Venture capitalists find value in Indian agri-tech start-ups: Omnivore

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Mark Kahn, a venture capitalist, said online marketplaces do not replace regulated mandis, but complement them by operating in niche areas

Private equity investors have been very successful in online agricultural markets. Photo: Pixabay

Online marketplaces are making a difference for farmers in the states in which they operate, such as Bihar, Madhya Pradesh, Rajasthan, Gujarat and Maharashtra. But they haven’t been able to make headway in Punjab and Haryana due to the proliferation of regulated mandis, says Mark Kahn, managing partner of Omnivore, a venture capital (VC) fund.

Kahn spoke to The Federal in a Zoom interview on the topic: ‘Are digital technologies changing Indian agriculture?’

Federal maintenance: Are digital technologies changing Indian agriculture?

Omnivore focuses on agri-tech and has been investing in Indian start-ups since 2012. It has a portfolio of 33 entities, in which it has invested around $90 million. These start-ups cover six themes: financial technology (fintech), business-to-business marketplaces, consumer brands that cater to the agricultural community, post-harvest technologies and agricultural life sciences.

Farmer’s Market Draw

Private equity investors have been very successful in online agricultural markets. In fiscal 2021, they invested $318 million in the segment, roughly the same amount as in the prior fiscal year, according to a report from AgFunder, a venture capital firm.

There are online marketplaces like Bijak (Hindi for “invoice”), which provide a platform for retailers, traders and arhatiyas or commission agents to trade with each other and traders who consistently meet the terms of the contract get higher rankings – and customer preference.

Startups like DeHaat provide comprehensive services to farmers, including agronomic advice, input supplies and access to finance. DeHaat helps institutional buyers source fresh produce directly from farmers, bringing price transparency. To these institutional buyers, it also provides services such as grading, sorting, fumigation and ripening.

Complementary to mandis

These online marketplaces do not replace regulated mandis, but complement them, Kahn said. They operate in niches like fresh produce. They are not an alternative to e-NAM, launched by the Center in April 2016.

Some of the startups in Omnivore’s portfolio are taking the drudgery out of farming and working to make it efficient, Kahn explained. Stellapps Technologies is trying to improve milk productivity, quality and safety with devices on cows and drums and in collection centers, bulk cooling points and processing centers.

Kahn said digital technologies are being adopted by horticultural farmers and those in the dairy, poultry and aquaculture sectors who have profitable operations and money to invest. Farmers engaged in large-scale crops such as cereals, pulses and oilseeds are affected indirectly.

Acting-food life sciences

One of the areas where there is frenetic venture capital activity in the US, UK, Netherlands, Singapore and Israel is in agribusiness life sciences. Start-ups engaged in the development of innovative dietary and alternative proteins, new agricultural systems or using transgenic and genome-editing technologies to develop plants with novel traits receive a lot of funding.

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Kahn said India’s contribution is negligible in this area. He said there was a talent shortage. Doctorates in these disciplines go west like computer engineers once did. To create an ecosystem for such ventures, it was important for India to retain talent and make the return attractive to non-resident agricultural life science scientists.

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