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Agritech: Untapped Segment Of Indian Economy
Agritech startups fared better in FY23 than in FY22, when funding reached a record $878 million in 54 deals, according to data from analytics firm Venture Intelligence. On a calendar-year basis, investments in the first nine months of 2022 climbed 67 percent to $393 million from $235 million a year earlier
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According to reports, Indian agritech startups raised $296 million across 27 private equity and venture capital deals in the first half of this financial year, almost double the $157 million through 23 deals during the same period in FY22.
As other segments grapple with a funding winter, agritech continues to attract investors optimistic about the nascent sector’s potential to grow on rising demand for quality food, supported by macro tailwinds like climate change and food security concerns.
Agritech startups fared better in FY23 than in FY22, when funding reached a record $878 million in 54 deals, according to data from analytics firm Venture Intelligence. On a calendar-year basis, investments in the first nine months of 2022 climbed 67 percent to $393 million from $235 million a year earlier. This also comes as investors reduce funding to high-growth startups and turn bullish toward ventures with a focus on profitability.
Robots, temperature and moisture sensors, aerial images, and GPS technology are all commonly used in agriculture today. Precision agriculture and robotic systems, as well as advanced devices, enable businesses to be more profitable, efficient, safe, and environmentally friendly. Technological advancements have helped all the stakeholders in the domain, be it farmers, industry, consumers, or the government. "Effective management of pre- and post-harvest productivity, as well as dissemination of end products in accordance with market needs identified through technology in the agri sector," said Akhilesh Jain, Co-founder, Agrotech India.
Total investments into Indian new-age startups through the PE/VC route slowed by about 49 percent to $9.8 billion in the April to September period in FY23 from $19.2 billion in the same period in FY22 amid rising inflation and shrinking liquidity concerns.
While funding for sectors such as edtech, healthtech, and e-commerce moderated after Covid-19 restrictions eased and offline services opened up, others like the fintech segment faced the speed bumps of an uncertain regulatory environment.
Sheetal Bahl, Partner at Merak Ventures, said, "In agritech, the focus of investment nowadays is on companies that are trying to increase yield and provide solutions for waste management. The startups should offer services such as seed development and discovery for precision agriculture. Further, improving the supply chain in the sector could also lure investors." He also mentioned that the population is increasing exponentially and that the adverse impact of climate change on food production and distribution are the focal points of the segment.
Over the years, new-age tech companies have tried to create disruptive models within and across various segments of the agriculture value chain. The onset of the pandemic in March 2020 brought a shift in how investors perceived agritech ventures.
During the pandemic new-age agritech solutions rose to the occasion. Jain further added that funding has a significant impact on the agritech sector as identification of potential development areas is one task and implementation is another. There should be proper research, development, and innovation setups to encounter the problem that we do have with our current agri-food system.
Over the years, startups in the sector have attracted funding from various local sector-focused investors with Omnivore and Ankur Capital the most active in FY22. More recently, founders said global tech investors such as Sequoia Capital and Alpha Wave Global, have started to invest in agritech startups.