Agritech Funding: Agritech startups trim groups, rework enterprise fashions in funding winter

Agri-tech startups have joined the rising record of corporations that are downsizing their groups amid enterprise mannequin challenges and an general squeeze in financing for privately held know-how corporations, trade executives and traders advised ET.

Whereas Temasek-backed agriculture market DeHaat fired about 5% of its staff final 12 months, different enterprise capital-backed companies like Bijak, Captain Recent, BharatAgri and Gramophone too have not too long ago undertaken layoffs, sources advised ET.

Indore-based Gramophone let go of round 75 staff throughout November and December final 12 months to give attention to attaining profitability over the subsequent few monetary quarters, cofounder and chief government Tauseef Khan advised ET.

The corporate was earlier in an enlargement mode after having raised $10 million in October 2021 from traders like Z3Partners and Data Edge. It at present has round 450 staff.

Captain Recent, the Tiger World-backed farm-to-retail platform for meat, has been attempting to maneuver his enterprise from home to worldwide markets since April final 12 months.

This train has led to 120 staffers dropping their jobs, founder and CEO Utham Gowda advised ET. The corporate’s valuation greater than doubled to $500 million in March 2022, after having raised $50 million.

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BharatAgri, which affords farmers AI-based providers on a paid subscription foundation, sacked 40 staff in August. The Bengaluru-based firm, which now has 52 staffers, attributed the layoffs to a change in the best way it sells services and products.So learn: ETtech Morning Dispatch layoffs unfold to Dunzo, ShareChat, Insurgent Meals, and agritech companies

Whereas DeHaat stated the variety of staffers let go of final 12 months was lower than 100 and that every one the layoffs have been based mostly on efficiency and cultural fitment, Bijak that too has minimize jobs didn’t reply to ET’s request for remark.

Agritech startups that have cut jobsETtech

The beforehand unreported layoffs have come after a interval of two years of strong funding exercise. About 63% of the whole enterprise capital invested in agritech in India up to now had been deployed within the final two years, as per a report from funding banking agency Avendus Capital in December.

Whereas 2021 noticed $1.22 billion being invested in 45 agritech startups, about $796 million got here into 30 agritech startups in 2022.

Why these layoffs?

After having snagged investor capital, agri-tech startups heightened hiring exercise however these corporations at the moment are streamlining operations.

At BharatAgri, as an illustration, the corporate had a mannequin the place there was a gross sales crew that was immediately speaking to customers to promote subscriptions and merchandise. “Over time, our product has developed in such a means that customers are in a position to buy the providers and merchandise with out a cellphone name,” founder and CEO Siddharth Dialani advised ET, reasoning the layoffs.

The Bengaluru-based firm final raised funds in September 2021 – $6.5 million in a spherical led by Omnivore, with participation from India Quotient and 021 Capital, each of which already held a stake.

Startup firingsETtech

“We see the present atmosphere as a boon to the agritech sector as it will clear up lots of litter within the area and with out huge progress stress, lots of corporations will come out stronger with higher unit economics,” Gramophone’s Khan stated.

“A lot of the corporations have already taken the suitable steps during the last two quarters and we anticipate the outcomes to begin displaying this 12 months,” he added.

Enterprise mannequin challenges

“Normally, we’ve got gone again to 2019 pre-pandemic ranges for seed rounds, like $2 million to $3 million rounds; there are some exceptions however few,” stated Omnivore managing companion Mark Kahn, when requested in regards to the present funding local weather within the sector. For different rounds, pre-money valuations are down 33% from 2021 peaks, he added.

Startups within the area are nonetheless determining preliminary challenges of enterprise fashions, with some having succumbed to an investor-led push on aggressively scaling gross merchandise worth (GMV) with out energetic give attention to gross margin, as per an trade insider.

GMV is the whole worth of products bought by an organization, and gross margin is the quantity remaining after subtracting value of products bought from internet gross sales.

“When it comes to enterprise fashions which can be figuring out in agri-tech, enter linkages are working very properly and output linkages are working properly in non-perishables. In perishables and in branded recent produce, it’s working properly solely in exports,” stated Kahn. “The entire ‘I purchase vegetable from farmer after which promote it to a kirana’ enterprise mannequin with nothing else is lifeless.”

Elevating capital has been robust up to now six-eight months. DeHaat’s $60 million raised in December took lengthy to shut, folks within the know advised ET.

“We are able to affirm that DeHaat’s present valuation submit the Sequence E funding is between $700 million and $800 million, which is about 80% premium from the earlier funding spherical that occurred lower than 13 months in the past,” an organization spokesperson advised ET.

DeHaat is among the many prime agri-tech startups in income phrases, alongside Waycool Meals & Merchandise, which claimed to have recorded Rs 1,008 crore of income within the monetary 12 months ended March 2022 (FY22).

So learn: 2022 Yr in Overview: Fund-starved startups sacked practically 18,000 staff

Patna and Gurgaon-based DeHaat’s income went up 3.6 instances to Rs 1,274 crore in FY22, in line with the spokesperson.

“We’re on observe to ship greater than 2x of this quantity in FY23 … we’re on an exponential progress trajectory with over 2.5 million farmers and 15,000 DeHaat facilities anticipated by FY23 finish, which will probably be 3x progress from FY22. Being a properly capitalized organisation, we goal to proceed this progress path in FY24 as properly,” the spokesperson added.

DeHaat stated it employed 2,000 folks until final 12 months.

“There was lots of progress in current instances which is why corporations went forward and employed extra folks … now all of these employed is not going to carry out on the similar stage, so that you rent slightly bit additional, identical to giant corporations do and retain the most effective,” stated Akanksha Malik, founding father of Growth360, which helps startups rent mid-to-senior stage folks.

Omidyar Community India and Sequoia Surge-backed Bijak has additionally been tightening its purses in advertising and marketing and folks prices within the current, a number of sources advised ET.

Three trade insiders confirmed that Bijak laid off many staff. ET couldn’t confirm the precise variety of layoffs.

Nevertheless, Kahn from Omnivore, an investor in Bijak, denied these claims and advised ET that Bijak has left years of funding runway and has no motive to chop its workforce.

The corporate operates a B2B agricultural commodities buying and selling market for agriculture suppliers and consumers, a barely extra crowded market inside agritech, competing with the likes of Lightrock India-backed WayCool Meals and Merchandise, Quona Capital backed Arya, Prosus backed Vegrow and Walmart backed Ninjacart.

“There isn’t a dearth of capital to be invested within the sector … however the query is what worth do the traders need to pay. That’s the place lots of offers are getting caught,” Hemendra Mathur, enterprise companion at Bharat Innovation Fund and a cofounder of ThinkAg, advised ET.

(Graphics and illustrations by Rahul Awasthi)

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