How Karkhana.io and BharatAgri are setting the foundation for Digital Bharat

India’s smaller towns and cities have been at the centre of a digital revolution. These locations have not only embraced technology but have also been birthplaces of innovative products and services. However, these locations are not always the top priority for technology-first companies. And it’s here that two startups are striving to bridge the gap. 

Karkhana, an on-demand manufacturer-focussed platform, and BharatAgri, a farming technology and advisory platform, are working with solution seekers in Bharat to enable a digital transformation. While their business models might be different, they have a common thread binding them together: Arkam Ventures. 

Karkhana.io has recently raised $6.3 million in a round led by Arkam while BharatAgri raised $4.3 million in Series A funding from Arkam in October 2023. Both startups have a passion for making a difference in India’s hinterlands through the effective use of technology. 

“We are serving the MSMEs of India by aggregating capacities of multiple MSME manufacturing suppliers. We help them get business across different product categories across geographies and in a way where they don’t have to invest in their business development efforts,” says Sonam Motwani, Founder and CEO, Karkhana.io.  

Karkhana.io's tech-enabled platform offers sourcing and contract manufacturing solutions to original equipment manufacturers (OEMs) and technology companies. Leveraging its network of manufacturing MSMEs in India, the startup works with OEMs in various sectors, such as electric vehicles, medical equipment, consumer electronics, and aerospace. It has a monthly business of Rs 7-8 crore.

BharatAgri is doing something similar in the agriculture sector. The startup offers an array of technology-led solutions for the country’s 140 million farming families. Farmers can understand the farms’ productivity shortfalls and access seeds, fertilisers, and insecticides to improve crop output. The startup gets over 35,000 orders every month through the BharatAgri platform.  

“BharatAgri first provides scientific techniques for farms. Farmers can register their farm, following which we identify the problems and offer personalised solutions based on the weather, soil, and farm,” says Siddharth Dialani, Co-founder, BharatAgri. 

The efforts of Karkhana.io and BharatAgri hold relevance when Middle India is among the biggest untapped opportunities in the country. The demand potential from this segment, which constitutes ~400 million Indians, is plenty. Even Arkam's Fund II, with a $180 million target corpus, focuses on Middle India or Bharat. And that’s also where Karkhana.io and BharatAgri have found a perfect fit. 

Building for Middle India

MSMEs are cognisant of the fact that digitisation is essential to growth and scale. However, the scale of adoption might vary from one manufacturer to another. Sonam explains that Karkhana.io envisaged building a smartphone application that was easy to use for machine operators. 

"We primarily conduct our business on the field. We build with certain MSMEs in a certain cluster and then connect to other MSMEs via them,” adds Sonam. 

Karkhana.io's approach has been to visit every factory, explain the platform, and encourage them to use the platform. Sonam explains that the startup also pays an equal emphasis on the after-sales service by checking in with the MSMEs to identify any technical issues and usage pattern fluctuations. 

“We want to become a platform that can not just help MSMEs utilise their idle capacity but also help them access business opportunities in tune with the previous manufacturing experience,” she says. 

Siddharth and his startup BharatAgri have a similar goal for farmers. He explains that almost 1 lakh farmers are using the platform to access scientific information. 

“Assistance from our agri-doctors has helped farmers increase production from their farms by over 20% even as the costs have reduced by 10%,” he adds. BharatAgri has also made a conscious decision not to link the scientist's and doctor’s key performance indicators to product sales. Hence, the sole aim is to improve agricultural output, and Siddharth believes that this strategy improves repeat usage among farmers. 

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Enabling the digital shift 

Middle India has a different buying behaviour wherein local suppliers and stores are often viewed as a superior alternative to e-commerce solutions.  

“Building for Middle India is difficult but exciting. But I didn’t want superficial feedback from my customers,” explains Siddharth. To ensure that he knows exactly what his buyers want, the BharatAgri co-founder lives at least seven to ten days a month in villages, with farmers, to observe their concerns and purchase patterns.  

By observing farmers from close quarters, he has also realised that farmers are open to spending money on quality solutions. 

“There is a misconception that all farmers are poor and it is tough to generate revenue from this segment. However, a significant number of farmers have the money to spend. They are just looking for solutions to add value to their business,” says Siddharth. 

At Karkhana.io, Sonam and her team follow a similar philosophy. The idea, she says, is to understand the specific needs of the MSMEs instead of offering generic technology solutions. 

“For instance, vehicles of the same category from two different OEMs may use completely different components. Hence, it is our responsibility to understand the specifications, including the materials, the high precision manufacturing processes, and adhering to the quality standards,” she says. 

Superior quality products produced consistently, a holistic feedback loop, and innovation based on customer needs are some factors leading to the success of Karkhana.io and BharatAgri. 

Despite challenges in the previously untapped Middle India, ventures such as Karkhana.io and BharatAgri strive to keep delivering higher value. And that is where the moat works so well.