Mumbai: City-based venture capital firm Nexus India Capital has invested in organic farming company Suminter India Organics Pvt. Ltd. It is the first investment in this sector for Nexus, which has so far invested in technology, mostly Internet and wireless, companies.
“We had been looking to invest in clean technology and related sectors for some time, and we liked the entrepreneur,” said Sandeep Singhal, managing director, Nexus India Capital. He did not reveal the amount invested.
The firm typically puts in $2-5 million (around Rs8-20 crore) in a company. Suminter is a contract farming company that focuses on organic produce for the textile and food industries.
Fund push: Nexus India Capital’s Sandeep Singhal.
While organic farming does not constitute clean technology, a term more associated with energy, investors often include all environment-related businesses under clean technology.
Such companies are on the radar of several venture capital firms, including Kleiner Perkins Caufield and Byers (KPCB), Draper Fisher Jurvetson, Lightspeed Venture Partners and Bluerun Ventures. However, there have been very few early-stage deals so far. The list includes Chennai-based Servals Automation Pvt. Ltd, funded by Aavishkar India Micro Venture Capital Fund; Bangalore-based electric car maker Reva Electric Car Co. Pvt. Ltd, funded by DFJ-ePlanet Ventures; and Indo-US cross-border start-up Deeya Energy Inc., funded by Bluerun Ventures, DFJ and DFJ Element (an affiliate fund). The last two have also received subsequent rounds of growth funding.
Suminter, which supplies to buyers in the US and Europe, currently has a farmer network in four Indian states, across 25,000 acres of land. Its network of farmers grow cotton, oil seeds, spices and herbs, in accordance with buyers’ demand.
The company works on a buy-back arrangement, in which it pays farmers a premium, typically 10-15%, over the market price. The harvest is processed and packaged at a central unit and then shipped overseas. It exports directly to the US and through a Netherlands-based subsidiary to Europe.
Post-funding, the five-year- old company plans to expand its reach to 10 Indian states. It will also set up an organic food park with high-end machinery for processing. “We are exploring options in Gujarat and Maharashtra currently. The criterion (for choosing these two states) is, it has to be close to a port,” says Sameer Mehra, founder and chief executive, Suminter.
This is Nexus’ fourth deal this year. It had invested in online ad network Komli Inc., embedded design services company Mistral Solutions Pvt. Ltd and managed IT services provider Netmagic Solutions Pvt. Ltd earlier.
The $100 million fund has so far invested in 10 companies, besides buying out the four-company equity portfolio of Rupert Murdoch-promoted venture capital firm eVentures India.