Ankur Capital’s Rema Subramanian On The Game Of Investor Returns In Agritech

Ankur Capital’s Rema Subramanian On The Game Of Investor Returns In Agritech


Mumbai-based early-stage venture capital firm Ankur Capital claims to invest in transformative technology startups, particularly focused towards digitisation, science and technology and others

Ankur Capital has invested in 12 agritech startups, Captain Fresh, Vegrow, CropIn, Suma Agro, Bighaat and others, and has also exited from Carmel Organics, and two exits are in the pipeline

Aggressively investing in agritech startups, Ankur Capital also looks to fund 15-18 startups in the next one year

The climate of Indian agritech space is changing significantly. According to the latest industry report, the sector contributes to 16% of India’s gross domestic production (GDP) and employs 43% of India’s workforce. With the growing interest among the investors and startups, plus the relaxed regulations, the opportunity to fuel the sector is immense. 

Throwing light on the returns, Rema Subramanian, cofounder and managing partner at Ankur Capital — which is one of the early entrants in the agritech investment space —  said the agritech startups, typically, have been offering anywhere between 30-50% internal rate of returns (IRR). “However, in the last two years, there has been a significant shift, where we are witnessing 80-90% IRR. Not only in our portfolio companies, but across various deals where we are seeing 100% IRR,” she added.

At the same time, in terms of revenue, Subramanian said that a lot of agritech startups are witnessing a significant growth due to the digitisation that is happening across the spectrum. As the markets are opening up, companies are witnessing a revenue growth of about 100% YoY across the industry. 

Subramanian said that overall, it has been witnessing exponential growth. And said that the rate of growth is much faster because of the fact that the market is increasing, leading to more investors’ interest. “With investors’ interest going up in the sector, it is attracting a lot of capital which is further driving all the changes in the agri ecosystem.”

Based in Mumbai, Ankur Capital was cofounded by Subramanian, Ritu Verma and Krishnan Neelakantan in 2014. The firm claimed to invest in transformative technologies, particularly focused towards digitisation, science and technology, which addresses inefficiencies in the process across sectors.

Highlighting the ground reality of the agritech investing ecosystem, Subramanian said that there aren’t too many early-stage investors because of the fact that it is a new area. Therefore, it becomes imperative to have early-stage investors to identify potential startups and help them scale. At the same time, it also becomes crucial to have investors coming in at the later stages of investments,” she added.

For Subramanian, the promising areas within agritech and food supply industry include:

  • Digitisation of fresh food supply chain
  • Facilitating marketplace linkages
  • Improving agri-outputs through smart and precision agriculture
  • Developing alternative proteins technology

Creating Global Agritech Brands 

Six years ago when Ankur Capital started its journey, there were only a handful of agritech startups and investors in the ecosystem. But, in the last two years, that seems to be changing significantly. In a short span of time, Ankur Capital has invested in close to 12 agritech startups, including fresh-seafood platform Captain Fresh, fresh-food supply chain startup Vegrow, alternative proteins startup String Bio, sustainable agritech startups Suma Agro, agri inputs digital marketplace Bighaat, AI enabled SaaS stack platform AgricX among others, and also exited from organic-focused startup ‘Carmel Organics,’ and two are still in the pipeline.  

Currently, in its second fund (ACF-II), Subramanian told Inc42 that the fund invests in early-stage startups in agritech, healthtech, vernacular tech, fintech and edtech among others. With the fund size at $50 Mn, the average cheque size of the fund is at about $5 Mn per startup. Its latest fund is backed by British development finance institution CDC, alongside Dutch Good Growth Fund and government backed SIDBI. 

In its previous fund, agritech constituted close to 70% of the total investment. With its latest fund, the firm has dedicated at least 50%-60% for food and agritech startups. 

The Myth Around Agritech Returns For Investors

When it comes to returns and scaling up of startups in its portfolio, Ankur’s investment philosophy revolves around value addition among the stakeholders and scalability of the business that have global reference. 

