Deal activity in agritech takes a hit amid covid

Deal activity in agritech startups was impacted last year because of widespread disruptions caused by the covid-19 pandemic and the subsequent strict lockdown. These startups got $152 million through 30 deals in 2020, a drop from the $232 million through 32 deals in 2019, according to data from Venture Intelligence. The figure, however, marked a sharp rise from the $69 million in 2018 and $43 million in 2017 through 17 deals each, underscoring continued strong investor interest in the sector.

“This (2020 performance) is a significant number and shows there is positive sentiment. We should not forget we had a pandemic in the middle of all this,” said Siddharth Pai, founder and managing partner, Siana Capital Management.

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More investments could be expected in “technologies and startups from the input standpoint in pre-harvesting, seeds, insecticides and irrigation”, he said. Farmers have begun to increasingly rely on agritech firms to ease supply chain bottlenecks, eliminate intermediaries, improve transparency, and ensure they earn a bigger chunk of sale proceeds.

Startups are using technology both in pre-harvest (soil, water testing) and post-harvest (focus on supply chain, grading products). Last October, agritech startup Ergos raised ₹38.5 crore in Series A funding from Chirate Ventures and Aavishkaar Capital. Ergos has been working on a farm-gate based technology driver Grainbank model for small and marginal farmers. It supports more than 20,000 farmers on its digital platform and has a physical footprint in more than 60 locations in Bihar.

Also, last April, Bijak raised $11.8 million in its Series A round from its existing investors, including Omnivore Partners, Tempo Ventures, and Bi Fund. Bijak, a B2B marketplace for agricultural commodities that connects millions of buyers, sellers, traders, wholesalers, food processors, retailers and farmers, is expecting a 10-fold growth this year.

“Over the past few years, investors have realized that Bharat or rural India is eager to adopt new technology. The gap between agri and tech has been huge and no startup including ours is close to scratching the surface in terms of the promise agritech holds,” said Nukul Upadhye, co-founder, Bijak.

According to Madhusudan Salla, founder, OneBasket, a Hyderabad-based agri startup marketplace, there is a more than $2 billion potential in agri supply chains. OneBasket expects revenues of $25-30 million a year in the next five years.

“The agri sector has suddenly seen technology acceptability after a very long time. Compared to other verticals available for investment, agri sector due to sheer size could possibly have multiple unicorn opportunities. Customers are today willing to pay a higher price for safe to eat and organic products. This paves the way for technologies such as traceability and standardization,” said Salla.