Only about a third of the yields of Indian farmers reach the large markets. Those whose products make it there today can use the post-harvest services. Everyone else misses it.
A Noida-based startup is working with everyone involved – farmers, food processors, merchants, and financial institutions – to fill this gap in post-harvest services. It has just secured new funding to continue its journey.
Seven-year-old Arya said Tuesday that he raised $ 21 million in his Series B funding round. The round was led by Quona Capital, a venture firm focused on fintech in emerging markets. Existing investors LGT Lightstone Aspada and Omnivore also participated in the round, while several undisclosed lenders are providing additional debt financing to the startup, Arya said.
Almost all post-harvest interventions that exist in India today are mostly focused on large agricultural centers like Kota in the north Indian state of Rajasthan and Azadpur Mandi in the capital New Delhi, Arya co-founder and CEO Prasanna Rao told TechCrunch.
This unequal concentration has deprived millions of farmers in the country from sensible options to efficiently store and sell their produce, as well as funding options to maintain their cash flow, he said.
“We believe we should serve the two-thirds of the market that are currently underserved. The Kota Mandi (market), for example, has 35 bank branches within a radius of one kilometer. But when you are 70 to 80 kilometers from Kota it really decreases, ”said Rao, who previously worked at a bank.
Arya solves all of the above challenges: The company operates a network of more than 1,500 warehouses in 20 Indian states, which store goods valued at over $ 1 billion. This network enables farmers to store their produce in a center that is much closer to their farms, avoiding any spillage and exorbitant real estate costs of the large markets. On the credit side, Arya has paid out more than $ 36.5 million to farmers, and its banking partners have paid out more than $ 95 million.
"Arya addresses a severely underserved market of farmers in India, half of whom previously had little access to post-harvest finance," said Ganesh Rengaswamy, co-founder and partner of Quona Capital. in a statement. "We believe Arya's unique approach to delivering a full-service digital platform with embedded finance and differentiated efficiency to small farmers will fuel the future of agriculture in India."
The startup's offerings proved even more useful during the coronavirus pandemic, which saw New Delhi enforce one of the strictest bans in the world earlier this year. The lockdown broke the supply chain network and agricultural commodity prices fell over 20%.
To control this, Arya has connected the Farmer Product Organizers (FPOs) with the buyers through its own digital marketplace a2zgodaam.com. “With the need for immediate liquidity, the demand for credit for these inventory revenues increased. Arya's loan portfolio has jumped three times over last year, ”Prashanth Prakash, founding partner of Accel in India, and Mark Kahn, managing partner at Omnivore, wrote in an industry report last week.
Rao said Arya will use the fresh capital to scale its fintech platform "big" as the startup expands its warehouse network across the country. In addition, the startup plans to drive the growth of a2zgodaam.com, which also pools unorganized warehouses, and equip it with its own financiers and insurers so that farmers can sell directly through these warehouses if necessary.