LLess than a decade ago, funneling capital into India’s booming agritech sector was a Herculean task. Before the ubiquity of mobile data and smartphones in rural India, venture capital (VC) investors focused on urban themes including e-commerce, e-grocery and restaurant delivery . Around 2016, when these categories consolidated around a few unicorns, major venture capital investors began exploring B2B themes and agtech popped up on their radar, which is fitting given that about 25 percent of the economy of India is agriculture and agribusiness. As of 2022, India has the third largest startup ecosystem in the world and ranks third after the US and China in agritech funding. However, agri-food life sciences (AFLS) as a subsector of agritech has not yet seen the same boom in entrepreneurship and funding.
We consider agri-food life sciences to include four broad categories: agricultural biotechnology, new agricultural systems, bioenergy and biomaterials, and innovative foods. Agricultural biotechnology includes on-farm inputs for crop and animal agriculture, including hybrid seed breeding, genetics, microbes, and animal health. New farming systems include controlled environment agriculture (CEA), RAS aquaculture, insect protein and algae production. Bioenergy and biomaterials include agricultural waste processing, biomaterial production, and feedstock technology. Finally, innovative foods refer to various forms of alternative proteins (plant-based, fermented and cellular), as well as functional foods and other novel ingredients.
Why is AFLS so critical for India?
Indian agriculture faces a grim trap 22 situation in the coming decades, where there is an urgent need to increase crop yields to feed a growing population, even as increased agricultural output depletes water tables and soil health that are already in decline. To make matters worse, there are the creeping effects of climate change. A decade from now, Indian farmers will bear the full force of climate change, and digital technologies alone are insufficient to ensure a bright future in rural India. Innovations in agri-food life sciences can play a critical role in addressing climate mitigation (reducing India’s GHG emissions) and climate adaptation/resilience (ensuring a future for India’s farmers). We are also moving towards a more protein-intensive future along with growing concern for animal welfare and environmental sustainability. Agri-food biosciences have the power to transform India’s bounty of millet and pulses into innovative plant-based proteins to meet global demand.
ALFS can even reinvent entire agricultural value chains, for example by replacing unsustainable ingredients like fishmeal with insect protein, creating a circular economy at scale. Finally, biological substitutes for chemical fertilizers and pesticides can be developed, simultaneously improving human and planetary health. India has myriad challenges ahead, but agri-food biosciences can solve them with innovations.
Current Status of AFLS in India
Agri-food life sciences is the most neglected aspect of agritech in India’s startup ecosystem. Globally, $6 billion was invested in AFLS startups in 2020, while in India, startups tackling these immense challenges only raised $10 million in total. India is becoming a global outlier, with the US, Israel, Europe and China building unicorn startups in agri-food life sciences. The lackluster state of business in this category in India is puzzling. Even more so when we consider how innovations in synthetic biology, chemistry and biotechnology have the power to catapult Indian agriculture and food into a profitable and sustainable future.
Many blame India’s de facto ban on new GM traits in seeds, but this is a weak argument as we also lack startups in organic farming inputs, microbial biotechnologies, alternative cell protein and animal health products/ aquaculture. Part of the answer lies in a lack of world-class talent. In the digital startup ecosystem, in recent decades, entrepreneurs and investors have returned to India with global exposure. In contrast, Indian life science talent continues to migrate abroad at the earliest possible opportunity and rarely returns home. In India, scientists are not considered wealth creators and R&D spending is very limited at the national level.
How do we fix the ALFS gap?
Despite operating on shoestring budgets, India’s public sector has done more to help the nascent life sciences ecosystem than it is given credit for, with DBT, BIRAC, C-CAMP and NCL helping to support the entrepreneurs in the absence of significant private investment. Unlike the generous flow of capital into other agtech categories, the trickle down of venture capital investments into this space is notable. It may be because most venture capitalists in India come from digital technology backgrounds, rather than life sciences training.
Also read: How escalating climate events threaten food security around the world
It is clear that we can no longer afford anemic progress in the agri-food life sciences. The fledgling ecosystem needs to be reinvigorated with talent and capital. Despite painting a rather sad picture of the current state of affairs, it would be unfair to lose sight of India’s strong universities and research institutions that shape future life science innovators. The time has come for venture capital investors to step up and help reshape the future of India’s agriculture and food systems. For our part, Omnivore has launched the OmniX Bio initiative to support early-stage agri-food life sciences startups. OmniX Bio aims to catalyze venture capital into India’s nascent agri-food life sciences ecosystem and also provide mentorship from global leaders in agri-food life sciences, institutional partnerships and business development support to access pipelines. domestic and export sales. The road ahead for India’s agri-food life sciences may not be an easy one, but it is definitely the surest way to ensure a truly atmanirbhar future for India.
(The writer is a managing partner and co-founder of Omnivore)
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(This story appears in the September 9, 2022 issue of Forbes India. To visit our archives, Click here.)