The emergence of AgTech companies in different spheres of services such as input trading, output trading, farm services, and quality testing has brought in a few hundred start-up enterprises to adopt models of engagement with the farmers and the market that were hitherto practiced only by large agri and food enterprises. The start-ups have differently positioned themselves as AgTech companies due to the application of digital tools in providing connectivity between various trading partners. The funds provided to these enterprises are at manifold valuation compared to well-rooted, established commercial players in all these segments. The investment is predominantly from international PE/VC funds with very little commitment from homegrown large PE investors. Currently, about 1.1% percent of PE/VC investment attracted by Indian enterprises in the last twenty-four months has been deployed in AgTech companies.
Over five hundred companies have come into existence over the last five years, with a significant surge witnessed in the previous thirty-six months, the general thesis adopted by most business models reflects efforts to dis-intermediate supply chain, improve efficiency through digital tools and provide knowledge-based services to the farmers.
These enterprises aim at the asset-light investment model, with the predominant deployment of the capital raised in the form of equity and debt to meet working capital requirements and cash losses. There has not yet been any notable exit in the segment to reflect the sustainability of abnormal valuations applied to these enterprises in successive investments.