"Would Like to See Less of Indian Govt's Involvement in Agriculture" - Agritech VC India's sugar industry takes India's scarcest resource –water and converts them into diabetes
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Agritech is a dicey sector to place bets on as its success depends on uncontrollable factors such as weather and awareness of the farmers. Hence traditional VCs generally refrain from investing in this domain.
However, with the advent of new technology and the amalgamation of tech – such as AI, IoT and big data in agricultural practices, we now see venture firms like Aspada, Ankur Capital step up and support this sector.
While there are new VCs, Omnivore Partners is an old messiah of this sector. Mark Kahn, Founding Partner at Omnivore, who has seen the VC environment in India evolve over the last six years, spoke to Entrepreneur India on why VCs should take "agritech' as a sector very seriously!
How can agritech help save water!
There have been technological advancements in the agritech space, the question however remains how much of this is actually able to solve the crucial aspect of water. Speaking on this Mark said, "I think part of the water tech space is that as long as water is free, the incentive of saving it does not work out. The incentives also don't make sense due to the availability of power subsides. I have always been surprised at how there are only few water tech startups in India but this is what accounts for that. You will need a policy change or if not that you'll need people to have a change of heart!"
Ritu Verma, of Ankur Capital also had a similar view on this topic.
Omnivore's niche set of investments in the agritech and water tech space include companies like Mitra, Barrix, Skymet, Stellapps and more. The firm's investment strategy works on three Ts – namely traction, technology and the team. The firm does not like to place its bets on me-too versions and is more on the lookout for differentiated technology and IPs, he said.
How can government help this space further?
"I think the government is far too involved with farming. India moved to a private economy in 1991, farming is still not a private economy. It has a massive amount of government involvement, at times it becomes counter-productive. So I would like to see less of government's involvement in agriculture," Mark said.
According to Mark, a series of inter-locking and illogical decisions in agriculture linked to government subsidies and policies. Citing examples of them, Mark said "We've decided to have a massive spend on fertilizers that then encourage a radically imbalanced use of nitrogen that poisons our soil."
Mark also cited another example of sugar production which consumes large tons of water in a country where water is a sacred resource. "I always say that India's sugar industry takes India's scarcest resource –water and converts them into diabetes," he adds.
Mark speaks out of experience! He serves as a Director for multiple Omnivore-backed startups, including Skymet and MITRA. Previously, he was the Executive Vice President (Strategy & Business Development) at Godrej Agrovet. At Godrej, Mark was responsible for corporate strategy, M&A, R&D, and new business incubation. Earlier in his career, Mark worked for Syngenta and PFM.
Why don't the traditional VCs invest in agritech?
Mark was speaking at T-Hub's first anniversary celebrations in Hyderabad, where he said that at Omnivore they fund seed and initial stage startups in the agritech domain. Post funding, they would help them scale and then make them Series B ready and enable later rounds to come in from VCs like Sequoia, Accel Partners and others.
On asking as to why the traditional, big VC firms don't take agritech seriously, Mark said, "... I think traditional big VCs are unaware about India and they think it's much more backward than it is. I think increasingly what we have is not the divergence of rural and urban India, but the convergence! Your average rural family has people working or studying in urban cities. The rural and urban divide in India is not widening but is rather getting stitched together, hence I feel there are a lot of misconceptions," Mark said.