How DST-backed agritech incubator Indigram Labs is ushering in a new green revolution
It is a great time to be an agri-business in India. Although we’ve traditionally been an agrarian economy, with nearly two-thirds of the country’s population earning its livelihood on farms, there is a renewed focus on the sector lately.
Not only is the government more pro-active in doling out schemes and incentives for farmers, private funding has also gone up now.
As a result, a host of agri companies have mushroomed in the last 24-36 months. They are using new-age technologies to improve crop output, better farm management, increase farmer incomes, eliminate pesky middlemen, and drive efficiencies in the entire farm-to-fork value chain.
In a recent report titled Agritech in India – Emerging Trends in 2019, industry body NASSCOM estimated there are over 450 agritech startups in India today. In 2019 alone, the sector received close to $250 million in funding, a whopping increase of 300 percent over last year.
NASSCOM also expects India to have its first agritech unicorn in two to three years.
Indigram Labs is one of India's top agritech incubators.
Incubators driving growth of agritech
Playing a critical role in the development of the sector are agri-business incubators. Delhi-based Indigram Labs is one of India’s first private incubators focused on agritech and related businesses.
Started in 2016, Indigram has incubated about 35 startups so far. It claims to be the largest agri incubator in India, with a network of 500,000 farmers, and 250 Farmer Producer Organisations (FPOs) across 18 states. It focuses on tech-led agri ventures, and offers mentoring, funding, resources, and market linkage to its incubatees.
Indigram even provides lab facilities, where startups can test their product prototypes before taking them to market. It has trained more than 4,000 youths in collaboration with the Indian Society of Agribusiness Professionals (ISAP).
Notable startups in Indigram’s portfolio include Intello Labs (AI-based agro commodity testing app), MyCrop Technologies (farm management system), AgriWatch (delivering market intelligence on agri commodities), Rowan Agronature (market linkage to farm produce and a credit platform), TechnifyBiz (managing the dry commodity supply chain), AgSmartic (farm management and smart irrigation), and Farms2Fork (farm automation).
Ashish Khetan, Director and Chief Investment Officer, Indigram Labs
Ashish Khetan, Director and Chief Investment Officer, Indigram Labs, tells YourStory,
“Agritech is one of the few sectors that is yet to be disrupted. There are many opportunities to create depth. We don’t know if there can be a Flipkart-like player in agritech, only time will tell. But if any startup can capture even five percent of the farm base, that will lead to a $100-billion valuation.”
In a decade, Indigram plans to incubate 100 startups from across segments in agritech - crop input/output, farming techniques, tractors and farm equipment, food processing and grading, farmers’ credit, cold storage and supply chain, and more.
The incubator, which Ashish says is “run like a proper business”, recently tied up with the Department of Science and Technology (DST).
Indigram will fund agritech startups under the government’s National Initiative for Developing and Harnessing Innovations - Seed Support System (NIDHI-SSS) scheme.
It has earmarked a corpus of Rs 10 crore for the same, and will elevate startups to a level where they can draw angel or institutional investors. The investment for each startup will be capped at Rs 25 lakh.
How Indigram incubates and what it offers
What makes Indigram Labs different from other private incubators?
“Our incubation period is for three years. We don’t offer a classroom kind of session to graduate startups. Our aim is to help them go to market, identify new revenue streams, mentors, and investors."
He adds, "All kinds of support are offered in-house. We have agronomists, supply chain experts, strategy experts, consultants, and market intelligence people. We also have angel investors within the incubator.”
By the end of 2019, Indigram Labs is projected to be a 2,000-people organisation, making it one of the largest business incubators in the country.
Because of its vast network, it has gained a deep understanding of the variable farmer psyche in India. Indigram is currently ‘active’ in Maharashtra, Karnataka, Haryana, Punjab, and Madhya Pradesh across multiple agro-climatic zones.
“Farmers are progressive in some areas and are keen to try out new products. But, others may be sensitive and not very trusting. In such cases, startups usually take the help of NGOs or village entrepreneurs. We can improve access to farmers, and help validate their product on the ground.”
Indigram reveals that setting up an agritech venture in southern states is “far more viable and sustainable” because state governments there are more lenient with subsidies. Also, in places like Karnataka, there are 10 different agro-climatic zones where “you can grow almost everything” - from betel nuts and spices to black pepper and coffee. “Farmers in the south are more organised too,” Ashish observes.
Investing philosophy and “judgement calls”
For any incubator or institutional investor, taking “judgement calls” on startups is the all-important step.
Several questions stare at them: Do you back the current idea or the potential of what it can become? Do you bet on the founder and the team? Do you look to fill gaps in your own portfolio? Do you focus on quick returns?
Indigram reveals that it rests “90 percent” of its selection on founder background. “Dekho, idea toh sabke paas hai (everyone has an idea),” Ashish says. “But, what we see is if the team has the ability to execute that idea. Does the founder have a commercial background? Can he scale a business?”
He adds, “We usually don’t put money in a startup which is already highly valued at the incubator stage. Our goal is to take it to Series A and get a 10-15X return.”
One of Indigram’s biggest success stories has been Intello Labs.
The Gurugram-based startup enables commodity grading with AI and image recognition technology, and is one of India’s most awarded agritech companies. Its platform scans one million images daily. In April 2019, Intello raised $2 million in seed funding from Nexus Venture Partners and Omnivore.
Puneet Kumar, VP, Nexus Venture Partners, said in a statement, “Without the standardisation and digitisation of quality assessment of agricultural produce, e-Mandi and digital agriculture markets will remain a distant dream. Intello Labs is revolutionising quality assessment and grading for agricultural produce, utilising technology advancements in AI and ML.”
Exits and returns on investment
Indigram claims that it earned 30-35X returns on its investment in Intello Labs.
“It was a successful exit,” Ashish says. He adds, “In another startup, TechnifyBiz, we’re getting a 100X return. But, we’re not looking to exit yet.”
What really is the right time to exit a startup?
“It varies with incubators. We usually stick around if we think that a startup can go from Series A to Series B in six to eight months," Ashish explains.
By 2020, Indigram plans to set up a new $30 million fund for “follow-up investments” of $500,000 to $2.5 million each in its startups.
CIO Ashish signs off by saying, “We also have a consulting arm. The idea is to help startups cut a bigger cheque of $10 million or more. We want to be looked at as an overall agritech solution, and not just as an incubator.”
(Edited by Megha Reddy)