Indian Agritech Market: Untamed yet Perspective

Elena Vardanian
22.01.2021
5 min read

COVID-19 lockdowns and reduced economic activity slowed down the Indian agritech market in FY2020 with total investments of $1.1 billion. Agfunder and Omnivore investors report on India Agrifood Startup ‘20 states that the agritech market shrunk 56% from FY2019*. Yet deal volume shows 6,4% growth with 133 deals in FY2020 compared to 125 deals in the previous year. You may say that is quite insignificant but money doesn't grow on trees. Well, maybe for the agritech market they do, not on trees but on farm fields.

Twists and turns of agritech market 

This year was a drop debut for downstream deals. The amount of downstream deals declined to 67% in FY2020 to $741 million investment. Not only COVID-19 but the situation on the market is in charge of this sharp decline. Investors were extremely cautious and left venture deals, expanding the market with hyper-founded startups run against weak unit economics. Epidemic also put investors in a non-combative mood from January 2020 onwards.

On the other hand, upstream startups’ share of overall agrifood funding grew to 42%, compared to 34% the previous year. Startups with farm and supply chain-linked business models, raised twice as much with a total $312 million across 56 deals in FY2020, up from $145 million across 43 deals in FY2019.

Top of the milk Downstream deals 

eGrocery and Restaurant Marketplaces are trying to get 37% of all total funds invested this year in India AgriFood Startup Investment pie. At the same time Restaurant Marketplaces and eGrocery are losing their dominance reflecting the world epidemic situation – e.g., eGrocery was 80% down from FY2019. Investors got out two big players BigBasket and Grofers in 2019 to startups with their alternative inventory-led, on-demand models of these two players.

Restaurant Marketplaces were 82% down with only $276 million in FY2020 but we shouldn’t forget the aftertaste of those two mega-rounds of investments for Swiggy and Zomato in FY2019. This year investments have to continue, thus and so, Swiggy and Zomato are in the race with $113 million in a round led by Naspers for Swiggy and with the largest downstream deal this year — $150 million for Zomato in a round led by Alibaba affiliate Ant. Hungerbox, a restaurant marketplace focused on serving corporate clients, also joined the leaders with $12 million investment. However, UberEats was unable to continue the money race and left India, transferring the reins of Online Restaurant power to Ola.

Premium Branded Foods & Restaurants was the brightest star in downstream startups constellation and experienced strong growth with the highest deal volume with 37 deals on the back. Everyone is seeking quality, healthiness, and convenience in tough times of home staying. Health snacks, luxury teas, top-grade meats and premium dairy products were “the chosen one” and got funding.

Upstream startups, are you sitting pretty?

Midstream Technologies cumulated 18,9% of all AgriFood Startup Investment and became the second largest and attractive category for investors. B2B fresh produce platform Ninjacart was ahead of the pack, raising $99 million and setting a new bar for future upstream agrifoodtech deals. Supply chain traceability software and food quality testing solutions also earned financial backing from investors. DeHaat, an online platform that offers full-stack agricultural services to farmers, has raised $12 million in a round led by Sequoia Capital. Aquaconnect with AI-Powered Platform for shrimp and fisheries and Farmley for high-value dry fruits, also attracted investment.

Startups in the Farm Robotics, Mechanization & Equipment and Farm Management Software, Sensing & IoT categories are still at their initial stage of development, raising smaller amounts because product/market fit is not happening.

The Bottom Line

While the main recipients of a large amount of money appeared to be consumer-facing enterprises, downstream deals got almost all the kudos this year. Investors encouraged big players such as BigBasket and Grofers in eGrocery, Restaurant Marketplaces picked two prominent players — Zwiggy & Zomato again. Strong growth was shown in the Premium Branded Foods & Restaurants segment. We can assume that investors will be wiser and be coining money farther up the agrifood value chain. 

*For this report, AgFunder has used the Indian financial year, ending March 31. Therefore, the numbers for 2020 reflect performance for FY2020 – ie, April 1, 2019 to March 31, 2020. We also use the form ’FY2020’ to describe this period throughout this article.