Opportunities for Agritech Start-ups

A challenging yet promising arena for potential investments

With about 150 million farmers and majority owning less than two hectares of land, the Indian agriculture sector needs to adapt innovations to become sustainable and profitable for farmers. Crippled with many challenges like climate change, water stress, deterioration of soil health and price volatility, a farmer with average land holding of about one hectare is hardly left with a surplus for productive investment into new age solutions. Fortunately, agritech start-ups driven by entry of high-quality entrepreneurs and increasing investor interest, have come to the aid with innovations in improving farm economics. In all probability, agritech will continue to attract venture capital in the foreseeable future while trying to solve multi-dimensional problems prevalent in Indian agriculture including low productivity, sub-optimal efficiency in supply chain and lack of access to markets, institutional credit, crop insurance, quality inputs and market linkages.


I really worry about start-ups who spend eighty percent of their time fundraising and twenty percent of time building business. It should be the other way around.

In order to highlight the opportunities of agritech start-ups in the Indian context, Mr. Hemendra Mathur was the speaker for MentorED, our weekly live 45-minute workshop where industry veterans share their knowledge and experience and discuss topics that are apt and relevant to the start-up and small business fraternity. A PGDM from IIM Ahmedabad and Bachelor in Engineering from Rajasthan Agricultural University, Mr. Hemendra Mathur is currently the Chairman, FICCI Task Force on Agri Start-ups and Venture Partner of Bharat Innovation Fund. He is the co-founder of ThinkAg – a platform for accelerating the adoption of innovations in the agriculture space. He has authored many papers on the subject and speaks regularly at conferences pertaining to the food and agribusiness sector as well as the start-up ecosystem.

In brief, the session had the following takeaways for the audience:

  • Current status of Indian Agritech
  • Ecosystem support available for start-ups
  • Innovation themes and opportunity areas
  • Learning from other agritech entrepreneurs

Innovation and Young Entrepreneurs: Key Drivers for Growth

Mr. Mathur started his highly informative presentation highlighting the status of agricultural sector in India, “It is a very vast area, as we know agriculture is one of the key pillars of Indian economy contributing to almost 15 to 17 percent of the GDP and almost 50 percent of the population continue to depend on the agricultural sector. I think one of the key drivers for growth in agriculture at least for the next decade or two will be innovations and these innovations are going to be driven by young entrepreneurs who are joining the sector.” In an encouraging ecosystem that has picked up momentum in the last three to five years, the agritech start-ups have come to the aid trying to solve problems across the value chain from pre-production to production to post harvest.

Although the Indian agritech start-up space is almost a decade old now with the first names popping up in 2011-12, several of them are building interesting models considering the needs of small and marginal farmers who constitute eighty-five to ninety percent of the farming community in the country. As of the present day, there are more than a thousand agritech start-ups in the country and Mr. Mathur is hopeful of that figure to grow to ten thousand in the next ten years. Terming the sector as a resilient one that had even bowed down unlike several others during the pandemic, the perception of investors has also changed. “I think investors are becoming more and more amenable to invest in the sector and as we speak about more than a billion dollars has been invested in the sector in the last eight to ten years. Out of that maximum amount has come in the last 18 months. I am sure as we go along this number is going to change and again my prediction is, we are going to get at least a 10-billion-dollar investment in the next 10 years.”

Considering the supply chain, Indian agriculture exhibits a highly fragmented scenario with concerns like high water stress, degrading soil quality, unavailability of labour coupled with low mechanisation. Similarly, inadequate storage, processing and transportation facilities cause a significant amount of food loss which makes the supply chain very inefficient. “If you look from a farmer perspective, one of the biggest challenges most of the farmers in India end up selling their produce at the nearest mundi (market yard) which is typically thirty to fifty kilometres from the farmer’s field and it is not necessary he gets the best price from that market.” Thus, there is an urgent need for logistic solutions to discover more buyers.

Agri-fintech: The Next Big Opportunity for Agritech Start-ups

Mr. Mathur also mentioned that only about thirty percent of Indian farmers have access to institutional credit and the rest have to pay as high as twenty-four to sixty percent of credit per annum. He stated, “Just imagine the cost of capital is so high which makes the whole farm economics look very vulnerable. So, can we improve the excess of institutional credit to the farmers and that is where I see a very interesting intersection of agritech and fintech, I call it agri-fintech.

I think this is the next big opportunity in the sector.” Again, data figures out as a scarce commodity in the entire agricultural value chain where it fails to meet the requirements for decision making. “That is where I see a huge application potential for data sciences. I think agriculture is another area which is heaven for data scientists, there’s so many variables and you can do so much with it which can essentially help in decision making for the farmers as well as for other value chain members.”

