A cautiously optimistic stance adopted by investors towards Indian agritech during the second half of 2022 is seen continuing in the new year, especially with respect to the mid to late-stage deals, while the early-stage funding is set to gain traction with the increasing pace of technology adoption in the sector.
“Agritech investments in 2022 were somewhere in the range of $700-800 million compared with the previous year’s $1.18 billion in 2021,” said Hemendra Mathur, an agtech investor and industry expert. This correction is largely on account of the caution exercised by investors due to the prevailing global macro-economic conditions, even as they look for models that will be sustainable and profitable.
While there is some cooling of valuations, which is seen delaying the closures of late-stage deals upwards of $50 million, the early-stage funding in agritech remains attractive. “The early stage deals such as seed, angel and pre-series funding will gain momentum due to a combination of factors such as the good quality of new entrepreneurs, good quality deals, the public policy support and the vast opportunities in the sector,” Mathur said.
The ₹500 crore fund being set up by the government to support the incubation and adoption of innovations is set to provide a boost to the agritech sector in the year ahead, making it attractive for investors. “It is a good time to get into the sector and many venture capitalists, angels and early-stage investors are getting warmed up to invest in the sector,” Mathur said.
Focus on smallholders
Krishna Kumar, co-founder and CEO, CropIn expects some significant agri-food trends to accelerate in 2023. “Agri-financing and sustainability investments will skyrocket, while digitisation of agriculture will get accelerated for maximising visibility and transparency of food systems. There will be enhanced focus on smallholder farmer empowerment, building food self-sufficiency and reducing food wastage and regenerative agriculture to reduce soil degradation,” he said.
“The year 2023 in all likelihood would be the year of changes and transformations in term of adoption and implementation of technology across the agricultural spectrum. The cutting-edge agritech solutions will start coming into use, such as artificial intelligence, data analytics, Internet of Things, drone technology, and digital apps and platforms. Buzzwords for the coming year will be agri-fintech and agri value chain. These will help the farmers to connect with different stakeholders in the agriculture ecosystem.” said Navneet Ravikar, CMD, Leads Connect Services Pvt Ltd.