The agritech start-up space suffered a blow in 2023 as investments into this sector plummeted by 45 per cent to $706 million against $1.28 billion in FY22. Though the fall is in sync with the global trends, the quantum of decline was very huge.

While the number of investment deals rose from 121 in FY22 to 140 in FY23, the total funding raised by agritech start-ups in the country reported a steep decline.

Agritech investments globally saw a decline of 10 per cent to $17.7 billion in 2022-23 from $19.6 billion in the previous year. “While the financial year 2022 witnessed a boom in agritech start-up investments, which drove start-up valuations to unprecedented heights, the correction in FY23 has led to a more prudent investment climate,” Rishi Agarwal, Managing Director, Head-Asia, FSG, said.

Consulting firm FSG has come out with the report “India’s Unfolding Agritech Story: Updates and Emerging Themes in India’s Agricultural Technology Sector”, giving details about the investment scenario in the agritech space in the country.


Besides the hike in global interest rates, there is an increase in investor caution due to the rising uncertainty, forcing them to slow down their investments. “After keeping interest rates anchored near zero since the beginning of the Covid-19 pandemic, the US Federal Reserve raised interest rates nine times between March 2022 and March 2023 to counter rising inflation, reducing the capacity and appetite of VC funds for investing,” the report said.

Domestic VC firms have been particularly cautious in investing, and this trend has continued into FY24 as well.

According to a recent survey of 70 active VC firms in India, as of August 2023, Indian VCs have only invested 26 per cent of the capital they have accumulated. “The shift in investment dynamics highlights the Indian agritech sector’s sensitivity to global economic trends. Start-ups must use periods of slower investment to refine their business models and drive towards profitability. These moments can be invaluable for building a robust foundation that can withstand market fluctuations,” Agarwal said.

The report, however, noted a positive trend though the overall trend looked gloomy. “Start-ups operating in the mid-stream agritech category in India are starting to mature, as the bulk of investments (about 75 per cent) in this space are now in growth (Series B and C) and late (Series D+) stages,” it said.

The firm foresees continuation of the funding slump in the current financial year before springing back in 2024-25. It expects start-ups to continue focusing on profitability to tide over the next financial year. Investors are likely to continue being cautious and direct their limited funding towards established business models, such as follow-on funding for companies in the mid-stream agri-tech category.

While the upstream tech category has seen a sharp rise in total investments over the last two years, early-stage deals (pre-seed to Series A) continue to be the dominant investment stage in this category, accounting for about 50 of the total investment flows.