Only about a third of the yields of Indian farmers reach major markets. Those whose products get there today are able to take advantage of post-harvest services. Everyone is absent.
A Noida-based start-up is working with all stakeholders – farmers, processors, traders and financial institutions – to close this post-harvest service gap – and it just secured new funds to continue its journey.
Seven years Arya announced on Tuesday that it had raised $ 21 million in its Series B funding round. The round was led by Capital Quona, a venture capital firm focused on fintech in emerging markets. Existing investors LGT Lightstone Aspada and Omnivore also participated in the round, while several anonymous lenders are providing additional debt financing to the startup, Arya said.
Almost all of the post-harvest interventions that exist in India today are largely focused on large agricultural centers such as Kota in the northern Indian state of Rajasthan and Azadpur Mandi in the capital New Delhi, explained Prasanna Rao, co- Founder and CEO of Arya, in an interview with TechCrunch.
This uneven concentration has deprived millions of farmers across the country of reasonable options to store and sell their produce efficiently and financing options to maintain their cash flow, he said.
“Our conviction is that we must serve the two-thirds of the market that is currently underserved. The Kota mandi (market), for example, has 35 bank branches within a one kilometer radius. But if you drive 70 to 80 kilometers from Kota, it really decreases, ”said Rao, who previously worked at a bank.
Arya solves all of the aforementioned challenges: It operates a network of over 1,500 warehouses in 20 Indian states where it stores more than $ 1 billion in merchandise. This network allows farmers to store their products in a center much closer to their farms, thus avoiding any overflow and the exorbitant real estate costs of large markets. On the credit side, Arya has disbursed over $ 36.5 million to farmers and its banking partners have disbursed over $ 95 million.
“Arya caters to a largely underserved farmers’ market in India, half of whom previously had limited access to post-harvest finance,” said Ganesh Rengaswamy, co-founder and partner of Quona Capital, in a press release. “We believe Arya’s unique approach, which provides a full-service digital platform with integrated financing and differentiated efficiencies for smallholder farmers, will drive the future of agriculture in India.
The startup’s offerings proved even more useful during the coronavirus pandemic, which saw New Delhi apply one of the tightest locks in the world earlier this year. The lockdown broke the supply chain network and prices for agricultural products fell by more than 20%.
To find their way around, Arya connected Farmer Product Organizers, or FPOs, with buyers through its own digital marketplace. a2zgodaam.com. “The need for immediate cash has increased the demand for credit against these warehouse receipts. Arya’s credit portfolio has increased threefold from one year to the next ”, wrote Prashanth Prakash, founding partner at Accel in India, and Mark Kahn, managing partner at Omnivore in an industry report last week.
Rao said Arya will deploy the new capital to scale its fintech platform “big” as the startup expands its warehouse network across the country. Additionally, the startup plans to fuel the growth of a2zgodaam.com, which also brings together unorganized warehouses, and overload them with their own set of financiers and insurers and ways to enable farmers to sell directly through these warehouses if they need them.