Investments in Indian Agri-tech Startups Decline by 45% in FY23: FSG Report

• ByStartupStory     |    September 25, 2023

Investments in Indian agri-tech startups have experienced a significant decline of 45% between the fiscal years 2021-22 and 2022-23, primarily attributed to rising global interest rates and heightened investor caution amid increased uncertainty, according to a report by consulting firm FSG.

Global agri-tech investments also faced a 10% decrease between calendar years 2022 and 2023, as outlined in the report.

FSG anticipates this funding slump to persist into FY24 before experiencing a resurgence in FY25. The report suggests that startups will likely prioritize profitability during the next financial year.

Rishi Agarwal, Managing Director and Head-Asia at FSG, commented on these trends, emphasizing that the Indian agri-tech sector’s performance is closely linked to global economic dynamics. He suggested that startups should utilize periods of reduced investment to refine their business models and work towards profitability.

The report, titled ‘India’s Unfolding Agri-Tech Story: Updates and Emerging Themes in India’s Agricultural Technology Sector,’ notes that India’s agri-tech sector enjoyed a prosperous year in terms of venture capital funding in the FY21-22, followed by a substantial decline in FY23 amid a global slowdown in funding.

While the number of investment deals increased from 121 in FY22 to 140 in FY23, the total funding raised by Indian agri-tech startups plummeted from USD 1,279 million in FY22 to USD 706 million in FY23.

The report underscores that mid-stream agri-tech startups have shown signs of maturity, with investments mainly directed toward growth and late-stage funding rounds. For instance, 56% of investments in startups focused on output linkages and quality management were in their growth and late stages. Similarly, other mid-stream startups, such as those offering agri-carbon or agri-fintech solutions, saw 91% of their investments in these advanced stages.

Moreover, many midstream tech startups have embarked on inorganic expansion through strategic acquisitions, the report noted.

Follow Startup Story