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'Agritech can see 8-10 unicorns in five years'

By Sneha Shah

  • 14 Dec 2022
'Agritech can see 8-10 unicorns in five years'
Credit: Pexels

India’s agritech sector is likely to grow in scale and have 8-10 startups with more than a billion dollars in value each over the next five years, according to a new report by Avendus Capital. 

The report titled ‘Agritech-Leading next decade’s tech-first value creation’ said 2-3 companies will become worthy of launching initial public offerings (IPOs) over the next three to five years. 

The report covered business-to-business (B2B) firms such as Absolute Foods, Arya.Ag, Dehaat, Farmart, Captain Fresh, Vegrow, Bighaat, Agnext and Bijak and business-to-consumer (B2C) firms such as Country Delight and Licious. 

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“Farming in India is characterized by relatively smaller farm sizes and lower yields per hectare vis-à-vis global counterparts. This, coupled with fragmented, inefficient supply chains and unorganized retail, lends a uniqueness to the market,” said Pankaj Naik, co-head, digital and technology investment banking at Avendus.

“These unique market characteristics have led Indian agritech players to build ‘India-first’ business models with a larger focus and scale on the output market linkage side. The market is also seeing ‘India-first’ technology innovations in precision agriculture, quality assessment and digital traceability that can each be a large global opportunity,” he added. The report highlighted how 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. Around 17 Indian startups have crossed the critical mass of $100 million in annual revenues. 

Agritech is anticipated to drive the next wave of technology-led impact with a compound annual growth rate (CAGR) of around 50% over the next five years, reaching $34 billion in gross merchandise value (GMV) by 2027, a sharp rise from the current $4 billion. 

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“This, given the sheer scale of the agriculture economy in India, will create tremendous stakeholder value. The IPO timelines for most of the companies are 3-5 years away. The precursor would be active participation of private growth investors in the sector, replicating the participation seen in consumer tech-focused companies over the last five years,” said Karan Sharma, co-head, digital and technology investment banking at Avendus.

As per the report, with increased rural India internet penetration and covid-19 driving structural changes in the supply chain, the last two years have seen a sharp turnaround for the sector. Almost $2 billion of capital was raised in the last two years (63% of total capital invested) in the space. In 2022, almost 1.2 billion went into the sector while for nine months ended September, $796 million was pumped into the sector.

By 2027, the agri value chain disruption potential is being pegged at $34 billion with almost 25 million farmers getting impacted, the report said. 

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