India's food supply chain is complex; agritech startups are trying to solve it: Hemendra Mathur, startup mentor

Indian Express

3 days ago

Hemendra Mathur is a partner at Bharat Innovation Fund, a venture capital fund focused on deep-tech investments in emerging sectors, including agriculture, clean technology, healthcare, and digital tech.
He is also the co-founder of ThinkAg, a not-for-profit platform for accelerating the adoption of innovation in agriculture, and the chairman of FICCI's task force on agritech startups.
Hemendra is an engineering graduate from the College of Technology and Engineering, Udaipur.
Hemendra spoke to indianexpress.com on his journey in the agritech sector, challenges faced by agritech startups in India, and on themes that have not worked for the agritech sector. Edited excerpts:
Venkatesh Kannaiah: Tell us about your journey in India's agritech sector.
Hemendra Mathur: It happened by chance. During 2008, I was working with a private equity fund investing in late-stage companies across the food value chain. Around 2010, I noticed young tech entrepreneurs entering the agriculture sector, which was a pleasant surprise because agriculture had conventionally been a talent-starved sector. I saw people quitting companies like Honeywell, Bain, or tech founders returning from the US. These were early-stage entrepreneurs who were reaching out for guidance, ecosystem connections, and fundraising support. It intrigued me because this sector is not for the faint-hearted.
I started mentoring them, and since we were not doing startup investments at the fund, I helped them with whatever support I could provide.
In 2016, I left the private equity fund. I had the option to start or join a new fund, but I decided the best use of my time was to be an ecosystem enabler. My prior experience with Rabobank gave me banking and consulting exposure. The last nine years have been the best part of my career, working with investors, startups, and senior government officials. The goal was to drive innovation at scale in a complex sector.
I am on the Union Government's expert committee for Agri Stack. As part of an IFC project, I am working with the governments of Uttar Pradesh and Andhra Pradesh to develop Agri Stack use cases, like digitizing Kisan Credit Card crop loans, which are typically manual and time-consuming. We are also building the first open network for agriculture — Open Agri Net — where farmers are not tied to a single app but can access services like soil testing, financing, insurance, or equipment rental via a user-friendly bot. We have identified about 40 agritech network partners to connect farmers with relevant services, like weather forecasts, market prices, or buyers for their produce. This reduces the high cost of reaching and servicing farmers.
I also mentor startups, and have mentored around 500 of them in the last eight or nine years.
Venkatesh Kannaiah: Tell us about some highlights of India's agritech journey.
Hemendra Mathur: The Indian food supply chain is the most complicated on earth; 150 million farmers on one end, 1.4 billion consumers on the other, and a narrow middle layer of 5-10 million traders, wholesalers, retailers, and 40 million kirana stores.
From 2010 to 2017, agritech was in an experimental mode. The question was: would farmers adopt it? Would someone pay for these solutions? Would large corporations buy them? The investment in agritech during those first six or seven years was impact-led, with small cheques from impact investors.
Then, in 2017, a new wave of entrepreneurs entered agriculture with much more enthusiasm. During the pandemic, the food supply chain was very active, retailers kept selling, and agritech and food tech startups worked 24/7 to keep it running. Digital adoption by farmers and consumers grew significantly. Farmers became more digitally literate, which changed agritech between 2019 and 2021. That was an inflection point.
Investors woke up during this period as agriculture was growing — food production and consumption increased, and people were willing to pay a premium for quality food. Who would have thought that someone would pay a hundred rupees for one piece of cake? Consumer awareness about food traceability, safety, and nutrition picked up. Investors saw agritech as a growth sector and a defensible one — food is the last thing consumers compromise on.
In 2020 and 2021, investments increased dramatically, and large investors started taking interest, supporting startups through multiple rounds. This brought agritech into the mainstream.
Post-2022, we entered a different phase, where agritech demonstrated it could scale. Some startups achieved turnovers of $50 million to $100 million. However, a lot of money was sunk; stuck in debt, inventory, or overbuilding solutions. When the funding winter hit post-pandemic, agritech investors started asking tough questions: Will you ever make money? Scale is fine, but where's the bottom line? This was true for other sectors too, but agritech suffered more because profitability and farmers' ability to pay became question marks.
It is also seen as riskier from a regulatory and policy perspective. In 2023, funding dropped, and the focus shifted from driving top-line growth (GMV) to bottom-line profitability.
