The agritech sector is expected to create around 8-10 unicorns in the next five years, according to a recent report that comes as the sector has received continued investor interest, even while the start-up ecosystem struggles through a funding winter.
As on date, the Indian agritech sector has not minted any unicorn. A unicorn is a start-up valued at over $1 billion.
According to the report released by investment banking firm Avendus Capital, agritech start-ups are also anticipated to grow at a compound annual growth rate (CAGR) of close to 50 percent and address a $34 billion market by 2027.
“Agriculture which contributes $530 billion to India’s GDP, sees less than 1 percent tech penetration. The unique innovations in production, supply-chain/ market linkage, quality assessment, and digital traceability have the potential to become 'from India to the world solutions',” said Pankaj Naik, executive director, and co-head of Digital and Technology Investment Banking, Avendus Capital.
The report added that the initial public offering (IPO) timelines for many agritech ventures are three to five years away which can be met with the precursor of active investments.
“Going forward, we expect to see higher deal activity led by growth funds followed by IPOs in the latter half of the decade,” Naik added.
Moneycontrol had earlier reported that Indian agritech start-ups 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.
Even as other segments grapple with a funding winter, agritech continues to attract investors who are 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.
Avendus’ report said the boost in growth is driven by four key factors - increasing digital penetration across India, Covid-led supply chain disruption, growing consumer interest for quality produce, and increasing private equity and venture capital interest.
Since 2010, almost $3 billion of funding has gone into backing more than 1,500 agritech companies in India, compared to the $45 billion raised globally by such firms, as per the report.
“India is standing at the cusp of an agritech revolution as we see the confluence of rural India warming up to increased usage of technology platforms. Indian agritechs have been experimenting and pivoting over the last few years and have now identified scalable, capital-efficient business models with a strong path to profitability,” said Varun Gupta, executive director, Digital and Technology Investment Banking of Avendus Capital.
The report takes into account start-ups building across the value chain in pre-production, production, and post-production segments including companies like DeHaat, FarMart, BharatAgri, Sammunnati, Otipy, Waycool, and so on.
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