Indian start-ups offering agri and food products and services have raised a total of $4.6 billion in the fiscal year ending 31 March, 2022, reveals a joint report released by investment firms AgFunder and Omnivore. It marks a 119 per cent growth in VC investments into the sector, from $2.1 billion in the previous year.
Since 2018 overall investment in agrifoodtech in India has grown by over 400 per cent due to participation from both domestic and global investors, the ‘India AgriFood Startup Investment Report’, said. Bulk of the deals continue to be in early-stage start-ups; however, late and growth-stage deals have increased by 80 per cent indicating deepening investor confidence in the sector.
Number of deals in the space increased to 234 in FY22 compared to 189 deals in FY21. Food and grocery delivery services inflated total investment levels, thanks to an increase in online ordering due to the pandemic. Restaurant marketplaces and e-grocery start-ups secured close to $3 billion or around 66 per cent of total investment in FY22.
“India has always been a leading agrifoodtech ecosystem, ever since AgFunder and Omnivore started in the early 2010s but to see investment levels surpass all other countries in the Asia-Pacific region and compete on the global stage is indicative of the impressive range and depth of innovations coming from the country and potential to impact the agrifood industry as a whole,” Michael Dean, founding partner, AgFunder, said.
India has now overtaken China as the region’s biggest funder for agrifoodtech, another report from the same investment houses said. According to Asia-Pacific AgriFoodTech Investment Report 2022, Indian start-ups garnered $2.7 billion of investments during the first six months of 2022, leapfrogging well over the $987 million worth of investments raised by Chinese start-ups during the period.
Downstream start-ups, which include consumer-facing platforms like food and grocery delivery marketplaces, secured $3.8 billion in FY2022, marking a 115 per cent increase from $1.77 billion from the previous year. This significant growth is due to Swiggy, which raised $1.2 billion accounting for 38 per cent of total investment in Indian agrifood start-ups, the India report said.
It was a breakout year for farmtech in the upstream space. Investments into farmtech start-ups grew 185 per cent to $1.5 billion during the year from $527 million in FY21. Improved technology adoption, steady demand for traceable quality produce and rising sustainable farming practices boosted innovation and investments in this space.
Restaurant Marketplace and e-grocery were the most funded downstream categories, accounting for 84 per cent of total downstream funding. E-grocery start-ups landed $934 million across 42 deals, a 4x jump from $244 million raised from 25 deals in FY21.
Upstream investment leapt 300 per cent to $1.2 billion, up from $312 million last fiscal. Agribusiness marketplaces overtook midstream technologies to become the most funded upstream category in FY22. The former raised $569 million in fiscal FY22, a 7x jump from the $86 million raised in the previous year. By providing farmers with online access to offline products and services, startups in this category are solving the challenge of information asymmetry that erodes farmer incomes, the report said.
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