An investment lens alone does not work; policy is critical. In 2017, inspired by the success of UPI, I wrote about Agri Stack for a government-led data repository for agriculture that could later be opened to the private sector for building use cases. In 2021, the government adopted it, and now 60-70 million farmers are enrolled, with hopes to include 100-150 million, covering landowners and landless farmers.
Agri Stack integrates farmer, crop, and farm registries, providing powerful data on farmer identity, farm location, size, and crops grown. This is invaluable for banks like the State Bank of India to offer loans or for buyers sourcing from farmers. We are digitising 160 million hectares of agricultural land, using satellite imagery to track crops.
Venkatesh Kannaiah: What are the challenges faced by agritech startups in India?
Hemendra Mathur: The biggest challenge in agritech is not funding, it is talent. Agriculture is not a career of choice for young professionals or students. I became an agricultural engineer because I had no other option. Agriculture is not taught at school or college level, while we need agronomists, plant scientists, veterinarians, behavioural scientists, meteorologists, hydrologists, and data scientists for AI/ML applications.
As agriculture is a state subject, it is tough for startups to move between states due to differing regulations. Standardising policies and opening public datasets (70% of startup time is spent on data collection) and physical infrastructure, like warehousing, would help. Margins are low in commodity trading, so value addition requires accessible processing and storage facilities.
Trends show that 80% of the investments have gone into farm-to-table models connecting farmers to customers (e.g., BigHaat, AgroStar), with a focus on demand aggregation, inventory management, quality control, and logistics. The remaining 20% investment has moved into areas like input quality, mechanisation, and farmer advisory solutions for pest detection, soil testing, or irrigation scheduling, using data from IoT, mobile phones, or satellite imagery. Less investment has gone into agri-biotech, deep tech (robotics, computer vision, AI), or fintech for farmer financing. Supply chain financing, warehousing, and cattle financing are untapped opportunities.
Venkatesh Kannaiah: How do agritech themes and trends abroad differ from those in India?
Hemendra Mathur: Globally, agritech in the US, Israel, or Europe focuses on farm-level interventions, like productivity, soil health, alternative proteins, and controlled environment agriculture (greenhouses, vertical farms) because farms are larger and supply chains are more streamlined. In India, complex supply chains make farm-to-table models dominant, but Indian solutions are portable to other smallholder-dominated regions. Farmer dashboards, common abroad, are less relevant for India's small 2-4 acre farms.
Venkatesh Kannaiah: How does ThinkAg initiative work and what has it achieved?
Hemendra Mathur: The ThinkAg initiative, started in 2018 as a not-for-profit, aims to help startups scale by testing business models early through partnerships with over 40 agri-corporates, research institutions, universities, accelerators, investors, and policymakers. We organise thematic events and publish an annual agritech investment report, a benchmark for investors tracking trends. It is an open-source ecosystem platform, collaborating with incubators like Social Alpha and AgHub to validate innovations and build partnerships.
Venkatesh Kannaiah: Tell us about agritech themes that have not worked in an Indian context?
Hemendra Mathur: There are pure trading models, where there is buying and selling without any value addition. Such models had scaled up but could not sustain due to low margins and were vulnerable to pricing shocks.
Second were in the category of controlled environment agriculture, like hydroponics and greenhouses. These had high upfront costs and limited market linkage for premium products, making scaling slow. Such technologies are perhaps relevant in land-scarce regions like Singapore, but not in India.
The third is one of alternative proteins, like meat or milk substitutes. India has a low per-capita meat consumption, and with traditional alternatives like plant-based protein diets (pulses) being popular, the alternative protein industry finds it tough to take off.
As for the usage of drones in agriculture, they are in their early stages and promising. However, scaling it requires training rural youth in drone operations, as it is a skilled job varying by crop.
Venkatesh Kannaiah: What are your three asks from the government?
Hemendra Mathur: Firstly, we require dedicated agritech innovation cells at the central and state levels to streamline compliance, certification, and engagement with startups. Secondly, we need more catalytic capital for incubators, including grants, blended finance, or low-cost debt to support early-stage startups. Thirdly, we need open digital data stacks (like Agri Stack) for startups to build applications, with privacy protocols to enable farmer financing and market linkages.