by Lynda Kiernan
Pioneering Ventures, a Zurich and Mumbai-based venture capital accelerator focused on India’s agriculture and food sectors, has announced the launch of the Rural India Impact Fund, a $70 million private equity fund to invest in companies it has grown in India.
“Growth prospects offered by India’s agri and food sector are phenomenal and is all set for a big revolution,” said Martin Wittwer, executive partner, operations, at Pioneering Ventures. “Many of the agri-food products grow in double digits, at a much higher rate than equivalent markets in Europe or North America. The fund provides international investors with regulated and compliant access to these markets.”
The firm plans to raise the full $70 million over the next two years, mainly through European institutional and family offices, using all commitments to back its portfolio. To date the investor has invested in five companies:
FarmLink – the first pan-India platform for the distribution and marketing of traceable products to consumers and industrial-scale off-takers.
MilkLane – India’s most innovative and socially responsible integrated dairy that uses Swiss methods to transform the dairy supply chain.
Citrus Processing India – India’s first citrus concentrate producer working to become the leading supplier of international-standard juice solutions, formulations, blends, and by-products.
Desai Fruits & Vegetables – India’s first and largest controlled cultivator and marketer of high-quality bananas to both domestic and international customers.
Samaaru – a tech-enabled value chain and financial services company for farmers, rural communities, and underserved entrepreneurs.
Pioneer Ventures noted that the launch of the Rural India Impact Fund at this time is made necessary due to the fact that four of its five portfolio companies are on the cusp of their next stage of growth. And the investor now expects its five companies to triple revenue from $100 million to $300 million over the coming two years.
“This gives you a sense of the importance of making growth capital available (for these companies),” said Wittwer.
Through its platform, the firm currently works with more than 7000 farmers across India, and has goals to create a comprehensive ag and food platform representing an end-to-end supply chain, and to work with more than one million farmers.
The Potential Therein
India’s vast and growing population, combined with increasing affluence and socio-economic shifts, are expected to see the country’s overall food consumption increase by 4 percent per year to 2030, while per capita food consumption is expected to increase by 3 percent per year. Consumption in rural areas is expected to climb by 2.5 percent, while food consumption in urban areas will see double this growth at 5 percent.
Based on these projections, and the expected growth and continued maturation of the country’s agricultural production, processing, and exporting activities, McKinsey foresees India’s agricultural industry growing at a rate of between 5.2 and 5.7 percent over the next two decades.
Numbers such as these are driving the creation of investment funds dedicated to investing in the country’s ag and food sectors.
In January of this year, India’s National Bank for Agriculture and Rural Development (NABARD) announced the launch of NABVENTURES Fund I, a Rs 700-cr (US$105 million) venture capital fund that will concentrate on investing in the country’s rural, agriculturally-focused startups.
The fund, launched by NABARD subsidiary Nabventures, has received a cornerstone investment from NABARD, and has a proposed corpus of Rs 500-cr (US$75 million) with a Rs 200-cr (US$30 million) greenshoe option.
Although NABARD has contributed to other funds in the past as a limited partner, investing Rs 273-cr (US$41 million) across 16 alternate investment funds, this launch of a fund is a first for the bank.
Last summer, Belgian investment manager Incofin launched its first country-specific fund, creating the $80 million India Progress Fund. Historically, Incofin had earmarked allocations of between 15 and 20 percent from its previous funds for investments in India.
At the time of the launch, Incofin had exposure totaling $50 million in the country, which it planned to raise to $150 million by 2020.
Looking a little farther back, social impact, venture capital investor Acumen raised a fund in April 2017 to focus on the agriculture, water, education, housing, and healthcare sectors of India. Prior to the launch, the firm had raised all of its capital in the U.S., however, building upon its momentum in India, the firm is planning to concentrate its fundraising efforts for its new fund in-country.
“We are going to become more and more focused on India,” Ajit Mahadevan, India director at Acumen, told Live Mint at the time. “We have been focused on investing in India, but we will get much deeper in connecting with the right set of people who can further the opportunities for our companies. So we will look at corporate partnerships and raising funds in India.”