India’s agrifood start-ups close record-breaking $4.6bn in funding in FY22

India has overtaken China as Asia-Pacific's biggest funder of agrifood tech innovation, attracting record levels of investment in the fiscal year 2021-22, according to AgFunder and Omnivore’s fourth India AgriFood Startup Investment Report.

With $4.6bn in agrifood venture capital investments in FY22, India’s agrifood ecosystem is finally receiving the funding required to tackle the challenges faced by smallholder farmers, rural communities, agricultural value chains, and food systems.

India’s agrifood startup investment jumped 119 per cent year-over-year (y-o-y). Deal activity also increased to 234 in FY22 compared to 189 deals in FY21.

Jumbo deals in downstream food delivery categories bolstered funding totals while technologies operating closer to the farm closed more deals.

Farmtech start-ups closed $1.5bn in funding, a 185 per cent increase on the $527mn raised in FY21. Rapidly improving technology adoption buoyed this segment of agrifood tech, together with steady demand for traceable quality produce, encouraging innovations aimed at ironing out chronic inefficiencies.

As with other parts of the world and particularly in the wake of Covid-19, food delivery services inflated total investment level, with Restaurant Marketplaces and eGrocery startups securing close to $3bn – around 66 per cent – of total investment in the fiscal year (FY) ending 31 March 2022. But increasing deal activity for upstream innovations shows promise.

Downstream start-ups raised $3.8bn in FY22, a 115 per cent increase from $1.77bn in FY21. This significant growth is due to Swiggy, which raised $1.2bn accounting for 38 per cent of total investment in Indian agrifood start-ups.

e-grocery start-ups raised $934mn across 42 deals, a four-time jump from $244mn across 25 deals in FY21.

Investment in Online Restaurants & Meal Kits saw a remarkable recovery at $301mn in FY22, almost four times more than $64mn in FY21.

The Premium Branded Food & Restaurants category saw a marginal 9 per cent increase in funding.

Upstream deals surpassed downstream deals in number for the second year in a row: 121 upstream deals closed in FY22 vs 113 downstream deals. Upstream investment leaped 300 per cent to $1.2bn up from $312mn. The participation of generalist VCs, bigger deal sizes, and higher deal count contributed to this increase.

Michael Dean, founding partner, AgFunder, said: “India has always been a leading agrifood tech ecosystem, ever since AgFunder and Omnivore started in the early 2010s but to see investment levels surpass all other countries in the Asia-Pacific region and compete on the global stage is indicative of the impressive range and depth of innovations coming from the country and potential to impact the agrifood industry as a whole.”

Mark Kahn, Managing Partner, Omnivore, said, “The investment trends are proof that the agrifood tech space can no longer be called niche. It has caught the attention of generalist VCs the world over who understand that agrifood tech is key to the transformation of India’s massive agricultural sector and rural economy.”