Indian agri-foodtech startups clock $4.6 billion in funding in FY22, overtake China in funding inflow: Report

Indian agrifood startups have attracted $4.6 billion in FY22, up 119 percent year-on-year from $2.1 billion in FY21, according to a report, even as the rest of the startup ecosystem struggles through a funding winter.

In a statement shared on November 30, food and agritech-focused venture capital firms - AgFunder and Omnivore, said that Indian agri-foodtech startups have overtaken China as Asia-Pacific's biggest funder of agrifood-tech innovation.

“The investment trends are proof that the agri-foodtech space can no longer be called niche. It has caught the attention of generalist VCs around the world who understand that agri-foodtech is key to the transformation of India’s massive agricultural sector and rural economy,” said Mark Kahn, managing partner of Omnivore.

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

In the statement, the Omnivore-AgFunder report highlighted that the deal activity for agri-foodtech startups also increased to 234 deals in FY22 compared to 189 deals in FY21.

“India has always been a leading agri-foodtech ecosystem...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...,” said Michael Dean, founding partner of AgFunder.

Downstream takes the lead

The study titled ‘India AgriFood Startup Investment Report’ said the downstream segment, which includes consumer-facing startups in eGrocery, restaurant marketplaces, and premium branded foods, raised $3.8 billion in FY22, a 115 percent increase from $1.77 billion in FY21.

Restaurant marketplaces and eGrocery startups, within this segment, secured close to $3 billion, around 84 percent of total downstream funding in FY22 at the back of intermittent covid-19 lockdowns imposed in the country.

However, the report highlighted that the massive growth in funding can be partially owed to food and grocery delivery platform Swiggy, an outlier that raised $1.2 billion accounting for 32 percent of total investment to downstream startups.

Swiggy raised $700 million at a valuation of $10.7 billion, doubling its valuation in six months.  Earlier in July 2021, Swiggy had raised $1.25 billion from SoftBank Vision Fund II, Prosus, Accel, and Wellington at a valuation of $5.5 Billion.

Not to miss, eGrocery startups landed the highest number of late-stage deals, raising $934 million across 42 deals, a 4x jump from $244 million across 25 deals in FY21, the report added.

Promising upstream deals

However, the report said that increasing deal activity for upstream innovations also showed promise in the year.

Upstream investment leaped 300 percent to $1.2 billion up from $312 million. The participation of generalist VCs, bigger deal sizes, and higher deal count contributed to this increase, the report added.

Upstream startups are the ones that innovate for problems that are closer to farmers and farms to increase productivity and efficiency. Input marketplaces, equipment leasing, agri-biotech, farm robotics, and farm management software, among others, are some of the categories within the segment.

Out of all deals in the segment, Ninjacart clocked the largest funding of $145 million in December 2021, from existing investors, US retail giant Walmart Inc, and its Indian e-commerce arm Flipkart.

Agri-biotech, according to the report, emerged as a fast-growing upstream category, raising $114 million in FY22, a sharp increase from $5 million in FY2021. Agribusiness marketplaces, however, became the most funded upstream category in FY22 raising $569 million in FY22, a 7x jump from the $86 million raised in FY21.

The report highlighted that the deal count for upstream surpassed downstream for the second consecutive year with 121 upstream deals closed in FY22 from 113 downstream deals.

Farmtech follows

Apart from startups that are building across the supply chain, those in the Farmtech segment closed $1.5 billion in funding, a 185 percent increase on the $527 million raised in FY21.

Farmtech refers to technology that aids and improves farming outcomes ranging from better agricultural practices to forging reliable farm-to-customer connections.