Agritech Funding: Agritech startups are making teams, reshaping business models in winter funding

Agritech startups have joined the rising record of corporations downsizing their groups amid enterprise mannequin challenges and normal strain in funding for privately owned know-how corporations, business executives and buyers to ET.

Whereas Temasek-backed DeHaat farming market laid off about 5% of its workers final yr, different enterprise capital-backed corporations like Bijak, Captain Recent, BharatAgri and Gramophone have just lately laid off staff, sources inform ET.

The Indore-based founding father of Gramophone sacked round 75 workers throughout November and December final yr to concentrate on attaining profitability over the following few monetary quarters, co-founder and CEO Tauseef Khan instructed ET.

The corporate was earlier within the submit growth mode Raised $10 million in October 2021 From buyers like Z3Partners and Information Edge. It at the moment has about 450 workers.

Captain Recent, the meat retail platform powered by Tiger World, has been attempting to maneuver its enterprise from home to worldwide markets since April final yr.

This train resulted in 120 workers dropping their jobs, founder and CEO Utham Gowda instructed ET. Firm analysis greater than doubled to $500 million in March 2022, having raised $50 million.

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BharatAgri, which gives AI-based companies to farmers on a paid subscription foundation, laid off 40 workers in August. The Bengaluru-based firm, which now has 52 workers, attributed the layoffs to a change in the best way it sells services.Additionally learn: Layoffs unfold from ETtech Morning Dispatch to Dunzo, ShareChat, Insurgent Meals and agritech

Whereas DeHaat stated the variety of workers let go final yr was lower than 100 and that the entire layoffs have been primarily based on efficiency and cultural match, Bijak who additionally reduce jobs didn’t reply to ET’s request for remark.

Agritech startups that cut jobsETtech

The beforehand unreported layoffs got here after a two-year interval of sturdy financing exercise. About 63% of the full funding capital invested in agritech has been deployed in India up to now previously two years, in response to a report by funding banking agency Avendus Capital in December.

Whereas 2021 noticed $1.22 billion invested in 45 agritech startups, round $796 million entered 30 agritech startups in 2022.

Why these layoffs?

After invested capital faltered, agritech startups elevated hiring exercise, however now these corporations are streamlining their operations.

At BharatAgri, for instance, the corporate had a mannequin the place there was a gross sales staff that was speaking on to customers to promote subscriptions and merchandise. “Over time, our product has developed in such a manner that customers should buy companies and merchandise and not using a telephone name,” founder and CEO Siddharth Dayalani instructed ET, explaining the layoffs.

Based mostly in Bengaluru The final time the corporate raised cash was in September 2021 – $6.5 million In a spherical led by Omnivore, with participation from India Quotient and 021 Capital, each of which already personal a stake.

Startup shootingETtech

“We see the present setting as a boon for the agritech sector as it’ll clear up plenty of the chaos within the house and with out huge progress pressures plenty of corporations will come out stronger with higher unit economics,” stated Khan of Gramophone.

He added, “Most corporations have already taken the proper steps over the previous two quarters and we anticipate the outcomes to begin showing this yr.”

Enterprise mannequin challenges

“Basically, we’re again to pre-pandemic ranges for 2019 for seed rounds, like $2 million to $3 million; there are some exceptions however just a few,” stated Mark Kahn, managing associate of Omnivore, when requested concerning the present financing local weather within the sector. For different rounds, he added, pre-money scores are down 33% from their 2021 peak.

Startups within the house are nonetheless discovering preliminary challenges to enterprise fashions, as some have succumbed to an investor-led push to scale gross merchandise worth (GMV) with out an lively concentrate on gross margin, in response to an business insider.

GMV is the full worth of products offered by the corporate, and the gross margin is the quantity left after subtracting the price of items offered from internet gross sales.

“By way of the enterprise fashions that work in agritech, the enter linkages are doing very properly, and the output linkages are working very properly in non-perishable merchandise. In perishables and in branded contemporary produce, they’re solely doing properly in exports,” he stated. Khan. “The entire ‘I purchase greens from farms after which promote them to Kirana’ enterprise mannequin with nothing else is useless.”

Elevating capital has been troublesome previously six or eight months. DeHaat’s $60 million increase in December took a very long time to shut, individuals conversant in the matter instructed ET.

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

DeHaat is among the many high agritech startups by income, together with Waycool Meals & Merchandise, which claimed to have posted Rs 1,008 crore in income within the fiscal yr ending March 2022 (FY22).

Learn additionally: 2022 REVIEW: Fund-hungry startups have laid off practically 18,000 workers

DeHaat, primarily based in Patna and Gurgaon, had revenues up 3.6 instances to Rs 1,274 crore in FY22, in response to the spokesperson.

“We’re on observe to ship greater than double that quantity in FY23… We’re on an exponential progress trajectory with over 2.5 million farmers and 15,000 DIY facilities anticipated by the top of FY23, which will likely be 3 instances the expansion from FY22 Being a well-capitalized group, we goal to proceed this progress trajectory in FY24 as properly.”

Dahat stated it employed 2,000 individuals till final yr.

“There’s been plenty of progress currently and that is why corporations are stepping up and hiring extra individuals… Not everybody who’s employed will work on the similar stage, so that you’re hiring little or no, identical to large corporations do and hold,” stated Akanksha Malik, founding father of Growth360. , which helps startups rent mid- to senior-level individuals.

Omidyar Community India and Sequoia Surge-backed Bijak have additionally been tightening their insurance policies on advertising and marketing and personnel prices just lately, a number of sources instructed ET.

Three business insiders confirmed that PJAC has laid off a number of workers. ET couldn’t verify the precise variety of layoffs.

Nonetheless, Kahn of Omnivore, an investor in Bijak, denied the allegations and instructed ET that Bijak has years of funding left and no cause to chop its workforce.

The corporate operates a B2B agricultural commodity buying and selling market for agricultural suppliers and patrons, a barely busier market inside agritech, competing with the likes of Lightrock-backed WayCool Meals and Merchandise, Arya-backed Quona Capital, Prosus-backed Vegrow and Walmart-backed. ninjacart.

“There is no such thing as a dearth of capital to spend money on the sector…however the query is what value are buyers prepared to pay. That is the place plenty of offers get caught,” Hemendra Mathur, enterprise associate at Bharat Innovation Fund and co-founder of ThinkAg, instructed ET.

(drawings and illustrations by Rahul Awsti)

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