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Food start-ups stand tall to maximise India’s agricultural wealth
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Monday, 18 October, 2021, 08 : 00 AM [IST]
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Nandita Vijay, Bengaluru
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Facilitating innovation with technology and finding new consumers food startups in India from iD Foods, MTR to Pagariya Foods, Zomato, Country Delight, Licious, Tendercuts Fresh to Home, Rebel Foods, The Caffeine Bar, Lil’ Goodness, Eggoz from Nupa Technologies, 24 Mantra, HFNMandi.com, Timios, part of FirmRoots, are scripting one success story after another since their launch. These could e foray into new markets, novel product innovations, advanced technology, seamless supply chain management to unique machine designs.
Food startups in India succeed because their ability to commercialise a research innovation backed by science and market muscle. There is extensive academia support with elaborate funding options from private equity venture capitalists.
India is the hub for food startups:
Presence of agro climatic zones, traditional agriculture practices giving scope for modern technology to succeed. The new age-entrepreneurs are harnessing the potential to compete either as a monopoly or in an Oligopoly market. In their area of excellence, they are working to build the business through investments in technology for supply chain excellence, product innovation, talent, and vendor partner upgrades.
There is an ecosystem and according to research study startups in the country raised US$ 12.1 billion in the first half of this year. As of August 2021, India has produced 24 unicorns in 2021. In this category, food startups that have achieved a unicorn status are Grofers, Rebel Foods and Licious.
When Zomato acquired 9.16% stake of Grofers India, the online e-grocery firm for Rs 518.2 crore it entered the unicorn club.
Rebel Foods which perates multiple quick-service food brands independently, facilitating deliveries through its app or through online food delivery platforms like Zomato and Swiggy raised $175 million in a Series F funding round led by Qatar Investment Authority along with existing investors Coatue and Evolvence saw the startup’s valuation zoom to $1.4 billion.
The Bengaluru based company Licious, emerged as India’s first D2C Unicorn post receipt of funding worth $52 million led by IIFL AMC’s Late Stage Tech Fund.
The D2C market in India is at an inflection point and is expected to attain a size of over $100 billion by 2025. D2C has the advantage of direct consumer connect that helps Licious identify gaps and position their products accordingly.
Vivek Gupta & Abhay Hanjura, co-founders, Licious said, "Even though the funding for D2C sector has grown significantly, FMCG is still not considered the most attractive category. We expect that Licious' Unicorn status will change that. The fresh meats & seafood sector is still largely underserved and unorganised that holds a vast opportunity of $40 bn.
Fund access spurs success:
India has a vigorous startup ecosystem yearning to drive up the value-chain. According to reports, there are over 38,000 different Indian startups and also currently more than 5,000 investors that are active in the Asian country which indicates rapid growth in the Indian startup ecosystem.
Timios, part of FirmRoots Pvt. Ltd, is a packaged snack brand for children. Founded in 2016, the Bengaluru-based food start-up is funded by MTR Foods, Mysuru-based Rangsons and Paipal Ventures. In the last one year, the brand has served over 2.5 lakh customers and it currently receives more than 400 orders every day. snacks are an essential part of a child’s every day diet. “The market is full of opportunities. We have raised seed funding from MTR, Rangsons Technologies and Paipal Ventures. The funds were used towards product development, strengthening the existing distribution network and enhancing the backend operations,” said Aswani Chaitanya, CEO and co-founder, Timios.
Harshavardhan, co-founder & CEO, along with Pariksha Rao, co-founder and chief nutrition officer, Lil’ Goodness, stated, “We raised a seed round from reputed investors. This includes a US-based Indian family office and a Japanese institutional investor. Fund raising is an ongoing process. We delayed our fund raise since we have enough in the bank to scale our business for some more time. We would ideally look to raise funds once there is greater certainty of the Covid situation. Like any early stage high growth startup, funds are required to grow the business, at the right time.”
Tech gives booster shot to Indian agri landscape and food processing:
From artificial intelligence, block chain, machine learning, data analytics, robotics, augmented reality to online ordering apps, food delivery systems, inventory management software, and restaurant POS (point of sale) system the digital applications have enabled start-ups to spring up with offerings.
“With the implementation of high-end quality checks now at Indian farms, the demand for Indian coffee is growing. Roasters across the world are no more looking at Indian coffee as a country as a whole but are being particular about the farmers they work with,” stated Poojya Prasad, co-founder, The Caffeine Baar.
Coffee in India is grown under shade, and the coffee plantations are still producing coffee using traditional methods, getting technology to the plantation is not an easy task. Not too much new technology is used at the coffee plantation. “We have always used blockchain to manage our estates in a traditional manner, but we have not used any particular software to manage the blockchain system, whereas AI has not been used at the estates,” said Prasad.
Novel concepts with convenience to woo consumers:
Lil’ Goodness is a kids food and nutrition brand transforming how 100 million kids in India snack- from junk to yummy and healthy too It is positioned as the 'daily dose of goodness' for kids and their families through its products which solve two major problems . The first is the nutritional deficiencies of Vit. B, C, D , Minerals: Zinc, Calcium, Iron, protein deficiency and excess of unhealthy fats and carbs. This affects at least 100 million kids in India. The second is to keep fussy eating behaviour of kids at bay by offering variety, change and yummy options that convince parents who insist on being healthy.
Early this year, agri-tech startup Harvesting launched HFNMandi.com to help Indian farmers directly market & sell their agri-products to wholesale buyers. HFN Mandi is a free online service for farmers to connect and transact with genuine buyers across India & internationally. The platform provides farmers with larger market access and better price realisation. Prices are decided by the farmers and orders are fulfilled by farmers themselves. “For buyers, it provides not only access to the largest selection of crops under a single roof at attractive prices, but also provides a seamless experience of purchasing agri-produce in wholesale including the booking of transportation, quality check on the ground, legal contract, escrow of funds,” stated Ruchit Garg, Founder & CEO, Harvesting.
India’s food startup story cannot be complete without Swiggy and iDFresh. The two companies have broken new grounds to succeed in the competitive market.
Swiggy, India’s leading food ordering and delivery platform in India, as part of Prime Minister Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) Scheme, Ministry of Housing & Urban Affairs (MoHUA) inked an MoU to onboard street food vendors on its ecommerce platform, giving them online access to thousands of consumers and help these vendors grow their businesses.
In the case of iD Fresh which kicked off operations in 2005, has come a long way and set several milestones. The company funded by Premji Invest and Helion Venture Partners has a presence in over 50 cities across India, the US and UAE, with a team of more than 1,500 employees. It manufactures and markets 65,000 kg of Idly/Dosa batter per day, along with Parotas, Vada batter, Chapati and paneer to over 30,000 retail outlets. A few years ago, the company took the organic pathway to transition its entire product line and operations after being awarded certifications from the Agricultural and Processed Food Products Export Development Authority (APEDA), National Programme for Organic Production (NPOP), United States Department of Agriculture (USDA) and Jaivik Bharat, under the Food Safety and Standards Authority of India (FSSAI).
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