Noida-headquartered agritech startup Arya has raised $6 Mn in its pre-Series B funding round. The investment has come in from agritech-focussed Omnivore and the company’s existing backer LGT Lightstone Aspada.
Arya cofounder Prasanna Rao told Inc42 that the company will invest the funds towards building flexible warehouse products, grow its warehouse receipt financing business, and set up a pan-India agri-warehousing marketplace. The company plans to raise its Series B funding by mid-2020.
Until 2013, Arya was part of the JM Baxi Group. At that time, Rao and Anand Chandra acquired a controlling stake in the company to take over the business. As an agritech startup, Arya provides post-harvest services across the agricultural value chain, including warehousing, warehouse receipt financing, rural storage discovery, collateral management and market linkages.
LGT Lightstone Aspada earlier invested in Arya’s Series A round in December 2016. Arya’s clients include farmers, farmer producer organisations (FPOs), financial institutions, SME agri processors, commodity traders and corporate agribusinesses.
Jinesh Shah, managing partner of Omnivore, said, “The Arya team is transforming agri storage and financing across rural India, making small-scale warehousing viable at the village level, which farmers desperately require.”
Arya claims its USP is the focus on smaller markets, smaller agricultural mandi, which are closer to farmers. One of the unique products by Arya is a bag based on hermetic technology which acts as a flexible warehouse. Rao told Inc42 that the startup is working to ensure that the supply and demand side are balanced. “We provide assurance on the quality and quantity of the produce and help farmers connect with the demand and more.”
The hermetic bag technology vacuum-seals commodities and this goes over larger gunny bags to protect perishable goods. The cost of this product, Rao tells us, is one-third of a brick-and-mortar structure. As of now, the company has deployed these bags to store 10K metric tonnes of products and is now looking to scale up the product. For this, the company is also looking to manufacture this within the country instead of importing it from a US-based company.
Arya claims that it currently manages over 2.5 Mn metric tonnes of agri commodities in its 1400 warehouses, with around 75% of its warehousing capacity located in primary and secondary (village and small mandi level) markets. Arya is also launching a rural storage discovery platform aiming to build a pan-India agri-warehousing marketplace.
Besides warehousing tech, the company also offers warehouse receipt financing via Aryadhan, a wholly-owned NBFC subsidiary. Aryadhan provides credit to farmers, FPOs and SME aggregators (processors/traders) who have stored agri commodities in the Arya warehouse network. Rao told us that the NBFC has a loan book of INR 60 Cr, and aims to close FY20 with INR 90 Cr-INR 100 Cr in the books.
Kushal Agrawal, partner and CFO of Lightstone Aspada said, “Arya has successfully demonstrated its unique ability to serve the hitherto underserved warehousing and warehouse receipt financing markets in primary and secondary geographies.”
According to DataLabs by Inc42, the agritech sector recorded total funding of $244.59 Mn in 2019, an increase of over 350% in the amount of funding in the agritech sector from the previous year.
With farming touted to be a $400 Bn industry in India, the market is big enough for startups in both the organised and unorganised segments to sustain and build scalable models.