According to a joint report from investment firms AgFunder and Omnivore, Indian start-ups providing agri and food products and services raised a total of $4.6 billion in the fiscal year ended 31 March 2022. From $2.1 billion the year before, it represents an increase of 119% in VC funding for the industry.
According to the "India AgriFood Startup Investment Report," overall investment in agri food tech in India has increased by over 400% during 2018 as a result of engagement from both domestic and international investors. The majority of transactions are still in early-stage start-ups, but late- and growth-stage transactions have surged by 80%, signalling greater investor confidence in the industry.
From 189 deals in FY21 to 234 deals in FY22, the number of agreements in the space grew. Due to an increase in online ordering brought on by the pandemic, total investment levels in food and grocery delivery services increased. Marketplaces for food and e-grocery startups received close to $3 billion, or almost 66% of all investments, in FY22.
According to Michael Dean, founding partner of AgFunder, India has always been a leading agri food tech ecosystem, ever since AgFunder and Omnivore started in the early 2010s. However, to see investment levels surpass all other Asia-Pacific nations 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.
According to a separate report from the same investment institutions, India has now surpassed China as the region's top investor in agri food tech. Indian start-ups raised $2.7 billion in investments during the first half of 2022, much surpassing the $987 million raised by Chinese start-ups during the same period, according to the Asia-Pacific AgriFoodTech Investment Report 2022.
The funding for downstream start-ups, which includes consumer-facing platforms like food and grocery delivery markets, increased by 115% to $3.8 billion in FY2022, from $1.77 billion the year before. According to the India report, Swiggy, which raised $1.2 billion, or 38% of the total investment in Indian agrifood start-ups, is to blame for this enormous development.
In the upstream sector, farmtech had a breakthrough year. Farmtech start-up investments increased by 185% to $1.5 billion during the year from $527 million in FY21. Innovation and investments in this field were supported by increased technology usage, sustained consumer demand for traceable, high-quality produce, and expanding sustainable agricultural methods.
The two downstream categories with the largest funding, restaurant marketplace and e-grocery, accounted for 84% of all funding. A 4x increase from the $244 million raised from 25 deals in FY21 saw e-grocery start-ups secure $934 million across 42 deals.
From $312 million in the previous fiscal year, upstream investment increased by 30% to $1.2 billion this year. In FY22, agribusiness marketplaces surpassed midstream technology as the upstream category receiving the greatest funding. In fiscal FY22, the former raised $569 million, a 7x increase over the $86 million raised the year before. According to the research, entrepreneurs in this category are addressing the problem of information asymmetry that depresses farmer incomes by giving farmers internet access to physical goods and services.