Agri Start-up

Presented by : Sahil SwanglaM.Sc. (1st year)

Division of Agricultural Extension ICAR- Indian Agricultural Research Institute, New Delhi -

110012

Outline of the Presentation

Introduction

Incubators

Phases of Startup

Need of Agri-Startup

Challenges

Strength

Applications

Role of IARI

Case Studies

Ph.D. Thesis

Current Scenario

Government Support

Recommendation

Introduction

• A start up is a company that is just beginning to develop

• Generally small

• Initially financed and operated by a handful of founders or one individual

• They offer products and services that is not currently being offered elsewhere in the market, or that the founders believe is being offered in an inferior manner

In the beginning, expenses are more than the revenues

• Because of more expense, they require financing

• They can be funded from different sources

Incubators

• A firm engaged in the business of fostering early-stage companies through the developmental phases until such time as the company has sufficient financial, human and physical resources to function on its own. 

• It can either be a non-profit or a for-profit entity

Incubators can provide assistance via

1. access to financial capital through relationships with financial partners

2. access to experienced business consultants and management-level executives

3. access to physical location space and business hardware or software

4. access to informational and research resources via relationships with local universities and government entities.

• A startup that can prove its potential may be able to attract venture capital financing in exchange for giving up some control and a percentage of company ownership.

A New Definition in India

• As per GSR 180 (E) - an entity shall be considered as a ‘startup’-

a) Up to five years from the date of its incorporation/ registration

b) If its turnover for any of the financial years has not exceeded Rupees 25 crores

c) It is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property

Source: Department of Industrial Policy and Promotion, Ministry of Commerce and Industry

Agri Startup

Start up in the field of Agriculture is called as Agri Startup

NEED OF AGRI-STARTUPSIndia’s biggest employer- Agriculture

Need of Agri Startup

• Agriculture is the backbone of Indian economy• Agriculture is India’s biggest employer• Huge employment opportunities for the farmers’ and

agricultural graduates• Everyone needs food, that means depending on the kind

of Startup, it can have a large number of clients and customers

• Can promote rural welfare• Will surely help in faster growth of Agriculture sector in

India

PHASES OF A START-UPFrom idea to phases and team to organization

Phase 1 - Ideating

• Entrepreneurial ambition and/or potential scalable product or service idea for a big enough target market.

• Initial idea on how it would create value

• One person or a vague team; no confirmed commitment or no right balance of skills in the team structure yet

Phase 2 - Concepting

• Defining mission and vision with initial strategy and key milestones for next few years on how to get there.

• Two or three entrepreneurial core co-founders with complementary skills and ownership plan.

• Maybe additional team members for specific roles also with ownership

Phase 3 - Committing

• Committed, skills balanced co-founding team with shared vision, values and attitude.

• Able to develop the initial product or service version, with committed resources, or already have initial product or service in place.

Phase 4 - Validating

• Testing assumptions for validated solution to demonstrate initial user growth and/or revenue.

• Initial Key Performance Indicators (KPI’s) identified

• Can start to attract additional resources (money or work equity) via investments or loans for equity

Phase 5 - Scaling

• Focus on KPI based measurable growth in users, customers and revenues and/or market traction & market share in a big or fast growing target market.

• Can and want to grow fast. Consider or have attracted significant funding or would be able to do so if wanted.

• Hiring, improving quality and implementing processes

Phase 6 - Establishing

• Achieved great growth, that can be expected to continue. Easily attract financial and people resources. Depending on vision, mission and commitments, will continue to grow and often tries to culturally continue like a startup

• Founders and /or investors make exit(s) or continue with the company

Ideating Concepting

Committing

Validating Scaling Establish

ing

• This simplified framework describing Phases of a Startup can help both the startup entrepreneurs and those supporting them in communicating much faster about startups current development stage and about what support is available or actions needed to get to the next stage

CHALLENGES IN AGRI-STARTUPS

Challenges in Agri Startup

• Lack of awareness among startup about possible capital raising options

• Lack of understanding on part of the investors community as this sector lacks glamour quotient

• Farmers which are the main customer of startup are also skeptical to new innovations, though things are significantly improving

• Regulations in agricultural sector is complicated as it is a state subject with a strong influence from the Central government, state subject with a strong influence from the Central government which might create confusion for various stakeholders

