In a pandemic year when India’s agriculture sector showed resilience, investments into the country’s agri-technology (Agtech) segment dropped 35 per cent due to a slowdown in deal making.
Capital flows into Indian Agtech companies stood at $409.5 million during 2020, down 35 per cent from $656.5 million 2019, a report by ThinkAg said. ThinkAg is India’s first Agtech platform that brings together innovators, corporate entities, and investors to improve outcomes in Indian food and agriculture sector.
The report Agtech in India – Investment Landscape Report 2021, released Thursday said about 42 Agtech companies raised investment in 2020 compared with 58 in 2019.
However, the median investment stood at $2.15 million in 2020 against $1.42 million in 2019, indicating a higher proportion of large deals in the $5 million or more funding bracket. Also, the average value of the first cheque received by a company in its first institutional fund raiser was $1.1 million during 2020.
The report said that drop in Indian Agtech investments also deviates from the global trend of pandemic tailwinds significantly accelerating fund flows. While this comes as a setback, it likely does not represent the long-term prospects of the sector. This is supported by ThinkAg’s survey of stakeholders which reports an overwhelmingly positive business outlook for Agtech start-ups and continuing investor interest in channelling capital into Agtech in 2021. About 85 per cent of the 98 respondents, including investors, start-ups and corporate entities, surveyed were optimistic about opportunities in 2021.
The report said that new sources of venture capital in the sector have almost entirely come from generalist funds. The year 2020 also witnessed the entry of various international private equity and growth investors such as ABC World Asia and STIC Investments. While international investors, driven by their concentration in late-stage deals, continue to account for a majority of capital flows, domestic venture funds are the most frequent dealmakers in this sector.
Supply chain digitalisation continues to be the sole dominant category in India’s Agtech landscape, representing 85 per cent of all capital raised and two-thirds of all first-time deals. There is, however, increased variety in the business models that Agtech are pursuing in this space, the report said. While consumer-proximate models are still the largest fundraisers, Agtech are developing agribusiness marketplaces deeper into the supply chain. The top ten deals accounted for 80 per cent of total investments, similar to 2019.
BigBasket remained the top deal Ag-Tech, followed by Ninjacart, Fresh To Home, Country Delight and Waycool among others. Omnivore with seven deals topped the investors’ list followed by AngelList with six deals and Sequoia with 5 deals. NABVENTURES, Ankur Capital and Matrix Partners closed four deals during the year.