India’s food supply chain is complex; agritech startups are trying to solve it: Hemendra Mathur, startup mentor | Technology News

Venkatesh Kannaiah: Inform us about your journey in India’s agritech sector.

Hemendra Mathur: It occurred by probability. Throughout 2008, I used to be working with a non-public fairness fund investing in late-stage firms throughout the meals worth chain. Round 2010, I observed younger tech entrepreneurs coming into the agriculture sector, which was a pleasing shock as a result of agriculture had conventionally been a talent-starved sector. I noticed individuals quitting firms like Honeywell, Bain, or tech founders coming back from the US. These have been early-stage entrepreneurs who have been reaching out for steerage, ecosystem connections, and fundraising assist. It intrigued me as a result of this sector will not be for the faint-hearted.

I began mentoring them, and since we weren’t doing startup investments on the fund, I helped them with no matter assist I may present.

In 2016, I left the personal fairness fund. I had the choice to begin or be part of a brand new fund, however I made a decision the perfect use of my time was to be an ecosystem enabler. My prior expertise with Rabobank gave me banking and consulting publicity. The final 9 years have been the perfect a part of my profession, working with traders, startups, and senior authorities officers. The aim was to drive innovation at scale in a posh sector.

I’m on the Union Authorities’s skilled committee for Agri Stack. As a part of an IFC venture, I’m working with the governments of Uttar Pradesh and Andhra Pradesh to develop Agri Stack use circumstances, like digitizing Kisan Credit score Card crop loans, that are sometimes handbook and time-consuming. We’re additionally constructing the primary open community for agriculture — Open Agri Web — the place farmers aren’t tied to a single app however can entry companies like soil testing, financing, insurance coverage, or gear rental through a user-friendly bot. We now have recognized about 40 agritech community companions to attach farmers with related companies, like climate forecasts, market costs, or patrons for his or her produce. This reduces the excessive value of reaching and servicing farmers.

I additionally mentor startups, and have mentored round 500 of them within the final eight or 9 years.

Venkatesh Kannaiah: Inform us about some highlights of India’s agritech journey.

Hemendra Mathur: The Indian meals provide chain is probably the most sophisticated on earth; 150 million farmers on one finish, 1.4 billion shoppers on the opposite, and a slim center layer of 5-10 million merchants, wholesalers, retailers, and 40 million kirana shops.

From 2010 to 2017, agritech was in an experimental mode. The query was: would farmers undertake it? Would somebody pay for these options? Would massive companies purchase them? The funding in agritech throughout these first six or seven years was impact-led, with small cheques from influence traders.

Then, in 2017, a brand new wave of entrepreneurs entered agriculture with way more enthusiasm. In the course of the pandemic, the meals provide chain was very energetic, retailers saved promoting, and agritech and meals tech startups labored 24/7 to maintain it operating. Digital adoption by farmers and shoppers grew considerably. Farmers turned extra digitally literate, which modified agritech between 2019 and 2021. That was an inflection level.

Traders awakened throughout this era as agriculture was rising — meals manufacturing and consumption elevated, and other people have been keen to pay a premium for high quality meals. Who would have thought that somebody would pay 100 rupees for one piece of cake? Client consciousness about meals traceability, security, and diet picked up. Traders noticed agritech as a development sector and a defensible one — meals is the very last thing shoppers compromise on.

In 2020 and 2021, investments elevated dramatically, and enormous traders began taking curiosity, supporting startups by means of a number of rounds. This introduced agritech into the mainstream.

Submit-2022, we entered a special part, the place agritech demonstrated it may scale. Some startups achieved turnovers of $50 million to $100 million. Nonetheless, some huge cash was sunk; caught in debt, stock, or overbuilding options. When the funding winter hit post-pandemic, agritech traders began asking robust questions: Will you ever become profitable? Scale is okay, however the place’s the underside line? This was true for different sectors too, however agritech suffered extra as a result of profitability and farmers’ means to pay turned query marks.

It’s also seen as riskier from a regulatory and coverage perspective. In 2023, funding dropped, and the main focus shifted from driving top-line development (GMV) to bottom-line profitability.

An funding lens alone doesn’t work; coverage is important. In 2017, impressed by the success of UPI, I wrote about Agri Stack for a government-led knowledge repository for agriculture that might later be opened to the personal sector for constructing use circumstances. In 2021, the federal government adopted it, and now 60-70 million farmers are enrolled, with hopes to incorporate 100-150 million, protecting landowners and landless farmers.

