With 5x growth in FY23 revenue, Matrix-backed Farmart eyes inorganic growth

Alekh Sanghera, co-founder & CEO of FarMart

Close to seven years and two pivots later, agritech startup Farmart seems to have found its calling. The company, backed by early-stage venture capital fund Matrix Partners India, clocked five times growth in its revenue in FY23 over the previous fiscal and is eyeing more inorganic growth prospects this financial year.

Alekh Sanghera, co-founder and CEO, said in a recent interaction that Farmart clocked a total revenue of Rs 1,060 crore, a significant spike over the Rs 209 crore seen in FY22.

Sanghera also claimed that the company maintained EBITDA (earnings before interest, taxes, depreciation and amortisation) at a certain level despite the jump in revenue, without disclosing the bottom line figure for FY23. In the previous fiscal, the company recorded a loss of Rs 17.4 crore.

Farmart is yet to officially file its FY23 financials with the Ministry of Corporate Affairs.

Founded in 2015 by childhood friends Sanghera and Mehtab Singh Hans, the startup enables food businesses to source quality products in large quantities directly from the farm to retailers and factories. Earlier, the company experimented with a farm-equipment marketplace and an agri-fintech model, which did not quite work out.

Pivoting to a SaaS-led B2B food supply platform in 2020, the company posted a revenue of Rs 99 lakh in FY21, the first year of operations.

More recently in July, the company launched its own ERP (enterprise resource planning) software facilitating the digitisation of the entire workflow for the food processing and manufacturing sector.

Inorganic growth plans

The agritech startup, which has raised a total of $48 million in funding from prominent backers like Matrix Partners, Avaana Capital, 500 startups, Omidyar Network India and General Catalyst, among others, has now earmarked $5-6 million for acquiring smaller startups for inorganic growth.

According to the Farmart chief, out of about $42 million in equity funding that the company raised, it still holds $37 million in the bank.

“We want to look at certain assets in the ecosystem because there are many that are stressed. We want to collaborate with, acquire or acqui-hire ones that can help us either increase the distribution and network on the retailer, farmer, or factory side, or acquire companies that have a strong foothold on the brand side,” Sanghera said.

Regional brands with strong hold on a specific geography, or D2C startups running efficiently in the food space, are on its radar. In March 2022, the company had acquired fruits and vegetables (F&V) logistics platform Subjimandi.app.

“We have looked at more companies but issues have arisen with each opportunity like the scale not working out, spending too much money to grow or even not being in a great shape,” Sanghera added.

The Gurgaon-based firm is looking at both acquisitions in India and globally to boost its presence, Sanghera said.

Farmart currently sells produce sourced from India to the United Arab Emirates, Saudi Arabia, Oman, Nepal, Bangladesh, Mozambique, Kenya, Benin and Nigeria. According to Sanghera, the startup is bullish on its expansion across Africa and the Gulf Cooperation Council region, and particularly eyeing acquisitions in these geographies.

While about 90 percent of Farmart’s revenue currently comes from India and the remaining from its markets abroad, in the coming years the company expects to expand the latter to about 25 percent.