How agritech is revolutionising supply chains and retail in agriculture

SANJEEV BIKHCHANDANI has inspired a generation of founders. One of them is IIT Delhi alumnus Shashank Kumar. Around 2010, Kumar, who was in consulting then but mulling his own venture, attended an event where the Info Edge co-founder was a speaker. Kumar recalls that someone asked how one would know that one had the right idea for a startup. Bikhchandani said a founder had to ask himself if he was ready to work on the idea for five years even if there was no funding; if the answer was yes, then the idea was right. What’s more, the founder wouldn’t have to wait five years to get funding.

Bikhchandani’s checklist validated the idea that was still taking shape in Kumar’s mind. By then he had decided to do something in the agri space. Growing up in Bihar’s Chapra district around farmers had made him aware of the issues they faced; and in his consulting job, he met food companies, who are at the other end of the supply chain. While farmers had to deal with low profitability and productivity, food companies had issues related to lack of efficiency and transparency. This is what Kumar strived to solve. “Instead of starting from the demand side (food companies) we decided to start from the supply side (farmers),” Kumar says. Chucking up his well-paying job, he moved back to Bihar, where he gathered around a band of friends and acquaintances — Amrendra Singh, Adarsh Srivastav, Shyam Sundar Singh, and Abhishek Dokania — and co-founded Green Agrevolution (DeHaat) in 2012.

Today, DeHaat provides the full stack of solutions and services to the farming community. Kumar, also the DeHaat CEO, tells Fortune India that the company’s tagline, ‘From seed to market’, describes how it serves the community — from selling inputs, to providing advisory, to buying their output, besides providing financing and insurance. And with revenue of ₹2,720 crore in FY24, according to Tracxn data, it leads Fortune India’s list of startups in the agritech space.

A few years after Kumar and his co-founders set up DeHaat, fellow IIT Delhi alumnus Varun Khurana, a serial entrepreneur, decided to get into the agritech space as he wanted to do something where his venture could have a huge impact. “When we started out in 2016, the agritech sector was in a nascent stage… and it made sense to enter a space that wasn’t very crowded,” Khurana, the founder and CEO of agritech startup Crofarm, tells Fortune India. The startup, which is now present in Delhi-NCR and Mumbai, began life as a B2B fruits and delivery business in Delhi-NCR and has now grown to operate farm-to-fork brand Otipy, dairy brand Farm Tale, and staples brand One Farm. It helped that Khurana had experience of building the supply chain in his earlier avatar as CTO of the erstwhile Grofers.

With more than 50% of India’s population being dependent on agriculture and the digital transformation that the world is witnessing, it is a given that agritech is an exciting space to be. A December 2022 report by PE firm Avendus Capital said the sector was at an inflection point in terms of “technology adoption, rapid scaling of platforms with 10-11x growth (in the past three years), improving economics and a new wave of entrepreneurs also starting to focus on the opportunity”.

According to Nilachal Mishra, partner and head of government & public services, KPMG in India, the agritech space presents a $24-billion opportunity, with less than 1% penetration so far. “Startups are addressing long-standing agricultural challenges such as supply chain inefficiencies, limited market access, and unsustainable farming practices,” he says, adding that innovations in precision farming, digital marketplaces, AI-driven crop monitoring, and blockchain-based supply chains are attracting substantial investor interest.

For instance, Crofarm’s roster of angel investors includes Rajan Anandan (Peak XV Partners), Alok Bansal (Policybazaar), and Dhruv Agarwala (PropTiger), among others. Crofarm also counts names such as WestBridge Capital, Inflection Point Ventures, and Omidyar Network India among its investors. Omidyar has also invested in FarMart, a SaaS-B2B food commerce platform co-founded by Alekh Sanghera and Mehtab Hans in 2015, which has names such as Avaana Capital, and Matrix Partners among its investors.

Kumar of DeHaat recalls that when they started out — while there was investor interest — explaining what agritech is was a tough ask. Starting the venture with their savings, the CEO says what kept them going were the small wins in the initial days, and the impact these had on the lives of farmers. “For instance, by just changing the crop variety as per the market demand, the income of the farmer went up by 50%. Or by providing them with the correct information and advice, the costs came down by 30%,” says Kumar. Then came B-plan or business plan contests, which helped the young founders get feedback on their idea, hone their pitching skills, network, and even pump in fresh funds from their winnings!

Agritech is a complex market, with relatively smaller farm sizes and lower yields per hectare vis-à-vis global counterparts, says the Avendus report. Plus, supply chains are traditionally fragmented and inefficient, while retail was generally unorganised, and digital adoption was low. While a lot of startups are solving for these issues, those that have made a difference are the ones that have their feet on the street, according to Chirag Jain, partner and food processing industry leader, Grant Thornton Bharat.

Agrees Kumar. “We started from Ground Zero,” he says, adding that for the first two years or so, their day started early, with the founders riding motorcycles to villages from their base. “For the first seven-eight years, we kept building each vertical,” he says, adding that the sector taught them to be patient as the business often has a long gestation period.

Investors, too, need to be in for the long term. “Agritech isn’t a quick win — it’s a long game that demands patience, deep market knowledge, and strong execution,” Galina Chifina, CEO & Partner-Asia Investment Team at early-stage VC firm RTP Global, tells Fortune India. She should know. As one of the early investors in DeHaat, one of the first successful startups in the space, she has seen it evolve.

This growth in the agritech space is also driven by increasing demand for sustainable practices and the adoption of advanced technologies. “Government initiatives, including a 12% increase in agriculture allocations in the latest Union Budget, aim to improve rural incomes and reduce food inflation by developing high-yielding seeds and strengthening infrastructure. Technological advancements, particularly in AI, are enhancing crop monitoring, yield prediction, and resource optimisation, boosting efficiency and sustainability,” says Mishra of KPMG in India.

While the agritech sector is a challenging place to be in, these companies have their eyes set on expansion. And their investors are optimistic. Chifina highlights the impact of DeHaat, saying that it is building the backbone of India’s agri supply chain. According to experts, agritech firms will have a massive impact on the agriculture space and incomes.

As the Avendus report from December 2022 says, “Agritech is anticipated to drive the next wave of technology-led impact with a CAGR of around 50% over the next five years.”

Amen to that.