Challenges in Startup

• Though there is increasing support from the government, there is limited consistency in the policies followed which adds to the challenges

• Today, Problem is not whether the technology is available. The problem is whether there are India specific solutions

• Government policies for agriculture are treated as a poverty alleviation method rather than a means to enhance productivity and raising incomes, and this keeps entrepreneurs out

• Investors tends to view agriculture as a risky proposition

Challenges

• Owing to the huge productivity gaps and large market size, agricultural start-ups have one of the biggest potential in India. But agriculture is a multiple operations enterprise, where about 10 different operations starting from soil preparation to storage and transport contribute to overall productivity and profit. This makes agriculture a complex system for start-ups to target.

• So the biggest challenge for start up is to target right area of the agricultural operations.

Strength

• Market size is huge and the problem faced can be solved

• If any startup can solve even few of existing problems faced by the sector, it is possible to create multi-billion dollar opportunities

• Agriculture sector is recession proof and can act as a portfolio diversification from an investor perspective

• Public Private Partnership can work together which can help in introduction of private sector technology and innovation to the public sector dominated field

APPLICATION TO THE PROBLEMS

Agricultural Graduates

• Linkage of Agri-Startup, Startup India and Skill India with the Agricultural Graduates especially who are unemployed

• 13.3% Unemployment rate in 15-29 age group in 2012-13: Survey– (Source: Press Trust of India, Dec 1, 2013)

• More than 75 million youth in worldwide are looking for work (According to UN International Labour Organization)

• Capacity utilization of Agricultural graduates

ARYA- Attracting and Retaining Youth In Agriculture

• Youth are three times more likely to be unemployed than adults

• Most youth find it as an unattractive profession, especially the way it is practiced traditionally

• ARYA- Constituted by ICAR• Aim- to suggest ways of attracting youth to

agriculture

• Agri-Startup can be one of the activity that can attract the youth and can provide them a profitable venture

Skill India Program

• Currently, Agri-startups are suffering with the inadequate talent in the job market, due to which the creation and growth of agriculture startups are facing challenges

• But these constraints can be removed with the help of Agricultural Skill Council of India (ASCI) which is providing ample opportunities for the individuals with agriculture background to develop their skills as per the competency standards and qualifications

• So, it is necessary to link them to the Skill India program

ROLE OF IARI IN AGRI STARTUPS

“Arise , Launch Pad for Agri-Startups”

Arise – Launch Pad for Agri Startups

• Arise” is the Agribusiness Incubation program of ZTM-BPD UNIT, IARI in association with ICAR Institutes & State Agricultural Universities of North India. 

• After the success of first edition Agri Biz Idol Camp cum incubation Workshop in 2014, The Second edition of Arise is an initiative in sync with the Govt. of India policy of “Start-Up India” and “Skill India”

• Aim- to provide a platform for budding Agripreneurs to provide innovative solutions to today’s market needs. 

Who can Apply?

• Smart Farmers• Youth • Students• Women Entrepreneurs• Anyone interested in

Agribusiness

What they are offering?

• Capacity building & pre-incubation support• Technical Mentorship• Business Mentorship• Incubation Support• Investors Pitch support• Facilitation for Funding and Investments

Timeline for Arise Incubation Program

9th June- Event Launch

30th June- Applications Opening

4th August- Application Submission Deadline

22nd Aug- Preliminary Selection

25th Aug – 8th Sep – Pre-incubation Mentoring

17th Sept- Final Selection Day

19th – 24th Sept – Business Incubation Workshop

22nd December- Investors Pitch Day

Achievements

• 22 Business Planning and Development units (or Agribusiness Incubators) have already established in the ICAR & SAU institutions in the last four years

• Business Planning & Development units all over India are currently providing incubation support to 1,218 entrepreneurs/Agri based startups, out of which 91 ventures have successfully graduated from the incubator

(Source: NAIP, Final Report 2014)

PH.D. THESISA study of Agri-Entrepreneurship Behavior of Farmers- Dipika Hajong

Frequency distribution of Agri-entrepreneur characteristics (N=20)

