By Lokesh Makam, Founder, Barrix Agro Sciences Pvt. Ltd
Founded in 2010 with a vision to augment the integrated pest management industry in India through pheromones and other innovative platforms, Barrix Agro Sciences Pvt. Ltd. develops IPM technologies as an effective alternative to chemical insecticides, including proprietary synthesized pheromones, unique nanotechnology delivery platforms, and innovative traps.
India is an Agrarian Nation
For the company like Barrix, the success or ease of doing business is tied to the general economic well-being of the agrarian ecosystem. Farmers are very much willing to spend money on a product once they are convinced about the benefit and performance of the same. Another advantage is that they are relatively stickier as compared to urban customers. Hence, the more the farmer earns revenue, the better are prospects for the growth.
For an agro based company, challenges are on two fronts during the beginning phases of the journey. First will be product acceptance in channel/regulatory approvals – there was a lot of initial push back in terms of getting the product on the dealer’s shelves, getting government approvals for producing the products. But with time and constant demonstrations which was driven bottoms up, from the farmer’s end, we were able to win over this barrier. Second area, like all other startups was the time and effort to find a match between financial and human capital.
Right Path Entering this Social Field
I think we should focus on creating a business which is solving a large pain point for customers. In case of agro based startups, the primary customers are farmers. The correct approach is to identify a large problem set plaguing farmers and build a sustainable economically feasible business around it. Remember, focus on building a sound business (whether product or service) – social impact is a natural corollary/by product which companies enjoy as a result of operating in agriculture. The focus should be to enable the growth/income of farmers, which is the only way in which companies in the agro space can flourish.
Primary Components to pull in VC’s
Agriculture needs much more creative capital sources and business models for it to grow rapidly. While public spending is inevitably required, there needs to be more private sector activity to support entrepreneurs who are trying to solve critical deadlock problems in agriculture and food. VC’s and the funding ecosystem give entrepreneurs the flexibility and freedom to take risks, operate without barriers and provide speed to entire operations.
For any investor, there needs to be a sound economic case compounded with a large market opportunity for them to take a bet on the space. I do not believe that something which is not sustainable in its DNA is investible by VC’s or PE’s. Companies which are building products/services aimed at solving critical needs of the farming ecosystem are bound to do well. We also must remember that farmers today are no longer shy of adopting technologies, they are all businessmen in their own right and ROI is of paramount importance to them – so think what ROI you are giving your customer through your offering.
Unlike some other sectors like the consumer internet and mobile space, agro based startup is not a glamorous industry. Entrepreneurs need to be prepared to dirty their hands (literally!) and expect very high resistance to change in customer and channel behaviour, in initial days. The urge to give up will be ever inviting, especially more so given the rigor of making your target customer aware of your product.
Some factors (and potential red flags) to consider while evaluating a space: