From the Green Revolution over 60 years ago to the digital age, India’s agricultural landscape has evolved tremendously. Technology and startups have seeped into the traditional field of agriculture, revolutionizing it. This huge untapped opportunity is increasingly attracting venture capitalists.
The global pandemic has accelerated the growth of the digital economy by five years, and the agritech sector was not left out. With the rapid adoption of mobile and internet services by the farmers, digital access and reforms have increased. This is a key factor driving growth in the agritech industry, which has been unphased by the pandemic.
Agritech Revolution in India
India has the second-largest agricultural land in the world, with more than half of the population dependent on agriculture. Agriculture and allied sectors contribute 14% to the GDP, making it important from both economic and social standpoints. However, there are several structural challenges that impede its growth. These include fragmented land holdings, poor irrigation practices, manual and inefficient farm activity, inadequate capital influx, and operational gaps.
To remedy these problems, interventions in the form of agricultural technology and startups (also known as agritech) have been introduced. India has 15 agro-climatic zones and various cultivation practices. This poses large-scale requirements for technological interventions to remedy pre-and post-harvest distress. Increasing smartphone and internet penetration at the grassroots level has led to the immense potential for growth and a rise of VC interest in the space.
India has become home to more than 500 active agritech startups, growing at a rate of 25% YoY. Farmers’ access to digital services and government support through initiatives like PM-KISAN, PM-AASHA, PMSKY among others have empowered farmers and benefitted stakeholders. The farmer is being uplifted as a producer and a consumer by information access, inputs, farm-to-fork linkages, and financing support. As a result, the agritech sector is looking towards positive technological disruption.
Agritech Business Models
As the old adage goes, “necessity is the mother of all invention”; challenges in the agriculture sector have served as opportunities that have given rise to various startups. The various business models that have emerged to tackle these challenges have been listed below.
- To meet the challenges of poor infrastructure and supply chain inefficiencies, the downstream farm-to-fork supply chain model is working towards increasing efficiency. The key players in this area are Krishi Star, Crofarm, Sabziwala, BharatBazar, etc.
- To meet the challenge of limited access to quality inputs, the access to quality inputs model is ensuring precise and timely delivery of inputs. The key players here are Unnati, DeHaat, Agrostar, Bighaat, etc.
- The access to financing model, which includes farmer onboarding, credit scoring, recovery, insurance, etc., is working to resolve the lack of financing options. The key players are Samunnati, Jai Kisan, FarMart, etc.
- Mechanization and the novel farming model are decreasing dependence on external factors such as weather, soil, rainfall, etc. The key players include Flybird, Distinct Horizons, S4S Technologies, Futurefarms, etc.
- The data/Artificial Intelligence model is leveraging big data to maximize the economic benefits of farming practices. The key players include Bharat Agri, Bharat Rohan, Cultivate, Easy Krishi, etc.
Private Equity Funding in Agritech
Agritech is still in its nascent stage in India, with a penetration of just 1%. However, technological disruption due to digitization, analytics, AI, ML, IoT, and SaaS, presents a market potential of $24 billion over the next five years. Investments in sustainable, scalable startups with higher unit economics are likely to exceed $500 million soon.
Indian agritech startups raised $125 million in January-August 2020. Since the post-harvest supply chain continues to be a big challenge in Indian agriculture, supply chain technology and output market linkage are the top-funded segments. They present a market potential of $12 billion in the next five years. Precision farming and financial service startups are also on the rise.
Venture capital firms are very active in domains such as access to inputs, digital infrastructure, and farmer financing. Active investors in the agritech industry currently include Sequoia, Accel, Tiger Global, Omnivore, Nuveen, Bertelsmann, Agfunder, Nexus, and Infoedge.
Some of the major recent deals include:
- Tiger Global’s $89 million investment in Ninjacart for a 26.5% stake
- Samunnati raising $55 million
- Agrostar raising $27 million in Series C funding led by Bertelsmann India
- WayCool raising $17 million from LGT Impact, Caspian Northern Arc
- DeHaat raising $12 million from Agfunder, Omnivore, Sequoia, and Netherlands Development Finance Co.
- Intello Labs raising $6 million from Nexus, Omnivore, Saama Capital, SVG Ventures
- JaiKisan raising $3.9 million from Akram Ventures and Nabventures
- Unnati raising $2.3mn million from Nab Ventures and Angel Investors
The agritech ecosystem in India is still unfolding and attracting investor interest by increased deal traction and mainstream VC/PE’s focus. Agritech startups in India are bridging the gaps in agriculture and food production by maximizing productivity, increasing supply chain efficiency, and improving market linkages. The increasing demand for such solutions has created a positive sentiment towards the agritech industry.
Top 10 Agritech Companies to Receive Funding
In the last five years, Indian agritech startups and companies have been growing rapidly. They have built farmer platforms, B2B agri-marketplaces, rural fintech enterprises, farm-to-fork brands, and much more. The agritech sector has received $467 million 2014 to H12020. Some of the notable agritech companies to receive funding are:
- WayCool: $65.7 million in Series C funding
- DeHaat: $16.5 million in Series A funding
- Bijak: $14.6 million in Series A funding
- Arya Collateral: $9.3 million in pre-Series B funding
- IntelloLabs: $8.8 million in Series A funding
- Clover: $6.9 million in Series A funding
- Ergos: $6.3 million in Series A funding
- JaiKisan: $6 million in Seed funding
- Crofarm: $4.9 million in Seed funding
- Procol: $4.8 million in Series A funding
- Unnati: $2.3 million in Pre-Series A funding
Conclusion
With the agritech industry expanding like never before, it has gained significant momentum among VCs. However, in order to reach their full potential, agritech startups have to create scalable and sustainable models. They should innovate agriculture value chains and establish partnerships with FPOs, distributors, and food processing organizations.
To help entrepreneurs and startups achieve their potential and disruptive growth, agritech consultants are providing strategic solutions. Equity 360 is one such consultancy service that helps agritech companies overcome challenges. They bring private equity closer to these companies by helping them shape their business models through the extensive use of technology.
“The golden age of Indian agriculture may well have just begun.”
