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

Agritech startups have joined the rising checklist of firms downsizing their groups amid enterprise mannequin challenges and normal stress in funding for privately owned know-how firms, business executives and traders to ET.

Whereas Temasek-backed DeHaat farming market laid off about 5% of its employees final yr, different enterprise capital-backed firms like Bijak, Captain Recent, BharatAgri and Gramophone have not too long ago laid off employees, 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 publish enlargement mode Raised $10 million in October 2021 From traders like Z3Partners and Data Edge. It at the moment has about 450 workers.

Captain Recent, the meat retail platform powered by Tiger International, 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 supplies 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 way in which 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 all the 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 robust financing exercise. About 63% of the entire funding capital invested in agritech has been deployed in India to this point up to now 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 firms 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 advanced in such a approach that customers can buy companies and merchandise and not using a cellphone name,” founder and CEO Siddharth Dayalani instructed ET, explaining the layoffs.

Primarily based 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.

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

He added, “Most firms have already taken the precise steps over the previous two quarters and we count on the outcomes to begin showing this yr.”

Enterprise mannequin challenges

“On the whole, 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 accomplice of Omnivore, when requested in regards to 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 area 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 energetic concentrate on gross margin, in response to an business insider.

GMV is the entire worth of products offered by the corporate, and the gross margin is the quantity left after subtracting the price of items offered from web 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 up to now six or eight months. DeHaat’s $60 million increase in December took a very long time to shut, folks accustomed to the matter instructed ET.

“We will affirm 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 prime 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 occasions 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 shall be 3 occasions 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 folks till final yr.

“There’s been loads of progress these days and that is why firms are stepping up and hiring extra folks… Not everybody who’s employed will work on the similar degree, so that you’re hiring little or no, similar to huge firms do and maintain,” stated Akanksha Malik, founding father of Growth360. , which helps startups rent mid- to senior-level folks.

Omidyar Community India and Sequoia Surge-backed Bijak have additionally been tightening their insurance policies on advertising and marketing and personnel prices not too long ago, a number of sources instructed ET.

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

Nevertheless, 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 India-backed WayCool Meals and Merchandise Lightrock, Arya-backed Quona Capital, Prosus-backed Vegrow and Walmart-backed Walmart. ninjacart.

“There isn’t a dearth of capital to put money into the sector…however the query is what worth are traders keen to pay. That is the place loads of offers get caught,” Hemendra Mathur, enterprise accomplice at Bharat Innovation Fund and co-founder of ThinkAg, instructed ET.

(drawings and illustrations by Rahul Awsti)

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