How to Obtain Seed Funding if You are a New Start-up?
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With agritech taking centre-stage in India, investments from venture capitalists and angel investors are pouring in. Prime Minister Narendra Modi's recent proposal to launch Start-up Agri India scheme to assist start-ups working in the field of agriculture has further emboldened entrepreneurs to work in this direction. The current environment appears naturally conducive for the mushrooming of more agritech ventures ranging from agriculture e-commerce to logistics to drone mapping.
In a bid to simplify the approach of agritech start-ups with respect to raising funds and to understand how easy or difficult it is for these ventures to attract investors, Entrepreneur India interacted with one such entrepreneur Tauseef Khan who is the Co-founder of Gramophone, an Indore-based agritech startup which secured its first round of seed funding on March 4 from Info Edge, the brainchild of ace investor Sanjeev Bikhchandani
Khan offered valuable insights on raising capital, the key strategies/pointers of fundraising, and Gramophone's model for problem-solving.
Analyse Approach for Early-Stage Agritech Start-ups
"Like any early stage start-up, raising funds wasn't a cakewalk. But we were cognizant of the fact that the market is tough and the model would need more traction for the investors to come in. Info Edge ran a very rigorous process to understand the market and team before deciding in favour of us," stated Khan to Entrepreneur India.
His statement clearly substantiates the fact that robust technology-driven models offering scalability is the key to grab investors' eyeballs. Also, the target market size and the team competency (from the start-up's end) with respect to technical capability are the other complementary factors.
At this point in time, it is worth noting that Gramophone was founded as recently as in 2016. Therefore, the need for having market scalable models whilst harnessing next-gen technology is emphasized again.
Smart Strategies That Can Help Early-Stage Agritech Start-ups Raise Funds
Khan advises owners of early-stage agritech start-ups to keep in mind the fact that venture capitalists look at investing in a solid team possessing clarity of thought propelled by a reasonable execution plan.
"We took our time to work on all these before going to the market," he further adds.
Hence, it is imminent for new ventures to carefully formulate their thought strategies if these have to move on to the execution stage.
As per Khan, the most important aspect in the whole fund-raising plan for the company was to build a strong and self-motivated team who could take responsibility and execute the deliverables accordingly.
Find, Analyse, and Build the Right Tech Talent
He states that at Gramophone, despite limited resources, the right tech talent was found, analysed, and nurtured so that the investors (Info Edge) could get a clear glimpse of the capabilities of the startups' models and this played a crucial role in closing the latest round of investment.
Also, the agritech entrepreneur says that with the right tech talent, the productivity of farmers (agricultural) associated with Gramophone has increased by at least 20% in comparison to existing statistics. This is also claimed to have gone as far as up to 50% in a lot of instances.
Key Learnings for Agri-tech Startups
Leading technologists and venture capitalists believe that the key for startups to raise funds newly would be to stick to a model that solves a particular problem, and to stick to this only, for at least a couple of years till scalability is achieved.
Khan signs-off by saying that having numbers/product on one problem makes life easier while fundraising.