Why Agritech is Set to Redefine VC Investments from 2018? Find out how VCs and investors perceive investments in AgriTech startups in 2018 and beyond
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For Venture Capitalists (VC) along with angel investors, and simply people interested in fostering sustainable models to oversee long-term development in India; agriculture has become the 'buzzword' of late. With focus being on developing technology-driven solutions for issues plaguing agriculture, agritech has got investors excited, more so after the recent central government budget which has laid increased emphasis on new trends that could help both farmers and agro-businesses.
Need for Technology-Driven Agritech Solutions in 2018 and Beyond
"Agriculture sector is in need of a systematic overhaul. Despite half of India's workforce deployed in this sector, the contribution to GDP is mere 16% and growth at 2%," states Saurabh Kumar who is Co-Founder at Maharashtra-based Agricx; an agritech startup.
Saurabh also believes that it is now the duty of the new-age solution providers to disrupt the way in which agriculture is perceived in India.
At this point in time, it is worth noting that Agricx Labs being an early stage startup recently raised $500,000 in seed funds from Ankur Capital and the Centre for Innovation Incubation and Entrepreneurship (CIIE) based out of IIM Ahmedabad.
From the VC's Point of View
Venture Capitalists view combating plaguing issues through next-generation technology-driven solutions. For them,the key to investing in startups holistically blending both traditional agricultural practices as well as smart solutions.
An illustration at this point in time is that of early-stage venture capital firm Aspada Investments which has invested in EM3 that offers pay-per-use on-demand farm mechanization services.Aspada Investments targets marginalized farmers owning comparatively lesser parcels of land.
Aspada invested with a view on helping marginalized farmers in India, owning considerably less amount of land, obtain technology-driven farm solutions. This, in turn, got EM3 to come up with its Samadhan range of Farming-as-a-service FaaS solutions which have ensured that there is a network of farm centres driven by IT-enabled systems and agritech professionals. Each Samadhan centre helps farmers in the entire crop production operational cycle.
As of now, EM3 is focussed on Rajasthan, Noida, Jaipur, Madhya Pradesh, and Uttar Pradesh farming territories in India.
EM3, in 2017, raised $10 million in a Series B led by England-based Global Innovation Fund and Aspada Investments. Overall capital raised by EM3 amounts to nearly $14 million. At this instant, it is worth noting that this farm mechanization startup founded in 2013 is an early stage venture. Therefore, its total funding raised obtains significance considering the importance of technology-driven solutions for farmers.
The Aim is to 'Make in India - For India' in 2018
Leading venture capitalists believe that ever since PM Narendra Modi's Make in India initiative put the onus back on developing smart models locally, agritech startups mushroomed exponentially through the country. "This led to a new trend even amongst the investors who were really excited about getting researchers to come out with models that could do more than to ape the west," adds Ganesh K - a Bengaluru-based venture capitalist.
Also, with startups employing next-gen technology viz. The Internet-of-Things (IoT), Machine Learning (ML), Artificial Intelligence (AI), Predictive Learning, and more to suit local needs, it is a win-win for both investors and founders of startups.
By furthering research in India, it is only obvious that the desired shot in the arm for Make in India is achieved even if it is a result of non-corporate and more social initiatives. In agriculture, the key is that the developed smart solutions are to smartly forward India's traditional occupation.
VCs today actively invest with a vision which is also sought from startups today. Venture Capital today is not about the ultra-rich handholding a few marginalized societal sectors. It is all about working towards smart models and to enable people; especially the next-gen techies to return to their roots (agriculture) in a way involving both traditions as well as technology.
Leading VCs believe that the above approach is certainly the way ahead. This is substantiated when we consider that over $20 million has already been raised by agritech startups in India over the course of an year.
Agriculturists are in Need of Mentoring - A Funding Opportunity in 2018 and Beyond!
"I felt greater excitement being a coach than playing the match myself," stated Amit Anand - founding partner at Jungle Ventures separately to Entrepreneur India. Prior to turning VC, Amit also dabbled in entrepreneurship.
Amit's statements resonate with that of other VCs and technologists who believe that with better accessibility to tools, agritech has what it takes to redefine the traditional Indian occupation which is now staring at disturbing aspects such as farmer suicides, unwillingness among the new generation to take up the occupation and long-term effects of inefficient practices.
"Availability of macro and micro level information and its application is what will revolutionize agriculture in India," adds Saurabh.
"Farmers of tomorrow will know in advance what to sow, when to irrigate, what nutrient and where it is needed, when to harvest, where to sell and at what price," visualizes Saurabh.
The above approaches have resulted in the origin of startups such as CroFarm which rids farmers from middlemen by directly connecting the former with retail majors across the country. This startup harnesses AI and ML smart technology to guide farmers to effectively increase market value by selecting the right specifications for their produce.
CroFarm has so far raised INR 10 crores in two rounds led by prominent investors such as Jitendra Gupta and Rajan Anandan.
There are others in the sector as well. Click here to check out the list of startups that are estimated by VCs to make a major impact in 2018.
In-house Smart Agritech Solutions - Drivers of New Age Agritech Funding
With sustainable models, now driven by smart technology, being the key, startups could look at having customized in-house solutions to solve a multitude of agricultural-related issues. In-house smart solutions are also seen by investors as an answer to the current outsourcing trend that is leading to the development of economies outside of India, rather than within.
As far as in-house models are concerned, Bengaluru-based startup Kamal Kisan founded in2 013 works closely with farmers by offering them smart agricultural equipment manufactured in-house. These are claimed to increase overall process efficiency by as much as 50% resulting in farmers saving both money & time. Kamal Kisan is currently funded by the Tata Trust which has put in unknown amount of funding to further the startups' agritech mission.
Finally, with 2018 all set to change the way in which VCs perceive agriculture in India, it should do a world of good to startups to start working on genuine smart models for the Indian farming community.