How agritech startup Poshn is bringing order in a fragmented sector
The first thing that strikes anyone about the agricultural sector in India is how fragmented and low on discovery it is at a grassroots level.
Shashank Singh, an alumnus of the Indian Institute of Management (IIM) Calcutta and BITS Pilani, and Bhuvnesh Gupta, an alumnus of XLRI Jamshedpur, had been working together on several agricultural and agritech-based projects when they witnessed the challenges in bulk procurement.
“We further validated the “procurement problem hypothesis” by visiting other wholesale buyers (general trade and modern trade) over a couple of months. With the hypothesis strongly validated, and our backgrounds in the agri-space, we were very clear that this is the space and leg we want to build for. Agricultural staples are essential commodities, hence their movement was unfettered even during Covid. With Poshn’s increasing traction, we have been able to digitise discovery and fulfillment, which has been a great boon in these testing times,” says Shashank.
Bhuvnesh Gupta, Co-founder Poshn
Hence, the duo started, a wholesale processed commodity distribution and financing platform based out of Delhi-NCR, to make agricultural wholesale trade efficient, effective, and seamless. In April, the agritech startup raised $3.8 million in funding led by Prime Venture Partners. The round also saw participation from Zephyr Peacock.
The key problems that Poshn solves are - access to reliable distribution to suppliers in otherwise fragmented markets, efficient discovery of prices and commodities for buyers, delivery reliability for buyers , and working capital (credit) for suppliers.
Building the startup
The complexities in a large sector like agriculture can vary by commodity, value chain and geography. It then becomes very tricky to build for all in the ecosystem. However, Shashank is clear they have found a way through.
“At Poshn, we have identified the leg we want to operate in, and the problems we want to solve. This has given a very clear focus and helps build the right solutions and products.”
The platform aims to scale up to staple wholesalers (across ecommerce, modern trade, and general trade) with an ARR of Rs 1200 crore.
Speaking of their investment in the company, Amit Somani, Prime Venture Partners says, “What attracted us to Poshn is how the company frugally scaled its way to incredible traction with solid unit economics over the last eight months. At such an early stage, the company was able to grow 20x while maintaining a positive EBITDA. We are also in awe of the customer love that Poshn has garnered, which was evident when we spoke to both the buyers and suppliers in the marketplace."
He adds, “Both Shashank and Bhuvnesh are missionary founders and deeply passionate about the problem and the sector in which they operate. Growing up in families who were traditionally into agritrade as a business, they have a visceral understanding of both the nuances and the challenges the sector faces. They also have experience in building and scaling large marketplaces in B2B trade and logistics, which are essential pillars in building this business.”
The fulfilment process
On Poshn, wholesale buyers post their requirements with us which we reverse auction with our select set of suppliers for price discovery and delivery schedules. Once the right price and schedule are agreed upon with our buyers, the trade is closed, explains Shashank.
“We started off as a commodity and price discovery commerce platform. As we scaled the platform, we expanded beyond just a discovery platform to an end-to-end fulfilment platform. We are now on our way to build a full-stack food exchange making wholesale trading of commodities liquid,” he adds.
The team claims to have a revenue MRR of $3 million with positive take rates, over 200 users, and 20x growth in eight months.
“We are maintaining a strong supplier focus in an otherwise inelastic demand market. Our product solves for some of the key issues plaguing the processors, millers, and repackagers in the market. Our key clients include Jio mart, DealShare, CityMall, along with 100+ traditional wholesalers in NCR,” says Shashank.
Currently, an agent-driven market, the gross margin profiles seen here are - sellers - 4-6 percent ; wholesale sallers - 3-5 percent; agents - 1 percent; and transportation - 1-4 percent.
According to Amit of Prime Venture Partners, agriculture has been the backbone of the growing Indian economy for centuries, and yet has seen little digitisation and organisation across its supply chain. It contributes 18 percent to GDP, employs 43 percent of the Indian workforce and just the processed commodities trade alone is over $500 billion annually.
“With more than 500,000 food processing units in the country, Poshn adding tremendous value which will remain critical to this sector for decades, that is in need of a rapid digital transformation.