Green shoots? Agritech startups brave funding winter as investments nearly double compared to last fiscal

Indian agritech startups raised $296 million across 27 private equity and venture capital deals in the first half of this financial year, almost double the $157 million through 23 deals during the same period in FY22.

As other segments grapple with a funding winter, agritech continues to attract investors optimistic about the nascent sector’s potential to grow on rising demand for quality food, supported by macro tailwinds like climate change and food security concerns.

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Agritech startups fared better in FY23 than in FY22, when funding reached a record $878 million in 54 deals, according to data from analytics firm Venture Intelligence. On a calendar-year basis, investments in the first nine months of 2022 climbed 67 percent to $393 million from $235 million a year earlier.

This also comes as investors reduce funding to high-growth startups and turn bullish toward ventures with a focus on profitability.

Bucking the trend

Total investments into Indian new-age startups through the PE/VC route slowed by about 49 percent to $9.8 billion in the April to September period in FY23 from $19.2 billion in the same period in FY22 amid rising inflation and shrinking liquidity concerns.

While funding for sectors such as edtech, healthtech, and e-commerce moderated after Covid-19 restrictions eased and offline services opened up, others like the fintech segment faced the speed bumps of an uncertain regulatory environment.

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In the first half of FY23, edtech, healthtech, and e-commerce clocked investments of $629 million, $451 million, and $1.4 billion, respectively. In the same period in FY22, these sectors recorded $1.9 billion, $1.4 billion, and $6.1 billion in funding, respectively, according to data collated by Venture Intelligence. While funding in edtech and healthtech fell by 68 percent each, e-commerce investments declined 77 percent.

Fintech companies raised $4.8 billion in the first nine months of 2022, down 8 percent from $5.2 billion in the first nine months of 2021, Moneycontrol reported earlier.

Notably, agritech is still far behind established sectors like edtech, e-commerce, fintech, and healthtech in absolute funding amounts as it is a new, emerging sector. Investors said the nascent factor works in its favour.

While the sector itself is complex, agritech founders told Moneycontrol that it can be classified into three segments: input and production; processing and warehousing, and market linkages.

Covid-19 impact

Over the years, new-age tech companies have tried to create disruptive models within and across various segments of the agriculture value chain. The onset of the pandemic in March 2020 brought a shift in how investors perceived agritech ventures. Lockdowns across the world disrupted global supply chains and new-age agritech solutions rose to the occasion.

“With the pandemic hitting India, agritech startups stepped into the void to help,” Mark Kahn, co-founder of agritech-focused VC fund Omnivore, told Moneycontrol.

Founders said this period provided investors an opportunity to assess the various models within the sector.

“Covid-19 was a real game changer for testing which models work and which don’t. The pandemic helped investors build conviction on where they can put their money,” said Chinna Pardhasaradhi, chief financial officer of Waycool, a food development, and distribution services startup founded in 2015.

Waycool has raised $404 million in a series of venture equity and debt rounds and is currently valued at $700 million, Pardhasaradhi told Moneycontrol.

Pardhasaradhi said the pandemic opened the doors for newer startups to build on this conviction for the large, untapped base of farmers and other agri stakeholders.

Mayank Tiwari, founder and chief executive officer of Reshamandi, a B2B (business-to-business) marketplace digitising the natural fibre supply chain, said successful models that scale up and get funded are paving the way for new founders entering the agritech space.

“Other founders start to look at that business model and try to replicate a success that’s already out there in another niche area,” he added. “Look at dairy as a sector. For example, Amul. Nobody thought it could be digitised. Then came Stellapps. They digitised the entire chain and changed how people perceived milk or dairy as a sector.”

Stellapps is a dairy IoT (Internet of Things) solutions company, building automation tools for dairy farms, cooperatives, and private dairies.

Macro factors

Stakeholders said macro issues are adding to the tailwinds for the sector.

“The depth and breadth of innovation to meet changing food habits and increased demand for quality food post-pandemic have led to a larger pool of quality entrepreneurs entering the sector,” said Rema Subramanian, co-founder of Ankur Capital.

Subramanian said this shift, coupled with climate change and food security concerns, has put the transformation of food systems at the top of the agenda globally.

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Chattanathan Devarajan, co-founder of, an integrated grain commerce platform that focuses on offering post-harvest services, said the problem of food shortage also contributes to unflinching interest in the sector.

“Agritech is addressing basic needs. Land is a constant factor and with the population growing, there is a need to address the food shortage issue and increase production,” said Devarajan. He said the fund flow in the sector is just beginning to increase and it has a long way to go. has raised $65 million in funding from investors including Lightrock, Quona, Asia Impact Fund and Omnivore.

Global VCs

Over the years, startups in the sector have attracted funding from various local sector-focused investors with Omnivore and Ankur Capital – the most active in FY22.

More recently, founders said global tech investors such as Sequoia Capital and Alpha Wave Global, have started to invest in agritech startups.

“People outside the country are also looking into this space and trying to understand it. Indian agritech startups are hence receiving global interest from venture capital firms,” added Waycool’s Pardhasaradhi.


Donovan Larsen

Donovan is a columnist and associate editor at the Dark News. He has written on everything from the politics to diversity issues in the workplace.

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