THE LONG WAIT FOR INDIA'S FIRST AGRITECH UNICORN

Interest rate hikes and investor caution have led to a more prudent investment climate

- Sayantan Bera

In June 2021, a searing post on LinkedIn, the professional networking site, generated some heat and many reactions. "Do not look any further than a few castles (read: bubbles) in the strange world of farm produce market-linkage startups, where revenue growth is showcased' but it does not move the needle on profitability," wrote then chief executive officer (CEO) of Nabventures, Rajesh Ranjan. Nabventures is the venture capital arm of India's apex rural lender, National Bank for Agriculture and Rural Development.

Market linkage startups aggregate produce from the farm and sell to institutional buyers (food and exporting companies, hotels and restaurants), retailers and consumers.

Ranjan's words, in a way, were an early warning. Agritech startups, particularly ones which were in the farm-to-fork supply chain, were on a roll. The reigning belief was: These startups will reduce the number of intermediaries, infuse technology, and clean up the farm supply chain, which will benefit both farmers and consumers.

"There is no turning back... Indian agriculture is ripe for disruption," consultancy firm Bain and Company said in a report mirroring the mood, also in June 2021. It added that by 2025, $30 billion-$35 billion of value pool will be created in the agritech sector, with e-sale of produce and inputs and digitally-enabled logistics emerging as key segments.

These estimates did not look impossible back then. India's agriculture sector-generating close to $500 billion annually with over 140 million farmers waiting to be serviced seemed ripe for technology infusion and disruption. But the party did not last long.

The agritech sector witnessed an investment boom in 2021-22 with venture capital funding at a record $1.28 billion, as per a September 2023 report by FSG, a consulting firm. The surge in funding drove valuations higher. A year later, investments fell by a staggering 45% to $706 million in 2022-23.