Indian agritech startup Arya, which reaches hundreds of thousands of farmers in the South Asian market and helps them store and sell their produce and secure credit, has raised $60 million in a new financing round as it enters a new phase of growth.
Asia Impact SA, Lightrock India and Quona Capital co-led the $42 million Series C financing round. US International Development France Corporation provided an additional $18 million as debt. The new round values the eight-year-old, Noida-based startup at $300 million, a person familiar with the matter said.
Arya is attempting to solve three challenges that have distressed farmers in India for decades. Only about a third of the yields they produce reaches the big markets, where most of the sales occur, creating an uneven concentration that continues to deprive millions of farmers from being able to efficiently store and sell their produce.
The vast majority of farmers struggle to find buyers for their yields, and they typically go through a cash crunch until they have sold the produce.
Arya, co-founded by Prasanna Rao, is addressing this through a network of close to 10,000 warehouses, up from about 1,500 a year ago, it has seeded across 21 Indian states. By making these warehouses available to farmers near their farms, the startup has made it possible for them to be able to store their produce for the first time.
The warehouse is designed to store grain produce from the farmers for about three months and gives them insurance coverage. Farmers are able to monitor in real-time as the produce leaves their farm to the nearby warehouse, establishing a level of transparency and trust that is crucial to court farmers, said Rao in an interview with TC.
At the warehouse, Arya also helps farmers connect with buyers and provides them the option to negotiate on prices. “Because we hold the commodity in our warehouses, we have complete visibility into quantity and quality. This is how we are able to establish a connect between the buyer and seller,” he said, adding that the startup has visibility into grains worth over $2 billion on its platform.
The startup has devised a level of sophistication that it is able to spin up a new warehouse within two days in any region they are required, he said. Arya doesn’t own these warehouses and instead revamps warehouses owned by other businesses. There are over 100,000 of such warehouses spread across the country and most of them are being under-utilised.
Arya works with farmer associations to reach the farmers. The farmers can use Arya’s smartphone app or use traditional ways such as guidance provided in-person to use the platform and clear any confusions.
But the work isn’t done there.
As we have seen in the case of tens of millions of neighbourhood stores in India, the farmers also rely heavily on the earnings they make from selling their current batches of produce before being able to start a new season of cropping.
Arya works with banks and non-banking financial institutions to help these farmers secure loan, allowing them to get back to work while their produces are sold. The $18 million it has raised as debt in the new round is meant to provide credit to the farmers who financial institutions don’t find credit-worthy, he said, adding that in the past one year, the startup has grown its financing book by three times.
“Arya’s unparalleled reach across rural India, coupled with its tech-driven integrated service model, has made it one of the fastest-growing agri-commerce platforms in India,” said Varun Malhotra, Partner at Quona Capital, in a statement. “Arya is successfully bridging the trust gap in post-harvest agri transactions through complete transparency and assurance on quality, quantity and payments. We are excited to deepen our partnership with Arya.”
Once an overlooked sector, scores of startups and tech giants are exploring ways to tap what is one of the world’s largest annual harvest of grains. India’s agri-tech industry has the potential to reach about $24 billion in revenue by 2025, according to consultancy firm EY.
Amazon recently began offering real-time advice and information to farmers to help them inform their decisions on crops. Microsoft is working with 100 villages to deploy AI and build a platform.
Rao said it has been heartening to see more players in the industry to pay attention to the sector. He said Arya alone is hoping to have a network of over 60,000 warehouses in the next four years and is also evaluating acquiring smaller startups to fuel faster growth.
“Through the pandemic, we have seen Arya transform agri-commerce across India,” said Matteo Pusineri, director of Asia Impact SA, in a statement.
“Arya will help accomplish Asia Impact’s vision to integrate rural under-served farming communities across Asia to markets at scale. We are confident that Arya, under the leadership of Prasanna Rao, Anand Chandra and Chattanathan Devarajan, will greatly contribute to a unique ecosystem supporting the sustainable growth story of rural India.”