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Emerging Agritech Startup Companies in India FY21

Updated: Oct 23, 2020

Overview

India holds the second-largest agricultural land in the world, nearly 60% of rural Indian households make their living from agriculture. Agriculture is a primary source of livelihood for about 58% of the Indian population. The agro-based industry witnessed a rise at a CAGR of 16.4% over FY10 to FY18 and as of FY19, the Indian agro-based industry is worth $39.1 Billion. The Indian food industry is foreseen to have huge growth due to the increasing contribution to food trade each year. The Indian food industry is accountable for 32% of the country’s entire food market, which is one of the largest industries in India.

The economic impact of technology and digitalization on indian agriculture.
Technology based applications in indian agriculture

Source: Yourstory

The Indian Government has taken favorable initiatives intending to double farmers’ earnings by FY22. The Indian agro-based industry contributes around 8.80% and 8.39% of Gross Value Added (GVA) in Manufacturing and Agriculture respectively along with 13% of India’s exportation and 6% of total industrial financing. In FY28 to FY19, the Indian Government is aiming at the production of 285.2 million tonnes. In FY19 agriculture exportation was US$ 38.54 billion. India is also regarded as the largest producer, consumer, and exporter of spices and spice products.

How will the VC Funds and Investments influence the agritech startup companies in India?

India and Zurich-based agri-food investors launched a 70 million USD private fund to provide working capital and finance them to set up various companies in India. The companies comprise Samaaru which is a tech-powered value chain and commercial company and Citrus International which is one of the largest generators of citrus concentrate and its by-products in South East Asia and India. The venture fund is directed at providing equity funds to the companies and tripling the trades to 300 million USD.


The investments allocated for the indian agritech startup companies
Agritech investments

Source: TrueGrit Analysis

India has more than 500 Agritech startups, increasing at a rate of 25% year-on-year basis. In FY19 these startups increased a cumulative ~$250 Mn in venture funding, which is thrice the total amount invested in the segment in FY18. It is anticipated that the market will draw more than $500M in funding in the future ahead. Aavishkaar, Accel, Ankur Capital, Beenext, and Omnivore were some of the early investors in the market along with other investors like Blume, Nexus, Sequoia, Tiger Global, and RTP.


Source: TrueGrit analysis

Some of the significant deals in FY19 and FY20 are Tiger Global's funding of $89 million in Ninjacart for a 26.5% stake, Samunnati Financial Intermediation, which specializes in loans to farmers, raising $55 million, AgroStar raising $27 million in Series C investment directed by Bertelsmann India, fresh produce distribution startup WayCool allocating $17 million from LGT Impact, Caspian, Northern Arc, dehaat allocating $12 million from AgFunder, Omnivore, Sequoia & Netherlands Development Finance Co, Intello Labs raising $6 mn from Nexus, Omnivore, Saama Capital, SVG Ventures, Jai Kisan allocating $ 3.9 million from Akram Ventures and Nabventures among others.


Top VC firms by agritech FY2020
VC funds

Source: Crunchbase

On the other hand, Mumbai-based India’s first sector-specific VC funds, Omnivore has financed 24 agritech startups including Stellapps, DeHaat, and Intello Labs. Omnivore has extended 30% of the capital from Fund II across 11 startups and is aiming to promote the third fund in FY21.

What is the business model of Indian agritech startup companies?

● Ninjacart is an app-based B2B startup supplying vegetables and fruits. The company claims to deliver the products ordered by the consumers through the mobile application as per their logistic terms within 12 hours.

● Licious delivers exclusively hand-cut vacuum-sealed, packed fresh, marinated, or cold cut meat along with a central processing plant and several storage units in various cities. It works on a zero inventory strategy. It provides a subscription model that enables pre-set delivery dates and products.

● WayCool Foods and Products is an e-distributor of agriculture products. The company obtains fruits and vegetables directly from farmers, aggregators, and cooperatives to supply hotels, restaurants, retailers, and wholesalers. It is involved in the storage of farm produce and owns cold storage facilities. The company claims to provides third-party storage assistance for producers and retailers and handle nearly 150 tonnes of fruits and vegetables per day. Their wholesale clients include The French Loaf, Nilgiris, Dell, Nokia, Dell, Heritage, Swiggy, etc.

● AgroStar is the produce of bio-degradable agrochemicals manufacturer ULink BioEnergy Pvt. Ltd. It produces agri-inputs comprising of fertilizers, seeds, manures, farm equipment, etc. to farmers. The godown of the company is located in Ahmedabad and has 1 lakh farmers enrolled with them.

● Green Agrevolution is an agro supply chain company working with farmers in Bihar with its unique delivery model "DeHaat". DeHaat is a farmers‘ services delivery center operated by local micro-entrepreneurs with 35 centers in Bihar, U.P. & Odisha.

It provides a mobile application (DeHaat) to connect farmers directly with agri input manufacturers. In the next five years, it intends to reach out to more than 1,20,000 farmers directly through 300 centers and value addition facilities like modernized post-harvest management & efficient supply chain management. Partners include NCDEX, Godrej Agrovet, Cargill, Spencers, Jubilant Fresh, and others.

How will the COVID-19 impact agritech startups?

In the fiscal year 2020, Rajya Sabha passed two farm bills — Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, along with the Agreement of Price Assurance and Farm Services Bill. It intends to end the monopoly of the Agriculture Produce Marketing Committee (APMC) Mandis. Under the APMC Act 1964, all farmers were required to sell their product at the government regulated markets, also known as Mandis. In such cases, the middlemen played a vital role in selling their products to private companies and government agencies. However, due to the dependency on the middlemen, the farmers feared about their earnings. To remove such dependency, the government passed the bill that would let the farmers work independently and without any restrictions.

How the coronavirus will impact agritech startup companies and the sector.
Covid-19 impact on agritech startups

Source: Consultancy.asia

On the other hand, the agricultural segment in India has been facing difficulties due to the use of outmoded equipment, underdeveloped infrastructure, and other limitations like unable to access a wider range of markets. Over time the digitalization of the market has made the industry operate efficiently and boost the growth prospects. With the improvement of technology, the startup culture has been providing efficiencies and benefits to the farmers as well as to the consumers. According to Puneet Sethi, cofounder at Farmpal, an agritech startup that connects farmers to businesses, said the reforms are the need of the hour and are probably the most significant steps in helping farmers increase their incomes. He claimed this would benefit the smaller farmers with marginal landholdings (1 to 5-hectare holding) that constitute over 75% of India’s farmers. The agro-based companies have also connected the consumers to the farmers directly making it a hassle-free method. This helps the farmers to draw more profit and identity the crop demand in the market. According to Ananda Verma, co-founder, Fasal, "Covid-19 and the lockdown have hit the core logistics and supply chain in agriculture in ways which were not measured in traditional distribution setups, and they were technologically insufficient to overcome this situation. Many agritech companies came up with innovative ways to help farmers and save their crops and harvest from complete loss and in this, they also gained farmers’ confidence". On the other hand, Bengaluru-based QZense is utilizing IoT for swift and precise grading of fresh food, by capturing insights on ripeness, spoilage, etc.

Summary

The Indian Agricultural startup companies are anticipated to grow due to the improved technology and digitalization of the market. Utilizing technological advancements like advanced sensors, machine learning, and artificial intelligence for data processing, precision farming helps to supervise environmental factors like weather patterns, water distribution, and soil chemistry, as well as small factors like nutrient deficiencies in individual plants.

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