Indian Supply Chain Management Startup Raises $1.5M Seed Round
August 15, 2017
Indian agtech farm-to-business (F2B) startup Crofarm raised a Rs 10 cr (US$1.5 million) seed round that included U.S.-based Factor[e] Ventures, Mukul Singhal and Rohit Jain, former principals at SAIF Partners; angel investor Himanshu Aggarwal; co-founder and CEO of Aspiring Minds, Ashish Gupta; and vice president at Paytm, Sunil Goyal, among others.
Founded little over a year ago by Prashant Jain and Varun Khurana, Crofarm is aiming to disrupt and modernize India’s fresh food supply chain. Through its app Crofarm Agriproducts, the startup sources produce directly from its network of more than 10,000 farmers, which it provides to large scale retailers including Big Basket, Grofers, Reliance Retail, Jubilant Foodworks, Big Bazar, and Metro Foods.
Based on the orders placed through its digitized platform by retailers, Crofarm is able to advise farmers on how much to harvest and what specifications retailers are looking for in their produce. This system ensures zero waste between the field and the store, and provides the freshest, highest quality produce for delivery to customers.
“We hope to reach a stage where we will be able to direct farmers on the kind of produce that they should grow in keeping with rising demand,” Khurana told the Economic Times.
“Crofarm uses a combination of smart logistics and a sophisticated technology platform that allows reduction of post-harvest losses by 30 percent, and its asset-light business model lends itself to scalability nationwide,” Satyajit Suri, country director for Factor[e]’s India operations, told VC Circle.
Crofarm’s revenue is generated through a commission structure, with the startup taking an approximate commission of 5 percent on less perishable produces such as onions and potatoes, a 15 percent commission on green vegetables, and up to a 20-25 percent commission on fruits and exotic foods. For farmers, the systems enables them to earn 25 percent more compared to selling their produce to mandis (open markets).
Currently the company has distribution centers in Delhi, Mumbai, and Bengaluru, but plans to use the funding from this round to support its expansion to 20 cities within a year, and eventually its expansion into the cold supply chain.
“We aim to create a dependable supply chain—and eventually expand to a cold supply chain—across India that supports farmers and provides retailers with the freshest and affordable farm produce, mainly fruits and vegetables, in an efficient manner,” Khurana told BusinessLine. “This would, evidently, eliminate the multi-layered middlemen and intermediaries and the antiquated system followed by the mandis, that shoot up the price at which the produce is sold to the consumer.”
India is a top global producer of many agricultural products – producing 81.285 metric tons of fruit and 162.187 metric tons of vegetables, or approximately 14 percent of the global supply – according to the research article Scope of Supply Chain Management in Fruits and Vegetables in India, published in the Journal of Food Processing & Technology. However, due to inefficiencies throughout the country’s supply chain, India sees food waste of up to 67 million tons each year – more than the total food production of Great Britain, reports Zee News.
Often in the agricultural investment field, challenges are seen as opportunities for innovation and return on investment – and investors are seeing these inefficiencies in India’s supply chain as a means to not only have a positive social impact, but as a path to positive returns.
For example, in February of last year, private equity firm Asia Climate Partners acquired a stake in Delhi-based cold chain logistics company ColdEX Logistics Pvt Ltd through a total investment that sources revealed to the Hindu Business Line would reach US$36.4 million over two years.
At the time of the announcement, Anand Prakash, managing director of Asia Climate Partners, told Deal Street Asia, “We see tremendous potential in both the company and the cold chain logistics sector in helping improve resource efficiency and reduce food wastage in India. Asia Climate Partners will bring its institutional support to help the company build a pan-India presence and provide a total solution to its customers.”
Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at firstname.lastname@example.org
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