The mentor listed down seven opportunities in his presentation for the audience and thereafter he elaborated on each of them. The seven opportunities are:

  • Access to Quality Inputs
  • Farm to Fork Market Linkages/Post Harvest Management
  • Access to Financing (Agri-fintech)
  • Data & Advisory
  • Mechanisation
  • Novel Farming
  • Platforms

Mr. Mathur underlined the nitty gritty of the Indian agritech ecosystem. He is thrilled at the promising presence of many high-quality entrepreneurs, supportive incubators and accelerators to whom he insists to connect. “One area which I feel is catching up is the village ecosystem. None of the agritech models are going to scale without participation from village level entrepreneurs. Because a farmer is not going to trust a person who’s coming from Bangalore, Delhi or Mumbai. He is going to trust someone who is there in the rural area. So, I think that it is very important that we build the local ecosystem, create opportunities for rural entrepreneurs.” He believes that entrepreneurship and agritech go hand in hand and it will create millions of jobs in the rural areas. Furthermore, Mr. Mathur also listed down some of the key incubators who can be reached out for assistance.


You should be obsessed with what problems farmers are facing. You need to have a farmer-centric approach. Unless you are solving for him you will never be able to create a scalable solution.

Agritech start-ups must focus on creating value

He concluded his presentation citing his own experience as a mentor, advisor and board member in various forums. “One thing which I really like about agritech start-ups is – it is a learning for everyone who wants to be in this sector and that a lot of them have a high degree of resilience and a frugal approach. Do not burn cash in farmer and customer acquisition but create value, as farmers are not looking for discounts, they are looking for value.” That appears as a unique trait of Indian agritech start-ups exhibiting a mortality rate of less than fifteen percent.

The supply chain of agritech being longer, there is a higher scope of unit economics utilisation. “I really worry about start-ups who spend eighty percent of their time fundraising and twenty percent of time building business. It should be the other way around. You should be spending less than twenty percent of your time fundraising and eighty percent time on building business, product development, hiring team, etc.”

He also highlights that most of the start-up founders come from a technology background and not agriculture. “Agriculture in India is a multi-dimensional problem so you need a multi-disciplinary approach.” He insists on a bridge approach whereby a holistic team works with multiple skill sets and which also understands technology, data science, behavioural sciences, meteorology among others in addition to agriculture.

Audience Asks

How do you encourage the youth to see the future in agriculture when a general notion seems to attribute it as a traditional sector?

People will laugh at me if I say that we are going to see reverse migration in 10 years. But that is the truth, people like you and me who are fed up with city life will migrate to villages, run farms, produce and sell. The reason I am saying it is because technology will help it. Probably we do not like traditional agriculture the way it is done but there are so many tools now available where you can go and manage very efficiently.

All said and done in agriculture, unlike the notion that we have, the gross margins at the production end are very good. If you add the cost of inputs labour and everything you can still make a thirty to fifty percent margin. Unfortunately, those margins are eaten up by the interest cost, by the food losses or by the price shocks that you see. So, I am very bullish that agriculture is the future not just for rural India but for urban India.

There is a good example that people with urban background and urban thinking have ventured into rural areas which demonstrates that there is a role for youth, not necessarily rural youth but also for urban youth to look it as a potential opportunity to create value and I can tell you it is going to be very satisfying career for people like you.

On what factors do you assess and agree on a tech starter for deciding to invest in?

I think first and foremost, from an investor perspective, the solution has to be scalable. Whether we like it or not, technology has a role to play and when I say technology, it does not mean just digital technology, it can be biotech or foodtech, it could be some other, but I think technology has to be integral. It need not be proprietary or patented but scalable. What is that differentiator in the business which can make it scale and answer typically is in the use of technology. I am not saying over-invest in technology but you should be clear how it will drive scale.

Second, of course, is the composition of the team. You need multiple skill sets, so do you have those skill sets in the team or do you have the ability to hire those skill sets is the biggest challenge for the sector. Today it is not capital, it is talent. That is where a start-up which has scaled and a start-up which is struggling to scale – the difference is talent.

Third is, you need to demonstrate unit economics. Everyone in the supply chain has to make profit. Since the supply chain is elongated and complicated, the unit economics at multiple levels becomes a bit of challenge but again with use of technology I am sure that can be solved and that’s where we will see models scaling faster.

Last but not the least, build a gross margin strategy. That is where I see a lack of articulation or lack of strategy in the ecosystem. Even now most starters have figured out how to scale but how to build a profitable business is still a question mark. You need to figure out how you unlock value so that it becomes a sustainable and profitable venture.

Live Workshop MentorED with Mr. Hemendra Mathur on Agritech Start-ups

A Unicorn in Agriculture: To Create Wealth for the Ecosystem

With over 25 years of experience in venture capital, private equity, management consulting and investment banking, Mr. Mathur has invested in several early stage agritech and mid-sized companies in the agricultural supply chain. From his experience he stated, “You should be obsessed with what problems farmers are facing. You need to have a farmer-centric approach. Unless you are solving for him you will never be able to create a scalable solution.

To me, a unicorn in agriculture means someone who has created wealth of a billion dollars for the ecosystem not necessarily for his own shareholders which means creating wealth for the farmers for the local entrepreneur, for the entire value chain rather than creating wealth for yourself. And that’s why I always say there are already multiple unicorns in the sector because they have created wealth for everyone, not just for themselves.” The mentor is hopeful of the next decade as one for agriculture and that it will be disruptive!

Abhilash Bapanasha
Abhilash Bapanasha
Abhilash is Assistant Editor at Dutch Uncles, an alumnus of Tezpur University, he writes on business, entrepreneurship, startup and its ecosystem. His expertise being live shows, live streaming, reporting and anchoring.

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