Sahayog Dairy, a Madhya Pradesh-based dairy startup, has raised Rs 11 crore ($1.6 million) in Series A round of funding from social venture capital investor Acumen.
The firm will mainly use the money for the expansion of its milk chilling and processing plant in Dewas area in the state.
“Acumen’s rich expertise in the agricultural sector as well as its deep commitment to social impact made it a natural partner for us,” said Anand Patidar, founder and CEO of the firm.
The dairy, which is located at Hardai district in the state, sources its milk from five adjoining districts.
The two-year-old firm was started by Symbiosis Institute of Management alumnus Patidar and has grown its network to work with 23,000 farmers from more than 300 villages across five districts in Madhya Pradesh. It also operates 272 primary milk collection centres, where milk is tested and evaluated, and smallholder farmers receive an instant receipt for the quality and quantity of milk delivered.
It also provides ancillary services such as farmer training, para-veterinary services etc.
“By bringing milk directly from its source—cows and dairy farmers—to the people of India, Sahayog Dairy creates a fair and transparent marketplace for rural farmers,” said Ajit Mahadevan, director, Acumen India.
Acumen focuses on investing in companies that provide products or services to the bottom-of-the-pyramid (BoP) income groups.
The fragmented dairy space that is marked by high volume low margin business is dominated by large cooperatives such as Amul and Mother Dairy. A set of private dairies have scaled up their presence in a particular region and have been trying to become national players.
The sector has attracted a lot of entrepreneurs in the past few years and many private ventures also received venture capital backing.
Last year, Odisha-based Milk Mantra Dairy Pvt Ltd had raised Rs 80 crore ($13.08 million) from Fidelity Growth Partners India. Social venture investor Aavishkaar also participated in that round.
However, in what was seen as a setback for the industry, Prabhat Dairy, a private equity backed medium size firm that sought to go public, witnessed poor investor interest in its just concluded initial public offer.