When Ninjacart, a Bengaluru-based startup that helps farmers sell produce to grocery stores and restaurants, raised money last December, it highlighted growing investor interest in India’s agricultural technology sector.  The USD 145m investment – led by Walmart [NYSE:WMT] and its India-based ecommerce subsidiary Flipkart – was India’s largest agritech investment. Even bigger deals may soon happen, say dealmakers and executives.

Though still at an early stage, interest in agritech has picked up pace during the pandemic. According to Dealogic, investments in agritech software reached an all-time high of USD 501m across 15 transactions in 2021, roughly double the prior record of USD 248m across nine deals in 2019.

Besides Ninjacart, last year’s other big deals included a USD 115m Series D for Green Agrevolution (doing business as DeHaat), whose platform helps Indian farmers source seeds, fertilizer and equipment and then sell their produce to buyers. A third involved Pune-based Agrostar, whose tech platform offers advisory services to farmers. It landed a USD 70m round in December. 

Mushrooming growth

India’s agricultural sector has long suffered from a lack of productivity and efficiency. While agriculture accounts for nearly 20% of the country’s economic activity, it employs roughly 40% of its workforce. Helped by high smart-phone penetration coupled with the availability of cheap data, a rising number of farmers realize technology can improve all areas of agriculture – inputs, outputs, advisory services, and supply chains.

Ashish Mishra, CEO and founder of Krishi Network, a mobile app that answers farmers’ questions, says while agritech is still nascent, startups like his have the potential to grow 100-fold over the next few years, serving 100m farmers or more.

That assessment is echoed by various studies. In 2020, Ernst & Young predicted that by 2025 the Indian agritech market would be worth

USD 24bn, of which only 1% had been captured. Bain & Company, in a June 2021 study, predicted the agritech market could hit USD 35bn by 2025.

Planting unicorns 

That huge market upside explains rising investor interest.

Early this year, WayCool Foods, a Chennai-based supply chain platform, racked up USD 117m in Series D funding.

Another startup that wants to raise up to USD 50m in Series C funding in the months ahead is Gramophone, whose technology platform aims to double a farmer’s yield. 

While various geopolitical risks might make investors a little more cautious this year, Mishra thinks around 10 agritech unicorns will emerge in the next two to three years.

Shalin Vasa, associate VP at midmarket investment bank Meresis, says all kinds of business models in agritech are receiving investments. In the coming years, each category in agritech will see five to six large players emerge, followed by consolidation.

Plenty of food for thought.