Impact investors flock to startups in agritech
By Team Startupcity | Friday, 31 March 2023, 09:29 IST
Agritech businesses in India are receiving more funding from impact-oriented investors than they did only two or three years ago, with one particular sector receiving the most interest. According to a survey by the Impact Investors Council, however, the rate of growth in the number of agritech companies receiving funding hasn't kept up with the rate of growth in total investments over the past three years (IIC).
The overall amount invested in agritech firms increased by more than twofold between 2020 and 2021, rising to $889 million before dropping to $846 million in 2022, according to the research. The number of deals increased to 66 in 2021 from 55 in 2020 but decreased slightly the previous year just as a financing winter started to grip the startup industry.
The average deal size is anticipated to quadruple to $6 million in 2021 before declining to $4 million in 2022, according to the research. This suggests that the majority of the transactions were modest in size and that a small number of companies received a sizable chunk of the entire sum.
Seed-stage deals actually accounted for less than a tenth of the deal value but nearly half of the deal volume. The number of Series A deals increased in 2021, and the overall deal value nearly tripled, but both indicators decreased in 2018. The majority of money raised comes from deals in the Series C and above stage.
The information approximately corresponds to statistics on overall startup investment. In 2021, the second year of the pandemic, venture capital financing into startups rose as investors and company owners sought out new business possibilities and profited from historically low interest rates. However, funding has slowed recently as a result of substantial interest rate increases by central banks around the world. Instead, attention is now being paid to profitability and cutting down on cash burn.
Nonetheless, it is anticipated that India's agritech industry, where the whole population depends on farming, would continue to expand quickly for many years to come. The agritech sector is predicted by the Inclusive Finance India study to develop over the next five years at an average rate of roughly 50%, reaching $34 billion in gross business value by 2027, a significant rise from the present $4 billion. The most heavily funded divisions are also highlighted in the IIC report. Research revealed that over 65% of the total financing went to startups that facilitated market linkages, which link farmers and markets.
These technological platforms are designed to address significant issues that the widely dispersed farming community has, such as fair product pricing, access to quality inputs and consulting services, institutional credit, and information. IIC claims that technology in India is closing the gap and promoting development in the agricultural industry. Agritech businesses with a focus on market connectivity raised $374 million in 23 deals last year. During the year, the industry underwent two significant acquisitions: Waycool and Captain Fresh.
The market-linked section had the most transactions and brought in the most money during the course of the three years under consideration. Farm management and agri-inputs were among the other major segments that got financing. Yet in 2022, the dairy industry also received a sizable investment, going from $49 million to $126 million in four partnerships. Yet a lot of that was because Country Delight raised $108 million the previous year.
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