Omnivore Capital invests in farm-tech firms2 min read . Updated: 02 Oct 2012, 08:38 PM IST
The firm expects to sign another three or four deals by March
Omnivore invested ₹ 5 crore for a 33% stake in Bangalore-based FrontalRain Technologies Pvt. Ltd, which offers Internet-based supply chain solutions for farm businesses.
In Rajkot-based farm equipment maker Khedut Agro Engineering Pvt. Ltd, it acquired a 26% stake for an undisclosed sum.
Godrej Agrovet, part of the Godrej group, sells animal feed, fertilizers and pesticides.
Khedut plans to step up its research and development of tillers, drills and planters. “We are now targeting new domestic markets like Assam, Bihar, Andhra Pradesh and Haryana and are beginning to get into Sri Lanka, Bangladesh, Nepal and Nairobi," said Dinesh J. Khanpara, Khedut’s chief executive and founder.
FrontalRain Technologies’ products can address specific needs for agri-business, food processing plants, cold chains, warehousing companies, distributors and retailers, founder and managing director Jayaram Srinivasan said. “We want to focus on a pan-India coverage and take our offerings global," he said.
Omnivore made its first investment in weather forecaster Skymet Weather Services Pvt. Ltd last year.
The firm, which is raising a ₹ 250 crore fund, has garnered 75% of the corpus and is hopeful of raising the entire amount by December.
Raising capital from investors has become difficult owing to lack of returns and liquidity concerns in the present slow economy.
“Our unique features set us apart. We are focused on agricultural technology start-ups and are supported and advised by Godrej. Also, there is a growing appreciation for these businesses by venture capital investors," said Mark Kahn, venture partner, Omnivore.
The firm expects to sign another three or four deals by March in the areas of information and communication technology, supply chain technologies and agriculture mechanization.
Kahn said exits from such investments will primarily be through strategic sales. There are hundreds of European companies in the $50-300 million (around ₹ 264-1,584 crore today) range that are looking for growth, he said.
“Their home markets are growing at 1%," Kahn said. “Our portfolio companies could be of strategic interest for both domestic and global firms."
Although demand for equipment and technology solutions for supply chains is huge in the country, returns for investors can take longer than usual, said an investment banker working on the farm sector. He declined to be named.
Agriculture and allied sectors contributed 13.9% to India’s gross domestic product in the year ended March, according to the Economic Survey 2011-12.
“While related services like tech enablers can make money early on for investors, the issue is with offerings targeting customers directly as majority of farmers in India have small landholdings," Verma said. “Returns can take longer for such firms."