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

Agritech startups have joined the rising record of firms downsizing their groups amid enterprise mannequin challenges and basic 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 Contemporary, BharatAgri and Gramophone have lately laid off employees, sources inform ET.

The Indore-based founding father of Gramophone sacked round 75 staff throughout November and December final yr to concentrate on attaining profitability over the subsequent few monetary quarters, co-founder and CEO Tauseef Khan advised ET.

The corporate was earlier within the submit growth mode Raised $10 million in October 2021 From traders like Z3Partners and Information Edge. It presently has about 450 staff.

Captain Contemporary, 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 staff shedding their jobs, founder and CEO Utham Gowda advised 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 providers to farmers on a paid subscription foundation, laid off 40 staff in August. The Bengaluru-based firm, which now has 52 staff, attributed the layoffs to a change in the best way it sells services and products.Additionally learn: Layoffs unfold from ETtech Morning Dispatch to Dunzo, ShareChat, Insurgent Meals and agritech

Whereas DeHaat stated the variety of staff let go final yr was lower than 100 and that the entire layoffs have been based mostly 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 sturdy financing exercise. About 63% of the overall funding capital invested in agritech has been deployed in India to date previously 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 workforce that was speaking on to customers to promote subscriptions and merchandise. “Over time, our product has developed in such a manner that customers can buy providers and merchandise with out a telephone name,” founder and CEO Siddharth Dayalani advised 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.

Startup shootingETtech

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

He added, “Most firms have already taken the appropriate steps over the previous two quarters and we anticipate the outcomes to start out showing this yr.”

Enterprise mannequin challenges

“Normally, 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 concerning 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 overall worth of products bought by the corporate, and the gross margin is the quantity left after subtracting the price of items bought from internet gross sales.

“By way of the enterprise fashions that work in agritech, the enter linkages are doing very nicely, and the output linkages are working very nicely in non-perishable merchandise. In perishables and in branded recent produce, they’re solely doing nicely in exports,” he stated. Khan. “The entire ‘I purchase greens from farms after which promote them to Kirana’ enterprise mannequin with nothing else is lifeless.”

Elevating capital has been troublesome previously six or eight months. DeHaat’s $60 million elevate in December took a very long time to shut, individuals conversant in the matter advised ET.

“We are able to verify 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 advised 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 staff

DeHaat, based mostly in Patna and Gurgaon, had revenues up 3.6 instances 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 tip of FY23, which will probably be 3 instances the expansion from FY22 Being a well-capitalized group, we intention to proceed this progress trajectory in FY24 as nicely.”

Dahat stated it employed 2,000 individuals till final yr.

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

Omidyar Community India and Sequoia Surge-backed Bijak have additionally been tightening their insurance policies on advertising and personnel prices lately, a number of sources advised ET.

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

Nevertheless, Kahn of Omnivore, an investor in Bijak, denied the allegations and advised ET that Bijak has years of funding left and no motive 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 Lightrock-backed WayCool Meals and Merchandise, Arya-backed Quona Capital, Prosus-backed Vegrow and Walmart-backed. ninjacart.

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

(drawings and illustrations by Rahul Awsti)

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