Supply chain digitalization solutions dominate India’s Ag-Tech sector, accounting for 85% of total invested capital in 2020
ThinkAg, an Ag-Tech platform working towards improved outcomes in Indian food and agriculture, has announced the release of its report titled ‘Ag-Tech in India: Investment Landscape Report 2021’ – an annual publication about the investment and innovation landscape in Indian Ag-Tech. It is supported by 3 organizations closely associated with the agriculture and Ag-Tech sectors: Rabo Foundation, ADB Ventures and Bayer CropScience Limited.
The ‘Ag-Tech in India: Investment Landscape Report 2021’, the second edition of this publication, looks at deal activity, capital flows, investor profiles and business models emergent in India’s Ag-Tech sector in 2020. To capture a systematic view, surveys of key stakeholder groups – innovators, investors and corporates – were conducted and the key findings have been featured in this publication. Providing a forward-looking view, the report identifies the likely drivers of innovations, investments and outcomes in the Indian Ag-Tech landscape in years to come.
Some key findings of this report include:
Pandemic’s impact precipitated a slowdown in Ag-Tech investments in 2020, though the sector’s long-term prospects remain favourable.
Capital flowing into the Ag-Tech sector in 2020 amounted to $40.9.5 million, 35 per cent lower than in 2019 and spread across 28% fewer deals. Investors leaned towards backing proven business models and chose to boost existing portfolio investments to tide over challenges posed by the pandemic.
Supply chain solutions continued to see growth and corner capital
Digitalization and optimization of India’s numerous and fragmented supply chains continue to dominate India’s Ag-Tech landscape, accounting for 85% of the total investment and two-thirds of first-time deals in 2020. There are also a growing variety of models in the sub-sector, particularly – agribusiness marketplaces for output in addition to consumer-proximate ones and, emergence of novel solutions for allied sector (dairy, poultry etc.) supply chains.
Healthier Ag-Tech investment pipeline
The 2020 edition of this report, covering investments from 2014 to 2019, identified a bloated-middle in the Ag-Tech sector’s investment pipeline, referring to many startups raising bridge funding, while first-time deals and late-stage investments remained low. In 2020, this was overcome to some extent, with half of the startups raising follow-on capital, more than doubling their previous fundraise. Since 2019, first-time deals and investments in higher-end funding brackets (above $5 million) have grown in proportion.
Diverse investor profile heralds the attractiveness and maturity of Indian Ag-Tech
2020 saw a greater diversification of investors in Indian Ag-Tech, with greater participation from domestic and international private equity and growth capital providers, increased interest and investments by sector-agnostic venture investors and the entry of large e-commerce companies as strategic investors in the Ag-Tech space.
Ag-Tech start-ups are pursuing a variety of paths to scale
Hyper fragmentation in Indian agriculture, the need for locally specific solutions and the plug and play nature of some high-tech solutions are some of driving factors behind Indian Ag-Tech companies’ chosen paths to scale. Significant approaches include, full stack solutions spanning multiple agri-value chain players and services, locally specific tech-enabled supply chains, and pure-tech B2B SaaS models with potential for global scalability.
Commenting on the report’s findings, Ram Kaundinya, Director General, Federation of Seed Industry of India and Co-founder, ThinkAg said, “Given Ag-Tech’s tremendous potential to transform Indian agriculture, understanding the factors that drive its adoption, becomes an imperative. Solving for improved farmer incomes, robust agri-value chains and more sustainable agricultural practices; the sector is witnessing innovations across technologies and business models. We hope the findings of this report will inform ecosystem stakeholders about the solutions at play and encourage investment and engagement in this crucial space.”
Reflecting on the evolution of Ag-Tech in India, Arindom Datta, Executive Director and Head, Rural & Development Banking/Advisory, Rabobank, said, “The current capital inflows in Ag-Tech are betting on innovators’ potential to address and solve the challenge of achieving scale in Indian agriculture. It is vital for private capital to back businesses that tackle the critical issues of inclusiveness, access to finance and climate complexities present within the domain of agriculture. Backed by the appropriate policies, technology can be the enabler for a sustainable agri transition, addressing issues being faced by farmers, consumers and the environment.”
