What ails agritech, and how can it come back?

Co-reported with Lokesh Choudhary

Agritech startups are struggling to take root in markets dominated by agriculture like India and Indonesia. In the first eight months of 2024, several agritech companies in both countries announced job cuts.

Indonesian aquatech unicorn eFishery, which automates fish and shrimp farms, announced layoffs in July, citing changes in business strategy. The firm raised US$108 million in a series D round last year.

India-based ReshaMandi, which clocked US$149 million in revenue for the financial year ending March 2023, reduced its staff by 85% by the end of last year. As of August 2024, the company laid off all remaining employees, though it has denied closing operations.

Despite raising more than US$90 million in total, Indonesian agritech company TaniHub had to shutter its B2C services in 2022 due to rising operational and marketing costs, while its lending arm recently faced liquidation.

This comes despite Indonesia’s agritech sector being considered pandemic-proof and having attracted an influx of capital in 2022.

In Southeast Asia, funding for the sector grew 3.5x in 2022 compared to the previous year, reaching its peak of US$513.2 million, according to Tracxn data. A large majority of this funding went to agritech firms in Indonesia.

However, funding has dried up since then. For the first seven months of 2024, agritech firms in the region have only raised US$43.1 million.

Industry insiders tell Tech in Asia that revenue lag and funding drought are key reasons for the funding downturn in the sector. These were caused by inflation, a lack of understanding of agricultural markets, and global conflicts like the war in Ukraine.

Cutting out middlemen isn’t worth it

Price volatility problems

Investor interest slowly returning

Branded products = higher margins?

The road ahead