Why do 90% of agri-tech startups fail in India?
The first & foremost reason associated with the failure of Indian agri-startups is the lack of innovation. In the recent survey of 2021, India has drastically moved to 46th position in Global Innovation Index.
2. Out-dated models of Agri-startups
Funding for agri startups are rejected by investors as they do not meet their expectation level due to out- dated models of existing agri-tech startups. Perhaps, viable business model cannot be created in case of all agribusiness startups.
3. Lack of mentorship & guidance
Lack of proper mentorship & guidance is however lacking in agribusiness startups. Young agripreneurs find it difficult to gain knowledge from expertise, develop their pitching skill, find resources, acquire networking skill & means to seek funding from angel investors.
4. Competence of Agri-Incubators
Most of the agribusiness incubators focus primarily on other money making sectors like IT, health, E-commerce, etc. Indeed, agribusiness incubators are comparatively low in number functioning in the country which shatter down potential of young agripreneurs who want to succeed. Many of the agri-tech startups find it difficult to scale up their business. Moreover, the agribusiness incubators available in agricultural universities & research institutes are also in their initial stage of learning. In order to equip young agripreneurs to scale their startup, incubators have to be strong in networking with professionals in respective field of expertise, who can provide unmatchable guidance to budding entrepreneurs.
5. Lack of seed fund
6. Small land holdings & Reluctant to Technology Adoption
Indian farmers characterized by small land holdings are alien to the high end technologies like AI, ML & feel expensive to implement at their farm level, not knowing how much tiresome work it can cut down & how far adopting these technologies can contribute to their crop's yield.
7. Less consideration of Farmers' issues by Urban Investors
As most of the investors hail from urban areas, they're indeed well-versed how to solve the urban demands. However, they're less considerate of the needs to address & the demand of Indian farmers to satisfy which is the ultimate aim to begin a solution based agri-tech startup.
8. Price war with retailers
Wholesalers & Retailers procure fresh farm produces at cheaper price from farmers & sell to consumers at a higher price to gain abrupt profitable margins. Indeed, it's ultimately the market functionaries getting enormous benefit than the stakeholders. This is sad but the reality condition prevailing to the Indian farmers. Sometimes, middlemen procure produces from farmers at cheaper price & sell to consumers at an unfair price in their own brand labels. This hurts the revenues of major Agritech players with their USP as organic produce, which they cannot sell at lower prices.
9. Less adoption of B2C Channel
Taking the path of retail channel will not be profitable for agri-tech startups as many of the big retailers have gained momentum right from COVID. Instead, taking B2C channel can supply end users with high quality produce at affordable price under traceable supply chain. However, the majority of startups in India fail to adopt B2C channel.
10. Lack of supply chain transparency
To run a successful agri-tech business, supply chain visibility is an integral key. Due to perishable nature of agriculture commodities, there comes security issues on every stage of supply chain in agriculture. Perhaps, it's difficult to track traceability of lot from farm to fork due to supply chain complexity especially with agricultural produces.
Thus, at the right stage of agribusiness, carrying out right technological intervention can preserve quality of produces, enable easy traceability, reduce wastage due to perishable nature of produces, ensure proper storage & transportation.
11. Lack of Tech-savvy professionals
Most of the agripreneurs lack technical know how of accessing health status with regards to cattle diseases & crop production using IOTs, resulting in lower crop productivity, which in turn results in lower returns. Thus, collaborative efforts of agripreneurs with tech players can make farming more successful ensuring high returns, as well as protect our environment.
12. Non-availability of internet facilities
Still now, there exists several remote rural regions lacking strong internet connectivity. In those regions, implementing digital agriculture technologies like IOTs, AI & ML become complicated. In order to set up agri startup, the respective agri-tech company needs to ensure the availability of internet connectivity in remote rural regions.
However, some other reasons for failure of agri-tech startups in India in their initial stage of establishment may include:
- Absence of a product-market fit
- Poor marketing strategy formulation and implementation
- Cash flow problems.
Use of high end technologies like AI, MI to improve yield as well as to conserve fertility is a new concept to Indian farmers, which will take time to be adopted by farmers & for agri-startups to reap profits. Also young entrepreneurs must be careful with expenditure for initial set up of their agri-tech startups, in the case that not many investors are willing to come forward for funding agri-tech startups due to uncertain climatic nature of India in which the agriculture is entirely dependent on..
"A true leader doesn't get doomed with failures but rather tuned to learn from those failures which are success in disguise for his/her dream startup"
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