Agri Stack integrates farmer, crop, and farm registries, offering highly effective knowledge on farmer identification, farm location, measurement, and crops grown. That is invaluable for banks just like the State Financial institution of India to supply loans or for patrons sourcing from farmers. We’re digitising 160 million hectares of agricultural land, utilizing satellite tv for pc imagery to trace crops.

Venkatesh Kannaiah: What are the challenges confronted by agritech startups in India?

Hemendra Mathur: The most important problem in agritech will not be funding, it’s expertise. Agriculture will not be a profession of selection for younger professionals or college students. I turned an agricultural engineer as a result of I had no different possibility. Agriculture will not be taught at college or school stage, whereas we’d like agronomists, plant scientists, veterinarians, behavioural scientists, meteorologists, hydrologists, and knowledge scientists for AI/ML functions.

As agriculture is a state topic, it’s robust for startups to maneuver between states on account of differing rules. Standardising insurance policies and opening public datasets (70% of startup time is spent on knowledge assortment) and bodily infrastructure, like warehousing, would assist. Margins are low in commodity buying and selling, so worth addition requires accessible processing and storage services.

Developments present that 80% of the investments have gone into farm-to-table fashions connecting farmers to clients (e.g., BigHaat, AgroStar), with a concentrate on demand aggregation, stock administration, high quality management, and logistics. The remaining 20% funding has moved into areas like enter high quality, mechanisation, and farmer advisory options for pest detection, soil testing, or irrigation scheduling, utilizing knowledge from IoT, cellphones, or satellite tv for pc imagery. Much less funding has gone into agri-biotech, deep tech (robotics, pc imaginative and prescient, AI), or fintech for farmer financing. Provide chain financing, warehousing, and cattle financing are untapped alternatives.

Venkatesh Kannaiah: How do agritech themes and tendencies overseas differ from these in India?

Hemendra Mathur: Globally, agritech within the US, Israel, or Europe focuses on farm-level interventions, like productiveness, soil well being, various proteins, and managed atmosphere agriculture (greenhouses, vertical farms) as a result of farms are bigger and provide chains are extra streamlined. In India, complicated provide chains make farm-to-table fashions dominant, however Indian options are transportable to different smallholder-dominated areas. Farmer dashboards, widespread overseas, are much less related for India’s small 2-4 acre farms.

Venkatesh Kannaiah: How does ThinkAg initiative work and what has it achieved?

Hemendra Mathur: The ThinkAg initiative, began in 2018 as a not-for-profit, goals to assist startups scale by testing enterprise fashions early by means of partnerships with over 40 agri-corporates, analysis establishments, universities, accelerators, traders, and policymakers. We organise thematic occasions and publish an annual agritech funding report, a benchmark for traders monitoring tendencies. It’s an open-source ecosystem platform, collaborating with incubators like Social Alpha and AgHub to validate improvements and construct partnerships.

Venkatesh Kannaiah: Inform us about agritech themes that haven’t labored in an Indian context?

Hemendra Mathur: There are pure buying and selling fashions, the place there’s shopping for and promoting with none worth addition. Such fashions had scaled up however couldn’t maintain on account of low margins and have been susceptible to pricing shocks.

Second have been within the class of managed atmosphere agriculture, like hydroponics and greenhouses. These had excessive upfront prices and restricted market linkage for premium merchandise, making scaling sluggish. Such applied sciences are maybe related in land-scarce areas like Singapore, however not in India.

The third is one among various proteins, like meat or milk substitutes. India has a low per-capita meat consumption, and with conventional options like plant-based protein diets (pulses) being common, the choice protein business finds it robust to take off.

As for the utilization of drones in agriculture, they’re of their early phases and promising. Nonetheless, scaling it requires coaching rural youth in drone operations, as it’s a expert job various by crop.

Venkatesh Kannaiah: What are your three asks from the federal government?

Hemendra Mathur: Firstly, we require devoted agritech innovation cells on the central and state ranges to streamline compliance, certification, and engagement with startups. Secondly, we’d like extra catalytic capital for incubators, together with grants, blended finance, or low-cost debt to assist early-stage startups. Thirdly, we’d like open digital knowledge stacks (like Agri Stack) for startups to construct functions, with privateness protocols to allow farmer financing and market linkages.