Venture capital firms in India invested nearly $2.5 billion across agritech space in the last three years as against $3 billion over a period of 12 years, indicating a sharp rise in the investors’ interest in the sector, according to a new report.
The Inclusive Finance India Report further says that the rise in equity base of these startups is a key contributor in scaling green financing solutions.
It adds that green financing solutions are key to empower small farm holders as they enable access to credit and adoption of fintech solutions. Some of the other methods to scale green financing via agritech players include forging partnerships with large commercial banks to offer credit, and pushing farmer engagement and education.
“The farmer engagement platforms created by agritechs can be used to educate farmers about climate-resilient practices and implement climate financing products for farmers,” the report noted.
With the key role that agritech startups can play in the agri sector’s development, a report published by Avendus Capital last month estimated that the space will see about 8-10 startups with more than a billion dollars in value over the next five years, pointing to a rapid growth in the sector.
Seeing this growth potential, Avendus Capital’s report said 2-3 companies may become worthy of launching initial public offerings (IPOs) over the next three to five years.
Agritech is anticipated to see a compounded 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, it said.
In a separate report published by VC firm Kalaari Capital in September, some factors that drove investor interest in the sector include better mobile internet penetration, technology solutions, innovative founders, the adoption of newer supply chains and the government's focus on farm-reforms.
