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Agriculture matters. It contributes a sixth of our GDP. More importantly, it is the livelihood for ~100mn farmers who feed the remaining 1200mn people in the country. Most of these farmers (>90%) are small land holders or labourers in mid-to-large farms. But, for an industry that employes a large part of the working population in the country, the core stakeholder – the farmer – often struggles to make their ends meet. NABARD, the government rural banking giant, estimated that the Indian farming household has average earnings per month of just Rs 9,000/-.

Why is this so?

One interesting answer for the woes of the Indian farmer comes from Arjun Ahluwalia, cofounder of Jai Kisan, one of our new investee companies. He puts it as – “The Indian farmer is the only business owner that buys at retail and sells at wholesale.” How do we get this to change? How do we get the farmer to become an effective businessman? How can Indian entrepreneurs impact Indian agriculture?

The Agritech Opportunity

Over the past few years, we have seen a wave of investments into agritech. Over $200m has been invested in this sector by now. What accounts for this excitement? Why is so much money going, of late, into agriculture. What has changed?

There are a few key fundamental trends making their way across India and the agricultural sector:

  • Machine learning advances, especially in machine vision, have found their way into agriculture enabling advances in areas such as produce grading, soil classification, weed identification etc.
  • Increased data availability via public datasets, thanks to government efforts, helping in access to training data for machine learning
  • Changing urban lifestyles leading to a surge in demand for organic foods and cosmetics
  • Formalization of the economy leading to the emergence of big box retailers selling fresh produce, who are beginning to buy it directly from farmers leading to a new supply chain.

All of the above mean the transformation of the agricultural sector across multiple fronts, leading to a slew of startups emerging to tap the opportunities that arise.

How Blume evaluates Agritech opportunities

Below is a framework that we use to understand agritech opportunities and determine where a startup stacks up in the agritech landscape.

This framework helps us identify white spaces and makes sure we can plan our investment pipeline and discussions with startups across all parts of the agricultural process chain.

Blume’s only agritech play thus far has been Stellapps, which is in the Go to market part, enabling effective milk procurement and grading. We lacked investments in the early part of the agricultural process chain. It was important to have presence there as we are beginning to see a lot of willingness to spend from farmers who have larger land holdings, basis rising incomes. These segments were clearly poised for growth.

And we set out to tap that via two investments in Fund III. They are Jai Kisan, and Tartansense.

Jai Kisan: lending to farmers via the EMI financing model

Founded by bankers Arjun Ahluwalia and Philippines-native Adriel Manigo, Jai Kisan lies at the intersection of fintech and agritech. Arjun and Adriel have leveraged their deep insight of farmer psychology to pioneer an innovative fintech lending play in agriculture.

Jai Kisan enables the farmer to buy productive assets such as shade nets and similar equipment, sourced in turn from the manufacturer, at low interest rates. They provide low-interest loans but only againt productive assets, which can be repossesed if there is a default. The payment is structured as an EMI, as is done with vehicle financing. The reason “Loan matlab maaf, but EMI, well, the farmer knows he has to pay, as he does with his tractor and two-wheeler loans”.

We were excited by Arjun and Adriel’s vision of enhancing the productivity of the Indian farmer, while simultaneously building a different lending model in agriculture. It is a hard uniquely Indian challenge, and we love entrepreneurs who focus on these types of challenges.

Tartansense: robots for farms, to help in weed control

Founded by CMU-grad Jaisimha Rao (Go Tartans!), Tartansense develops small land-based robots for farms. These robots, called Brijbots, move over planted crop, and identify weeds, and spray pesticide on only the weeds. Tartansense leverages machine learning, computer vision and robotics technologies to create a tech play, attempting to solve a deeply local problem for the Indian farmer.

Blume loves deep tech and has backed several deep tech startups since Fund I. What has been common to almost all is that they have been B2B startups and often see their markets in the West. Tartansense is unusual; it is a B2C focussed startup focused on the Indian farmer and the challenges he faces. Go home and go big!

Accompanying Blume as co-investors in Tartansense were Omnivore Ventures, Japanese fund Beenext and Samay Kohli + Akash Gupta, co-founders of GreyOrange Robotics.

Agritech and Blume

Over the coming months, we will announce our fourth agritech investment, this one in the agricommodity procurement and supply chain segment. You can see that we clearly love agritech ☺

If you are the founder of an agritech startup looking for funding, or wish to connect, please reach out and say hello! We would love to hear from you at sanchita@blume.vc or sp@blume.vc

A little about our criteria. Blume likes founders obsessed with solving hard, uniquely Indian problems. We invest between Rs 3 – 7 crs in startups for a 15-20% stake. We like to get in early, almost always as the first institutional cheque, and then stay invested as long as it takes to support the founders through the long journey of building the venture.

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