Agri Business

Agri-tech start-ups set to bloom on huge investments

Vishwanath Kulkarni Bengaluru | Updated on January 23, 2020 Published on January 23, 2020

Technology adoption by farmers paves way for digitisation of farm sector

Capital flows into the agri-tech start-up ecosystem are set to remain robust in the year ahead as innovations fuel digitisation of the farm sector with more farmers adopting technology solutions.

The segment is seen attracting interest from large mainstream venture capitalists such as Sequoia and Accel Partners, even as the existing players raise larger funds to invest in agri-tech, which attracted an all-time high investment of around $300 million in 2019.

“Calendar 2019 was the most active year of investing,” said Mark Kahn, Managing Partner of Omnivore Venture Capital, an agri-tech investor in the country since 2011-12. Omnivore closed seven deals in the Indian agri-tech space in 2019, its highest ever, with investments totalling ₹100 crore.

Kahn estimates total investments in the agri-tech ecosystem to be at $300-350 million as against $73 million in the previous year.

 

Nasscom, in its report on agri-tech released in November, had estimated investments in Indian agri-tech at $248 million till July, 2019. Increasing smartphone penetration in the rural set-up is aiding technology adoption among the farmers, who are seeking to minimise their costs while trying to maximise their returns.

“The agri-tech space will continue to do well in 2020 as there is increased interest on the part of strategic, generalist venture capital and late-stage funding entities. I think because of that continued inflow and increased interest, the agri-tech sector will continue to bloom even if the overall macro-economic environment isn’t exactly great,” Kahn said. Omnivore had raised its second fund of $97 million (about ₹700 crore) in April 2019 and it will be used for investments in the next three years.

Recently, Ankur Capital, an early stage VC fund that invests in technology focussed start-ups in agri-tech, announced the first close of its second fund of ₹240 crore. Ankur has invested 70 per cent of its ₹50 crore first fund in agri-tech companies.

The sector has also seen the entry of new players such as Sathguru Catalyser Advisors Private Ltd, which has launched an Innovation in Food Agriculture Fund that aims to invest in climate smart agriculture and food chain innovation. Sathguru recently invested in companies such as nu-genes and Ecozen Solutions.

“2019 was an inflexion year in terms of capital flows. It was the best year for agri-tech since the start of the ecosystem,” said Hemendra Mathur, venture partner at Bharat Innovation Fund.

Start-ups operating in areas such as farmer platforms, precision agriculture, agri-biotech, post-harvest technologies will be high on investors’ radar in the year ahead.

Mathur said the farm-to-fork theme, which connects farmers to consumers, eliminating middlemen, attracted investor interest in 2019, with companies such as Ninjacart and Jumbotail receiving funding.

Themes such as Factory-to-Farm, which help farmers access agri inputs directly from producers, will be of interest in the year ahead. Also, themes using data to build predictive models in the areas of price-forecasting, pest attacks and yield estimation, will attract investor interest in the next two years, Mathur said.

Published on January 23, 2020
This article is closed for comments.
Please Email the Editor