Bharat Innovations Fund is a unique public-private-academia venture platform to catalyze transformational solutions for emerging sectors in India including agriculture, clean technology, healthcare and digital technology. The Fund is housed at IIM Ahmedabad’s entrepreneurship centre – Centre for Innovation Incubation and Entrepreneurship (CIIE). Here, he is in talks with Om Routray from NASSCOM. 

1. It is being said that today agitech is where ecommerce was a decade back. How much real potential do you see in the sector?

Agtech can solve majority of problems in Indian agriculture. The food demand is consistently growing however supply has been constrained and distorted because of inefficiencies and lack of transparency. Agtech innovations can increase farmer income; improve efficiency of farm operations by reducing the cost and de-risking farming considerably through the following.

1. Improved productivity and diversification of farming activity will increase farmer incomes;
2. Optimising the cost of input application viz. seeds, fertilisers, agrochemicals, mechanization; and
3. Improving supply chain efficiency and reducing the cost of borrowings.
4. De-risking Indian agriculture by developing innovative crop insurance solutions and reducing supply-demand mismatch which causes price volatility.

2. How is funding in agritech different from other sectors? Does it essentially have to be a long-term investment?

The funding in agtech has to be more patient and active in nature. The time horizons to build scale (say to reach million farmers or a turnover of say 100 crores) could be 5 to 8 years. The margin improvement typically begins in third and fourth year. In addition, agtech innovation need strong supply chain and ecosystem support which are slowly building up. Over and above, the climate and policy risks can also impact the growth momentum. Hence the investment periods will tend be longer.

The good thing about this sector is that business models are not based on the discounting approach (unlike consumer internet) and even the poorest of the farmers are willing to pay price for the right product / service delivered to improve his farm economics.

 3. The agritech sector has grown away from the limelight so far. In fact, many are surprised by the number of serious start-ups in the segments. How do you see the sector evolving over the next few years?

In my estimate, there are about 250 to 300 agtech entrepreneurs in the country. The quality of entrepreneurs is top quality which I have never seen before. Many come from IT industry with more than ten years of experience with strong process oriented approach to solve the problems of Indian agriculture. Some of them come from rural backgrounds to with strong understanding of the agriculture domain. I think a mix of tech and domain expertise blended into the team is a good combination of skill sets required. I see the entrepreneurship picking up the pace. However, there is still struggle to find talented people who wants to work for this sector. We need to make this sector aspirational for both urban and rural youth.

4. Given the unique factors in Indian agriculture – govt subsidies, loan waivers, monsoons and numerous developmental agencies – what sort of control can funders have over their investments?

 Most of the factors stated above are unpredictable and to some extent uncontrollable. Investors need to look at models which are relatively de-risked with ability to work across geographies and crops. Entrepreneurs should also have a downside protection approach which is as important as growth strategy. The flexibility to pivot and respond to above situations is a key for the start-ups right from the beginning from their journey.

5. What would your advice be to agritech start-ups, for raising funds as well as on being profitable?

My advice to all the start-ups is that get customers on board before going to investors. It is important to demonstrate that someone is willing to pay for the innovation. Scalability and sustainability of models need to be thought through properly.  I also advise them to build partnership and collaborations with other start-ups which can reduce the initial capital requirement.  Fortunately, we have developed an informal group of about 100 odd agtech start-ups where we continuously exchange ideas to build such partnership. The group is few months old but I am pleased to see collaborative approach to solve the problems together.

6. Any particular technology that you will advise start-ups to focus on to get funding easily?

No, I never advice any entrepreneur what to do and which tech to focus on. They know what to do. As a mentor, advisor and investor; I usually advise them on business models as well as things to get investor-ready. In general, I connect them with potential customers / partners for an early validation of their prototypes.