In what has been a rather lackluster year for Indian startups – marked by lower funding amounts and fewer unicorns – agriculture and agri-tech companies managed to raise up to $1.32 billion. dollars. This is more than six times the funds raised by the sector during the same period last year.
The sector has plenty of room for growth in the coming days due to increasing technology penetration, industry insiders and experts say DH. This is good news for Asia’s third-largest economy, where agriculture, with its related sectors, is the main source of income.
As more farmers embrace technology and improve predictability by basing their decisions on data, “there is no turning back in terms of funding and financing that will come to this industry,” he said. said Saumya Kumar, director of ISB’s startup incubator, I-Venture.
The last five years have seen the birth of about a fifth of India’s agri-tech and agriculture startups, while the last five months alone have accounted for 35% of all funds raised by the sector so far, the researchers showed. data from Crunchbase, which is a platform that tracks private companies.
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Despite the booming flow of funds and the proliferation of agri-tech companies, the party is far from over.
Although large-scale startups and organized players are disrupting the space, they’ve barely scratched the surface, according to Chinna Pardhasaradhi, chief financial officer of agricultural supply chain startup WayCool Foods. “The two, combined, do not constitute 1% of the total addressable market,” Pardhasaradhi added.
Experts have linked the growth of the sector to technological advancements and the push in digitalization.
The pandemic has accelerated progress equivalent to five years in just a few years, according to Shashi Kant Singh, executive director of PwC – Agri & Natural Resources.
“There has never been any doubt about India’s agri-tech potential,” Singh said. “But the rapid pace at which it is growing can be attributed to factors such as a favorable policy framework, increased use of the internet and smartphones in rural areas, increased penetration and adoption of digital solutions, agri-fintech and ecosystem support at central and state government level.
Startups in the sector have played a vital role in helping farmers access finance, AI-powered data, and better markets, to name a few.
“Whenever the offers are directly linked to farmers, for example instant loans, it has boosted their uptake,” said Prasanna Rao, chief executive and co-founder of grain trading platform Arya.ag.
Problems become opportunities
In recent years, the lack of infrastructure and inefficiencies in the sector have attracted many specialized funds. This has transformed the sector into a breeding ground for investors and entrepreneurs, said Saurabh Agarwal, co-founder and chief technology officer of natural fiber supply chain startup Reshamandi.
“New-age entrepreneurs are also coming into the traditional sector due to market readiness,” he said, while attributing its growth to consumer apps and rising internet penetration through smartphones.
Although the sector looks promising, its unorganized nature could be a possible challenge.
“The space is hugely vast and at the same time multiple categories are present here,” Pardhasaradhi said, highlighting the different complexities in terms of cultivation, cultivation pattern, storage, processing and distribution.
“Due to small land holdings and unorganized market in India, bringing value to farmers and convincing them of the benefits becomes difficult,” said Agarwal, adding that unlike businesses in other sectors, there was no instant redemption and realizing value took longer.
I-Venture’s Kumar focused on challenges including the need for better farming techniques, access to markets and accurate weather data, while PwC’s Singh focused more on how funding was currently heavily concentrated in startups providing certain streams of products and services.
“For example, few players offer solutions in the field of biotechnology – plants, animal life, sciences and genomics. Globally, there is a lot of funding in this stream and so Indian players have a great opportunity to capture a better slice of this pie in the future,” Singh said.