For instance, one of its portfolio startups CropIn Technologies, which is into predictive-farming, Ankur Capital was one of the first investors and supported it to scale up to 50 countries. It is said to be one of the startups in Asia to have enabled an AI-based solution to drive digitisation, predictability, traceability in agriculture ecosystem.  

Often, there is this notion that the return on investment (RoI) in the agritech space takes longer than expected due to the slow pace of development in this field, and the time it takes for technology penetration to happen is also slow. 

Addressing this idea, Subramanian said that it is just a psychological perspective that people have, but that is not the case in reality. “As a matter of fact, all the sectors take longer than expected. In fact, we have had exit opportunities come by us, where some of the investors in the ecosystem wanted to buy our stake for almost 30X of valuation, however, we chose to hold on to it as we believe that there is scope for more returns,” Subramanian told Inc42, stating that the fund life is same across sectors.

Fund life is the time taken by an investor to exit out of business and collect their returns. For instance, the base of the fund life is typically eight years in India, and investors have the potential to extend this by another two years whereas globally, it is ten-plus-two years. 

With the rapid adoption of digitisation, the interest from the investors is growing significantly, be it angel investors or VC investors. At the same time, a lot of startups in the agritech space are providing great exit opportunities to the earlier investors. 

Further, Subramanian said that a lot of merger and acquisitions (M&As) are also expected in the next couple of years. “As traditional companies in the space are slowly realising the importance of digitisation, and are now looking at new technology. The need for them to buy existing technologies instead of trying to build from scratch is plausible,” she added, stating that this trend is forcing existing players in the market to start looking at M&As.  

In addition to this, a significant number of agritech startups, which are more towards providing supply chain related solutions, could be scaling very quickly and going to the market faster. “A lot of companies that I have spoken to have all said that their goal is to provide an exit to investors through an IPO,” shared Subramanian. 

At the same time, she believes that a lot of global players are looking at these startups that have a global footprint, and are trying to see if they can benefit from them. Also, strategic partnerships are on the rise, she added.  “We work with a lot of our portfolio startups in providing the right connections, industry experts specifically around marketing, technology, communications and business development,” the cofounder said. 

Besides providing capital assistance to startups, Ankur Capital under its mentorship and entrepreneurial wing called ‘Ankur Gro,’ claimed to provide a gamut of support to its portfolio startups and help them in various aspects, including operations, HR systems, processes and marketing and branding among others.  

(L-R) Rema Subramanian, Ritu Verma and Krishnan Neelakantan, managing partners at Ankur Capital

Ankur Capital On Agri Reforms & The Road Ahead 

The past month has seen frenetic activity in the agritech space thanks to the new farm reform bills introduced by the central government. Naturally, investors are keen on seeing startups make the most of the chances offered by the reforms. 

“Besides the fact that it has opened doors to multiple opportunities to farmers and startups, many agri-focused companies were already working around many of these restrictions in one way or another,” said Subramanian, stating that the latest reforms consolidated some of the trends that were already existing in the industry. 

However, the crux in the space relies on providing access to domain expertise so that the farmers, startups and other stakeholders can work in synergy to create better quality solutions around agri finance, logistics and storage among a whole range of things involved in the agri supply chain. Subramanian also said that the ecosystem needs more entrepreneurs and investors to consider while operating in space. 

Ankur Capital believes that this has opened up a whole new opportunity for budding entrepreneurs and startups to start developing innovative solutions in solving the inefficiencies in agri finance and logistics space, alongside developing innovative products in the areas of protein alternatives, which is a huge market globally, she added. 

Some of the key opportunities highlighted by Ankur Capital’s Subramanian in the wake of agri reforms include improving production at farm levels, management of pests and fertilisers, new storage methods, quality control techniques among others. 

“We are aggressively investing in the agritech space. In the next five to six months, we look to invest in at least five to six startups,” shared Subramanian, stating the roadmap ahead of Ankur Capital, and aims to close 15-18 startups in the next one year. 

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