Agritech start-ups in India have been successful in attracting funding from numerous investors including but not limited to large multinational companies, consumer funds, and generalist venture capital firms. There has been a significant growth in agritech investments in sync with the maturing of the agritech ecosystem in India.
The past ﬁve years have witnessed a strong surge in the development of this ecosystem, with a 9X increase in institutional funding in the sector during this period. In 2014-2019, the sector has pulled in US$ 1.7 billion (bn) as compared to US$ 0.2bn in the preceding five year block. One of the deals that caught eyes in the sector in 2019 was Tiger Global investing as much as US$ 89 million (mn) in Ninjacart. In 2020, tech adoption among farmers and resilience of the sector acted as a catalyst for fund raise by various agritech start-ups such as FreshToHome, WayCool, Arya Collateral, DeHaat, Bijak, Intello Labs, and Clover Ventures, amongst others. Omnivore has invested about US$ 15mn in 10 agritech start-ups during 2020, as compared to US$ 6.5mn in seven agritech start-ups during 2019. The year 2021 has started off well with agritech start-ups pulling capital within the very first month. Investments in this space include Dehaat, raised US$ 30mn in Series B led by Prosus Ventures (along with the existing investors including Omnivore); CropIn, raised US$ 20mn from Temasek backed ABC World Asia; and Agri10X, raised an undisclosed seed funding from Omnivore
Cross-border investments in the sector have not disappointed either. Certain Indian start-ups, such as AgNext, CropIn and Intello Labs, went global. Whereas, some international agritech start-ups, such as Plantix and Indigo, entered Indian markets.
Omnivore in its report “The Future of Indian Agriculture & Food Systems: Vision 2030”, has predicted that the post COVID-19 era would hold tremendous opportunities for the agritech segment, but not without considerable risks. The trends in the market underline increased capital deployment and rising investors’ interest in the sector. Various favourable policies announced by the Government for the agriculture sector recently along with the expected corresponding strengthening of infrastructure, logistics and capacity building, is expected to provide a strong tailwind for the agritech sector and investments in the sector.
In 2010, Omnivore came to be the first sector specific impact venture capital fund, based in India, which sought to fund entrepreneurs building the future of agriculture and food systems. Moreover, it has generally been credited with having redefined and mainstreamed investing in agritech start-ups. Omnivore is actively engaged in investing in Indian start-ups that strive to develop breakthrough technologies for food, agriculture, and the rural economy. It is a belief in Omnivore that for transforming rural India, the profitability of agriculture needs to be tapped. This could be done through improving sustainability of farming and reducing the extent of uncertainty borne by farmers in India. Omnivore’s vision of agricultural prosperity is driven by their theory of change, comprising three pillars: increasing smallholder profitability, enhancing smallholder resilience and improving agricultural sustainability. Omnivore’s first fund has been fully deployed and around 45% of the capital from its second fund has been deployed. Omnivore is looking to raise a third fund in late 2021.
Mark Kahn, co-founder of Omnivore along with Jinesh Shah has been the driving force behind the success story of Omnivore. Mark has been able to shape and give a definitive direction to Omnivore’s vision and investment thesis by using his prior experience in the sector. Mark spoke with Gaurav Dayal, Partner in Lakshmikumaran & Sridharan’s Delhi Office, about Omnivore’s early beginnings, its willingness to back ideas that improve farmer’s profitability, its focus on ESG implementation by investee companies, its focus on climate change and impact on the sector as well as the role played by the government in supporting the sector.
ABOUT MARK KAHN
Mark Kahn is a Managing Partner at Omnivore, a venture capital firm, based in India, which funds entrepreneurs building the future of agriculture and food systems. Omnivore pioneered agritech investing in India, backing over 20 startups since 2011, and currently manages INR 9.35bn (approximately US$ 130mn) across two funds. Every day, Omnivore portfolio companies drive agricultural prosperity and transform food systems across India, making farming more profitable, resilient, and sustainable
Previously, Mark was the Executive Vice President (Strategy & Business Development) at Godrej Agrovet, one of India’s foremost diversified agribusiness companies. At Godrej Agrovet, Mark was responsible for corporate strategy, M&A, R&D and new business incubation. Earlier in his career, Mark worked for Syngenta and PFM.
He is a BA (Honors) from the University of Pennsylvania and an MBA from Harvard Business School, where he graduated as a Baker Scholar. Mark is a member of the Confederation of Indian Industry (CII) National Council on Agriculture, a member of the Governing Council of the Maharashtra State Innovation Society, and a member of EMPEA’s Venture Capital Council.
GAURAV DAYAL: How did the idea of setting up Omnivore Capital come about? What was your vision? Did your stints at ITC and Godrej Agrovet have any role to play in this?
MARK KAHN: Absolutely, they both did. Just to be clear I was merely an MBA intern at ITC. I split my summer when I was at Harvard Business School and spent part of it with ITC. I was working on the e-Choupal project at ITC during my internship. I spent about six to seven years at Godrej. I was the executive Vice President at Godrej Agrovet. I was in-charge of looking at innovative businesses for us and one of the things that I also looked at was mergers and acquisitions. So, there were multiple agri-related start-ups in those days that were approaching us for funding. I always found it very strange that they would approach a corporate because obviously that is not a preferred source of capital.
The story that they told me again and again was that VC investors in India did not look at this sector, were not interested in the sector and will not invest in the sector. With that in mind, as we began to see more and more pipeline, I decided to build Omnivore to go after that to support those entrepreneurs.
I was joined in this journey by Jinesh Shah. At the time, Jinesh was the CFO at Nexus Venture Partners and he had a unique perspective on the opportunity because Nexus Venture Partners was the only VC in India that was doing deals vaguely in the same area. They had invested in Suminter India Organic (organic food exporter), Sohan Lal Commodity Management (agri-logistics) and Eka Software Solutions (commodity management platform). None of which were really what I would call agritech. But all were agri or commodity related. With that in mind Jinesh and I decided to go set this up and capture this arbitrage opportunity and help build this ecosystem.
GAURAV: What is your investment thesis? What is your typical deal size? Has it changed over the years?
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