, who knows, maybe the above strategy would work. The high level truths are there - labor is certainly the largest pain point for the majority of farm operations, and it’s increasingly expensive and painful. Robots don’t show up to work with human problems like substance abuse, proclivity for sexual assault, disobedience, susceptibility to dangers like pesticide and heat exposure.
It’s not that simple, though.
Farm work is complex, and farms are low margin.
Automation is cheaper and more sophisticated than it’s ever been, and this trajectory towards more sophisticated robotics will continue. However, this technology will not be sufficient for 90+% automation of production agriculture anytime soon. Field agriculture is inherently low margin and high diversity, making it a horrible early market for humanoid robotics. It's a phenomenal opportunity for collaborative or single-use robotics, but, for all the reasons I’ve dug into before, it’s a weird one for VC.
Farmworkers are skilled.
There is a misconception that farmworkers are “unskilled.” That is the farthest thing from true. I’m quite good at manual labor, and I treat most manual labor tasks as a competitive opportunity to prove that I’m the best at whatever task I’m doing. And I’ve gotten my ass handed to me harvesting leafy greens, raspberries, and fava beans, bucking hemp, planting hazelnut trees, digging fence posts - you name it, I’ve lost to far more skillful farmworkers.
Furthermore, farmworkers are excellent at increasing the efficiency of the work with which they are tasked. To neglect to include this level of human intelligence in innovation is to leave money on the table.Changing operational processes requires buy-in from everyone involved.
Like most new products, robots are very bad at their tasks before they’re any good at them. Startups have limited resources and cannot roll out 100s of functioning units on command. Therefore, it’s nearly impossible for robots to instantly displace farmworkers, even if farm operators want to do so. This reality gives farmworkers power. Farmworkers don’t have many privileges, but you better believe that they have the ability to influence and even sabotage technology adoption. I have seen this happen first hand, and I pity the fool who thinks he can force his technology upon a farm operation.Generalist VCs struggle with ag
A lot of generalist investors are pretty out on agtech right now after having lost their shirts in the vertical farming and alt-protein bubbles. Maybe this will keep them away, but, I doubt it, because the market fundamentals of ag are just too compelling. I fully anticipate that the robotics backed by generalist VCs will, by and large, fail, and we’ve already seen that with a few asset sales this year.
So what should we do?
Build with and for the folks who do the work. Create opportunities for farmworkers to increase their wages, improve their day-to-days, and engage with your product and team. Incentivize farmworkers for their contributions to your business. Consider access, and wrap your mind around the reality that literacy and mastery of English are not the same thing as “intelligence.”
Work with folks like our team at Farmhand Ventures and that at Equitable Food Initiative who have the access. If you’re a startup building, get in touch - we believe in cold outreach. If you’re tempted to invest in the ag labor space and want to do it well, reach out to me directly - I’m happy to help you.
Additional reading: We published a comprehensive whitepaper last year on Inclusive Innovation in Agriculture. Our research concluded that the most effective path to finding product-market fit in the complex, diverse reality of agriculture is through deliberate collaboration with and attentive listening to users and purchasers across all levels of agricultural operations.