Investment Memos

Investing in Vegrow

Building India’s largest B2B agritech platform for fresh fruits and vegetables

20th July 2021

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5 mins

Agriculture accounts for ~20% of India’s GDP and employs more than 40% of the Indian workforce. Since the Green Revolution in 1960s and 1970s, agriculture has largely been removed from the modernization that has impacted and boosted the other sectors of the economy. Supply chains have remained largely the same—with multiple intermediaries, traditional handling and transit as well as with non-scientific and mostly experiential cultivation practices. As a result, our yields continue to be ~50% lower than western nations and our supply-chain wastages continue to be ~33% higher (~16% of overall production). In the past few years, India has seen internet and smartphone penetration increase at a disruptive pace. This has also been true for India’s base of 100-120 Mn farmers who contribute to ~$489 Bn of the GDP. Farmers today, in theory, through their smartphones, can access the best cropping practices, discover the market prices and get market access, bypass intermediaries, understand forecasts and plan their cultivation accordingly. However none, or very little of this happens today for a large number of farmers. Several models have attempted to address parts of this problem with limited success

We believe that a successful business in the agri-tech space would have to focus on the following key dimensions:

  1. Bridging the trust deficit: This base, thus far, has not been exposed to e-commerce or fintech extensively and hence are generally averse to purely digital transactions.
  2. Mitigating the “natural” risk: Agriculture and agricultural output are susceptible to several “natural” phenomena. When buying from the farm, one of the unmitigated supply-side risks is the grade or inherent quality of the produce. Farmers typically prefer selling the entire produce in one go—so the buyer should have the capacity to mitigate this “natural risk”.
  3. Ensuring scalability: Agricultural production is a highly credit reliant process. Models such as farm input e-commerce that aim at selling services to farmers run into issues of scalability. Also, any high touch engagement with farmers for yield improvement impacts scalability.
  4. Focusing on profitability: Agricultural supply chains have existed for centuries. The delicate and highly perishable nature of agricultural produce leads to a multi-fold increase in complexity in the supply chain. Hence, models that incrementally improve the supply chain and rely on aggregators to source produce suffer from poor unit economics. An approach that focuses on deeper value creation across the farmers lifecycle and fundamentally reimagines this supply chain would be needed.

Over the past decade, various models have attempted to scale and create value in the agri-tech space. Pure input-focused models and advisory tech platforms aimed at improving farm yields have found it difficult to scale in the face of low trust and highly credit driven purchases at the farmer end. Pure output-focused e-commerce models have scaled up rapidly but in the absence of sound unit economics.


Our belief in agri-tech has been that the production (input) and commerce (output) will need to be looked at together in aggregate. The model will have to take a farmer-centric lens, almost consider the farmer a node and help it realize more value and optimize each spend flowing through it. Our belief is that in the long term, the ideal solution will (a) provide tailored insights to farmers on what, when and how to cultivate; (b) help them access the right and best quality inputs (including credit); and (c) provide them with hassle-free market linkage at the right price. The following table compares various models on these highlighted attributes:

Vegrow’s model is strongly aligned with this farmer-focused approach. The company focuses on establishing a trust-based relationship with farmer partners and buys out all the produce at the farm gate. The careful identification of their buyer base coupled with a fundamental reimagining of the nitty-gritties of the supply chain allows Vegrow to deliver on this promise consistently and predictably. This also helps the company identify the farmer partners with whom they can work to improve yields. Therefore, the company not only is able to offer better costs/prices on both the demand and supply sides, but also maintain healthy unit economics. Farmers’ earnings improve because of better yields and higher prices.


First principles strong, farmer obsessed and passionate team

Building and scaling such a business requires a highly farmer-obsessed team, passionate about agriculture and willing to disrupt the status quo (which has persisted for decades). The founders —Shobhit, Praneeth, Mrudhukar and Kiran—have seen and experienced agri businesses and farmers closely, either as part of their work experiences or as part of their personal journeys. We have known the Vegrow team for over a year now, and in each conversation, the team's strong fundamentals, customer obsession and thoughtfulness stood out. Right from the choice of mid-sized horticulture farmers as the first farmer base to the supply chain choices, every decision has been data-first, prioritizing customer/farmer delight. This was validated across all of our customer and farmer calls. We are super thrilled to lead Vegrow’s Series A as they build a farmer-first agri-tech enterprise.

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