India has overtaken China as Asia-Pacific's biggest funder of agrifoodtech innovation, attracting record levels of investment in the fiscal year April 2021 to March 2022, according to AgFunder and Omnivore’s fourth India AgriFood Startup Investment Report.
India agrifood startup Investment jumped 119% year-over-year to $4.6 billion in the fiscal year ending 31 March 2022.
Jumbo deals in downstream food delivery categories bolstered funding totals while technologies operating closer to the farm closed more deals.
Farmtech startups raised $1.5 billion across 140 deals, a 185% year-over-year increase.
Agriculture is the backbone of India’s economy and has to sustain its 1.4 billion population. With $4.6 billion in agrifood venture capital investments in FY2021-22, India’s agrifood ecosystem is finally receiving the funding required to tackle the challenges faced by smallholder farmers, rural communities, agricultural value chains, and food systems.
As with other parts of the world and particularly in the wake of Covid-19, food delivery services inflated total investment level, with Restaurant Marketplaces and eGrocery startups securing close to $3 billion – around 66% – of total investment in the fiscal year (FY) ending 31 March 2022. But increasing deal activity for upstream innovations shows promise.
Other key insights in the report:
Total investment in agrifoodtech startups for India’s FY2022 stood at $4.6 billion, up 119% from $2.1 billion in FY2021.
Deal activity also increased to 234 in FY2022 compared to 189 deals in FY2021
Downstream startups raised $3.8 billion in FY2022, a 115% increase from $1.77 billion in FY2021. This significant growth is due to Swiggy, which raised $1.2 billion accounting for 38% of total investment in Indian agrifood startups.
Farmtech startups closed $1.5 billion in funding, a 185% increase on the $527 million raised in FY2021. Rapidly improving technology adoption buoyed this segment of agrifoodtech, together with steady demand for traceable quality produce, encouraging innovations aimed at ironing out chronic inefficiencies.
Restaurant Marketplace and eGrocery were the most funded downstream categories, accounting for 84% of total downstream funding with eGrocery startups landing the highest number of late-stage deals.
eGrocery startups raised $934 million across 42 deals, a 4x jump from $244 million across 25 deals in FY2021.
Investment in Online Restaurants & Meal Kits saw a remarkable recovery at $301 million in FY2022, almost 4x more than $64 million in FY2021.
The Premium Branded Food & Restaurants category saw a marginal 9% increase in funding.
Upstream deals surpassed downstream deals in number for the second year in a row: 121 upstream deals closed in FY22 vs 113 downstream deals.
Upstream investment leapt 300% to $1.2 billion up from $312 million. The participation of generalist VCs, bigger deals sizes, and higher deal count contributed to this increase.
Agribusiness Marketplaces overtook Midstream Technologies to become the most funded upstream category in FY2022. The former raised $569 million in FY2022, a 7x jump from the $86 million raised in FY2021.
While Midstream Technologies remains an active category with $461 million raised across 19 deals, the number of deals declined. This is indicative of multiple sub-categories
including logistics, transport, and B2B retail achieving maturity.
Ag Biotechnology emerged as a fast-growing upstream category, raising $114 million in FY2022, a sharp increase from $5 million in FY2021.
Michael Dean, founding partner, AgFunder, said, “India has always been a leading agrifoodtech ecosystem, ever since AgFunder and Omnivore started in the early 2010s but to see investment levels surpass all other countries in the Asia-Pacific region and compete on the global stage is indicative of the impressive range and depth of innovations coming from the country and potential to impact the agrifood industry as a whole.”
Mark Kahn, managing partner, Omnivore, said, “The investment trends are proof that the agrifoodtech space can no longer be called niche. It has caught the attention of generalist VCs the world over who understand that agrifoodtech is key to the transformation of India’s massive agricultural sector and rural economy.”