India overtakes China as agrifoodtech startups raise record $4.6 bn in FY22

India's agrifoodtech startups raised around $4.6 billion in 230 deals in the fiscal year 2022, up 119% from FY21, according to a report by AgFunder and Omnivore. India has overtaken China as the region’s biggest funder for agrifoodtech, closing $2.7 billion in H1-2022, and is set to break records for total funding in 2022. In FY21, the total funds raised by Indian startups stood at $2.1 billion via 189 deals. In contrast, around $51.7 billion were raised by startups globally in the year 2021.

China agrifoodtech startups raised around $978 million in H1-2022. China funding has declined significantly as investors pulled away from the eGrocery startups that inflated funding levels in 2021. The biggest markets for agritech startups include China, India, Singapore and Indonesia, says a report by AgFunder and Omnivore.

In FY22, $0.4 billion were raised by early-stage startups (Pre-Seed to Series A), while $0.9 billion were pumped into growing ones (Series B to C). $3.3 billion went into lage stage startups with Series D+ funding. E-grocery and restaurant marketplace accounted for most of the late-stage funding secured in FY2022.

The e-grocery category raised the maximum number of late-stage deals, signalling a strong foothold in the Indian market. The convenience offered by startups in this category has vast consumer appeal as reliance on online shopping for everyday essentials is on the rise, the report finds. Restaurant marketplaces remained the dominant investment category due to Swiggy, which raised a total of $1.9 billion in late-stage funding.

A bulk of the deals continued to be in earlystage startups. However, late and growth-stage deals increased by 80%, indicating deepening investor confidence in the sector.

The largest deal raises in India were by Swiggy ($1.25 billion + $700 million), followed by Dunzo ($240 million), Licious($192 million), Absolute ($100 million), Zepto ($100 million + $60 million), Jumbotail ($85 million), Arya ($60 million), AgNext ($21 million) and Vegrow ($13 million).

According to the report, downstream investments continued to boost the overall funding into the agrifoodtech space. The downstream startups raised $3.8 billion in FY2022, a 115% increase from $1.77 billion in FY2021. Most contribution in this category was made by Swiggy, which raised $1.2 billion and accounted for 26% of total investment in the agrifoodtech space.

It was a breakout year for farmtech in India. Startups in this category raised $1.5 billion across 140 deals, a 185% year-over-year increase. Restaurant marketplace and eGrocery emerged as the most-funded downstream categories. Close behind the restaurant marketplace is also the rising pace of deals and investments in eGrocery startups that raised $1.4 billion across 42 deals, a 6X jump from $244 million across 25 deals in FY2021. Together, both these categories accounted for 66% of total funding in the agrifoodtech space, with eGrocery startups landing the highest number of late-stage deals.

Investment in online restaurants and meal kits also saw a remarkable recovery at $301 million in FY2022, almost 4X more than $64 million in FY2021. The premium branded food category also saw a marginal 9% increase in funding.

Upstream categories also saw accelerated growth in innovation and investments and surpassed downstream deals in number for the second year in a row. A total of 121 upstream deals closed in FY2022 vs 113 downstream deals. Upstream investment leapt 300% to $1.2 billion up from $312 million, shows the data.

The agribusiness marketplace also overtook midstream technologies to become the most funded upstream category in FY2022. The former raised $569 million in FY2022, a 7X jump from the $86 million raised in FY2021. The midstream technologies deal activity decreased in FY22. While the category remains active with $461 million raised across 19 deals, the reduction in deals shows multiple sub-categories are achieving maturities, such as logistics, transport and B2B retail.