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While most seed funds are concentrating on e-commerce, retail and health care in India, the Seattle-based Unitus Seed Fund is exploring agricultural start-ups. Will Poole, managing partner, says it’s an emerging area, which can unleash umpteen opportunities for start-ups and strengthen the supply chain in India agriculture. Excerpts of an interview with Komal Amit Gera:
Since agriculture is a vast field, what kind of start-ups would you prefer to fund?
We’d be interested in firms that are increasing their efficiencies through product/service with a smart distribution strategy, catering to a large and addressable market. We would lean towards product/services that cater to smallholding farmers, not the larger ones. Start-ups that are doing farm to fork product/consumables could be interesting if they have lucrative margins and differentiation in the product/ sourcing strategy. Else, they’re better off accessing debt.
How many agri start-ups have you funded in India?
Only one, based at Chennai. We’ve evaluated around 100 over the past two years but have not found fits in terms of addressable markets, differentiation, distribution strategy. But, it is an emerging area. Private investment in agriculture in India is a challenge but is viable, as 30 per cent of spoilage in the supply chain can be saved with efficiencies, and can raise the incomes of large, under-served, low-income populations. Farmers might not get a direct benefit but can earn from cost saving as the supply chain enhances.
Only young people can facilitate mass adoption of technology. What should be the target audience for agri start-ups?
We are bullish about use of technology to disrupt the supply chain and other business to business aspects of agriculture. We see less opportunity for high-growth farm-to-fork plays which would target younger generations. There are interesting companies in the food delivery business that are well financed and growing fast but I see them more as logistics and consumer branded-service plays, not as fundamental game changers in the agri marketplace.
Can agri start-ups experience the same multiplier effect as their peers in retail or health care could, or e-commerce verticals?
At this time, no. Funds are flowing into e-commerce and other consumer internet areas, for two fundamental reasons — the rate of growth of these new entrants is astounding and the potential to receive substantial margins is definitely there. Nobody has cracked the code for creating a high-growth and high-margin disruptive business in agriculture, yet.
Are you in touch with any agriculture university or research institutes to nurture agri start-ups?
Not at the moment. We are going ahead through incubators and accelerators. USF has a committed amount of Rs 140 crore and has so far invested Rs 35 crore in 16 start-ups over two years.
