Setuka Partners LLP advised on this transaction
The company plans to use the funds to provide loans to FPOs and agribusiness SMEs that are currently underserved by the formal financial system.
Previously, Samunnati raised equity from Elevar, Accel, ResponsAbility and Nuveen
Chennai-based farm finance start-up Samunnati has raised $ 20 million in debt from the American International Development Finance Corporation (DFC) to expand its lending business.
In a joint press release shared with Inc42, Samunnati and DFC said the newly raised capital will help the company expand its financing and technical assistance to low-income farmers and businesses along the agricultural value chain in India.
Setuka Partners LLP was the exclusive advisor of this transaction.
This loan will help Samunnati strengthen its financing, allowing smallholder collectives to connect with the growing demand for higher value-added agricultural products across India, the press briefing added.
Anilkumar SG, Founder and CEO of Samunnati, said, “Samunnati works with many FPOs on the supply side and agricultural companies on the demand side in 19 Indian states. We are excited to partner with DFC as it will help us deliver more tailored financial solutions, utilizing social and business capital, to FPOs and SMEs, allowing the agricultural value chain to operate at a better balance. “
Previously, Samunnati has raised equity from Elevar, Accel, ResponsAbility and Nuveen, as well as debt financing from a host of local and international financial institutions.
Founded in 2014, Samunnati works in the agricultural sector and is present in more than 54 agricultural value chains spread across 19 Indian states.
Ajay Rao, Managing Director of South Asia Region, DFC, said, “DFC is proud to work with the experienced team at Samunnati and we look forward to collaborating to expand the breadth and depth of operations of the business across India. “
Agritech Boom does not offer agricultural financing
Agriculture and related sectors contribute $ 368 billion to the economy, but its 16% share of India’s GDP is not an indicator of the financial inclusion of marginal small farmers. According to the report “The Role of Formal Technology-Based Finance in Agriculture in India” by Rabo Foundation in partnership with ThinkAg and MicroSave Consulting, over 50% of India’s small and marginal farmers are unable to borrow from any source – technological or traditional – resulting in a multitude of production and income problems.
However, complex policy schemes and lack of access to loans offer agro-fintech startups the opportunity to extend credit to small and marginal farmers by leveraging technologies such as satellite imagery, soil and climate forecasting tools, wearhouse loans, among others.
Some agro-tech startups that provide financial products and services include Sagri, Samunnati, Arya, Jai Kisan, DeHaat, FarMart, Kissht, and Bijak. The last five years have seen around 3,116 registered food and agriculture startups in the country, this is a 25-30% growth in the number of startups on an annual basis, with around $ 500 million in investment since 2014, according to the Rabo Foundation report.