This Chennai-based aquaculture startup is organising the hatchery-to-vendor value chain with a tech-based solution and improved market access.
Aqua Connect was brought about by serendipity. Or so says Founder-CEO Rajamanohar Somasundaram.
Raj, as he is called, an IIT-Kanpur alumnus and serial tech entrepreneur, who runs two companies — Hexolabs and Socialabs — in the consumer mobile and internet space, was traveling to his hometown of Chidambaram (about 250 kilometres from Chennai) in Tamil Nadu. It was the middle of 2017, and one of his co-passengers was a man negotiating “rates” and prices over the phone.
“He repeated the word ‘rate’ some six or seven times, but I couldn’t figure out what it was,” Raj tells YourStory. “Later, when I asked him, he said his family happens to own a shrimp factory for 20 years, but getting good rates for farmers was always a task.”
That co-passenger was Sanjai Kumar, now one of the three co-founders of Aqua Connect. Raj and Sanjai were joined by Shanmugha Sundara Raj, a banker-turned-entrepreneur, and they launched the startup in June 2017.
In a little more than a year, Aqua Connect controls about 3,000 aqua farms spread across 1,500 hectares of land in Tamil Nadu and Andhra Pradesh. More than 600 farmers have been touched making it the largest aqua farmers network in South Asia, according to the Coastal Aquaculture Research Institute (CARI).
Soon, Aqua Connect plans to expand to Gujarat, Odisha, West Bengal, and further into Andhra (which accounts for over 75 percent of the shrimp production in India).
Organising the ‘fish market’
Now, what does Aqua Connect really do?
Like most areas of agriculture, aqua farming or the activity of growing shrimps, lobsters, mussels, and other edible aquatic organisms, is highly unorganised in India. Middlemen play a critical role and are often a deterrent to the farmers’ getting a good value for their harvest.
This is partly because farmers’ access to large, lucrative marketplaces is restricted, and also due to their limited awareness about farm best practices, advanced aquaculture techniques, and demands of the export market.
“Everyone is talking to everyone. It is truly a fish market. That is the nature of the whole trade. We wanted to bring in technology to organise the farming process and give farmers better value.”
The Chennai-based Aqua Connect offers a real-time tech-based farm-monitoring solution, consultations and aquaculture expertise, and export market access to these coastal farmers. It organises the entire value chain from hatcheries (that breed shrimps) to ponds to the marketplace. The farmers are also connected with vendors and suppliers, farm input manufacturers (that provide probiotics, water chemicals, manufacture feeds, chemicals, etc.) and exporters.
The 13-member startup also helps hatcheries plan their breeding cycle more effectively by providing data and insights captured by its water-monitoring solution. As a result, not only is the produce better, but the wastage low too, thus reducing cost of operation at every stage of the value chain.
Including the middleman
Perhaps Aqua Connect’s biggest achievement has been its inclusion of pesky middlemen, who control “pretty much 99 percent” of the aqua trade in Tamil Nadu. “That is the culture,” says Raj. “Everyone talks to middlemen who control almost everything. Farmers are often exploited. So, we had to find a way to include them.”
Aqua Connect says its location-based app that captures farm data was facing low adoption among farmers because they needed a “local, digital assistant”. The startup roped in the middlemen to help farmers with the deployment of its tool and with farm monitoring and data reporting.
“There was a lot of resistance from the middleman early on. So, we asked them to take our technology solution and deploy it in farms. Slowly, they became trusted insiders. We are trying to collaborate with middlemen, and not taking their livelihoods away. They too can become a part of the solution.”
“Also, we realised that farmers prefer face-to-face communication as opposed to an app,” he adds.
But, some challenges remain.
Dealing with market traps
Aquaculture as a trade works on credit, and farmers often struggle to pay off debts. Moreover, most of the finance sources are informal, and traceability becomes an issue there too. Aqua Connect is looking to formalise that by creating a record docket for farmers. They are also working closely with several exporters to ensure higher margins for farmers.
“There is stiff competition in the export market too,” says Raj. “Farmers have a problem understanding who would pay a better price for their produce. They need guidance.”
At present, the US and Latin America are the biggest export markets for domestic aqua farmers. The EU comes next, while Asian markets are yet to pick up. Shrimp exports from India amount to over $5.6 billion per year, according to industry estimates. “Add to that about $1 billion in domestic consumption, and it is a huge market to tap into,” Raj says.
Aqua Connect competes with the likes of AquaBrahma (an app-based marketplace for hatcheries and suppliers), IntensAquatica (a fish farming startup backed by angel investor Sharad Sharma), and a few others. But, it claims to be the only one with a holistic aqua-farming solution. Raj says, “There might be a few overlaps, but we really don’t have a competitor right now even though the market can accommodate 4-5 more players like us.”
Funding and opportunity ahead
Only the tip of the iceberg has been scaled so far. There are over 1,36,000 hectares of shrimp land in India, of which only 1.1 percent is a part of the Aqua Connect network. “We want to grow the domestic production,” Raj says.
Funding is round the corner and it would primarily fuel Aqua Connect’s expansion to more states. An undisclosed investor would be putting in a seed capital of $130,000. This is in addition to a pre-seed amount it received as part of the Hatch Accelerator programme at the Norwegian Seafood Innovation Cluster. “A Netherlands-based VC is also keen to invest in us,” Raj reveals.
Aqua Connect is also backed by the Coastal Aquaculture Research Institute (CARI), an independent research organisation that promotes sustainability through research, training, and outreach programmes for aqua farmers in line with the United Nations Sustainable Development Goals.
Raj says, “We can easily achieve 5X of what we are doing now in the next two years. We also want to focus on local market development by identifying vendors in metros. That’s where you get the best ‘rates’.”
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