What to expect from the agritech sector in 2023

The year 2022 was a testing for startups from an investment standpoint owing to macroeconomic uncertainties leading to a downward trend in investor sentiment. However, some sectors are still perceived as promising such as agritech, which continues to be resilient through 2022 and is projected to grow by leaps and bounds in 2023.

As per a report by Avendus, agritech paints an optimistic picture for India. As one of the top four food-producing nations of the world, the report predicts a $34 billion market by 2027 impacting almost 25 million Indian farmers.

The agritech sector is projected to grow in scale and roll out unicorns in the coming years with 2-3 worthy companies reaching the cusp of initial public offerings (IPOs) in the next 5 years.

The sector’s resilience towards external disruptions has stoked investors into betting big on startups that have scalable agtech solutions to address some of the rampant issues that farmers and businesses face alike.

Given that agritech is a relatively new area for equity investment at scale, it is still witnessing a surge in deal sizes across all stages of funding— from those raising their first institutional investments to the ones having conducted several fundraising rounds. There has been an upswing trend in huge first-time deals indicating that agtech solutions that look promising on the surface are able to raise funds at scale and at a faster rate.

In view of this, the year 2023 will see an uptick in active participation by private growth investors. From an investment viewpoint, private investors will be laser-focused on startups’ path to profitability in 2023, and the unit economics at play. Due to the rapid growth in world population that will further choke the food systems across the globe – there is a growing demand for technological advancements and interventions in the agriculture field which will naturally make it a playground for public and private investments.

All this predicts an optimistic outlook for agritech as reinventing the traditional agriculture space through accelerated measures is the need of the hour and involves participation by entrepreneurs who have unique solutions and a greater risk appetite than the public sector.
Output market linkages, improving input access for farmers, and new-age supply chain mechanisms are some of the solutions that have seen a positive investment sentiment. Similarly, farmer-centric platforms will also see an inflow of capital against equity.

Another trend that will see an upward trajectory is strategic investments made by bigger startups in acquiring smaller players in order to bring collaborative and integrated offerings to the table. This will help in strengthening stakeholder value creation in the agrarian ecosystem. Already the past few years have seen mergers and acquisitions led by leading startups such as Waycool and Dehaat.

However, a startup’s growth, by and large, will rest upon capital efficiency and avoiding high cash-burn models in order to instil confidence in investors who have certainly turned hawkish and will continue to remain so due to external global factors.

The writer is CEO and founder of Krishify

ETRise MSME Day 2022 Mega Conclave with Industry Leaders. Watch Now.

Source link

Spread the word!

Leave a Comment

Your email address will not be published. Required fields are marked *