S. No. Entrepreneurial characteristic/attribute

Frequency Percentage

1. Innovativeness 14 70

2. Social Network 12 60

3. Risk taking 11 55

4. Resiliency 8 40

5. Autonomy 7 35

6. Desirability of Business 7 35

7. Expected utility of Business 7 35

8. Scientific orientation 7 35

9. Manageability 7 35

10. Need for Achievement 5 25

S. No.

Entrepreneurial Characteristic/ Attribute

Frequency Percentage

11. Critical Thinking 5 25

12. Persuasiveness 5 25

13. Self determination 4 20

14. Inquisitiveness 4 20

15. Sharing normative beliefs 3 15

16. Hope of success 3 15

17. Internal locus of control 2 10

18. Opportunity seeking 2 10

19. Self efficacy 2 10

20. Proactive 1 5

Conclusion out of the Thesis

• Innovativeness, Social Networking, Risk Taking and Resiliency were the top four Agri-entrepreneurial characteristics according to the research findings

• Innovativeness is necessary for the Agri-entrepreneur to devise and adopt new methods of production, processing, marketing and problem solving considering the socio-economic and agro-ecological challenges of his farm and firm

• Social Networking highlights that success of Agri-enterprise is not only influenced by agro-ecological factors, but also in activities such as organizing and mobilizing people to solve a problem, establishing rapport with technology developers, fellow farmers and customers, etc

• Moderate risk taking is prerequisite to establish an enterprise and running it

Conclusion out of the Thesis

• During the preliminary selection phase of the incubation program, individuals with these Agri-entrepreneurial characteristics can and should be selected for the support

Or• These characteristics can be installed upon them

through capacity building during the pre mentoring support

Conclusion out of the Thesis

AGRI-STARTUPS LAUNCHED RECENTLY

Case Studies

Omnivore partners

• A venture fund investing in early stage agriculture and food technology companies in India

• The firm supports entrepreneurs who are developing solutions to improve farm productivity, increase agricultural sustainability, modernize agri-business supply chains and promote farm-sourced food products

• Provides risk capital to venture involving Ag-tech and food tech solutions for India

• Also , they try to help the entrepreneurs by linking them with various other stakeholders who provide financing to Agripreneurs and try to increase the source of capital available to them

Farming-as-a-Service

• It offers services through the entire value chain in farming- from land preparation to crop harvesting

• They can also play an important role in financial inclusion of farmers. They collect comprehensive information of the farm and on the basis of that provide correct information to banks which provide credit/loans to farmers

EM3 Agri Services

• Can reduce the impact of financial loss through high productivity

• EM3- farm machinery vehicles on demand

• Pay-per-use mode

• Because most farmers cannot afford farm machinery

• Target is to reach 90 % of the farmers

Various other Agri-Startups

• Input – Manish Agri Biotech, Richcrore, Sri biotech,

Super Agree Seeds, Barrix Agro Services, MITRA, Global Easy Water Project

• IT Services– Reuters Market Light, Basix Krishi, Mobile in

Mud, Skymet, Uniphore, Eurvaka Tech

Present Scenario

• Funding for Indian agricultural startups declined to $56 million in 2015 from $123 million the year before

• In 2015, also a draught year, just 20 agriculture-related startups raised money, but $6 billion was invested overall in tech startups that year.

• Agriculture startup attracted less than 1% of the total

Source: Tracxn, a startup activity tracking platform

Government Support

• Important stakeholder in agricultural ecosystem• Farm extension services via Agricultural Universities• NABARD, ICAR and other allied institutions can provide a

significant value addition to all the stakeholders• Provides subsidized financing to improve the profitability

of farming sector• Government is also supporting Private incubators in recent

times• Recent Initiatives of ‘Startup India’ and ‘Skill India’

Recommendations

• Many of the Agri startup are inspired by western countries with the intention of solving the problems. But most of these people have no idea what the problems really are. Because these ideas mostly fit the developed countries which are non-agrarian country.

• So such startup need to be encouraged which understand the farmers’ background and can visualize the problems from the farmers’ point of view.

• ICAR can become a nodal agency for technology licensing for private agriculture enterprises and Agri startups

• Agricultural Extension can play a major role in motivating and guiding the farmers to take up new Agri-startups and transforming their ideas into reality

“We have a million problems, but at the same time we have over a billion minds that can

solve these problems”

-Narendra Modi