Rockefeller Foundation-backed impact investor Lok Capital has led a Series B round of funding in SV Agri Processing, an Indian potato supply chain management company.
Lok Capital was joined in the round by existing investor Aspada Investment Company, which invested in SV Agri in 2011 through its SONG fund, a vehicle financed by George Soros, eBay founder Pierre Omidyar and Google.
The combined investment from the two firms is around 250 million rupees ($3.7 million; €3.4 million) with Aspada investing 100 million rupees and Lok providing the balance, Aspada’s chief financial officer Kushal Agrawal told Agri Investor.
Pune-based SV Agri provides pre- and post-harvest solutions to potato farmers and processors including fertiliser delivery, training and finance.
“The idea is for SV Agri to become a strong vertically-integrated company. [We plan] to massively expand the seed side [of the business], Agrawal said. “We will create our own brand of potato seed because if you don’t have control over the seeds it’s harder to become a big player.”
Agrawal also said the company will focus on investing in technology including in potato processing equipment and on geographical expansion in India.
“We are excited about the partnership with SV Agri and believe its business model is creating significant value for all stakeholders in the potato value chain,” Rajesh Babu, director at Lok said.
SV Agri’s services include facilitating crop insurance, an issue which has become politically fractious in India, with more than 300,000 Indian farmers estimated to have committed suicide since 1995 because of crop failures, slow insurance payouts or a lack of insurance to cover losses.
As a result India’s prime minister Narendra Modi announced a crop insurance scheme which would reduce premiums paid by farmers to 2 percent for summer-sown crops and 1.5 percent for winter crops. Current premiums can be as high as 40 percent which deters farmers from buying the product, with only one in ten estimated to have cover.
Agrawal said that crop failures and lack of insurance “prevent Indian farmers from adopting modern technologies because they don’t want to invest because they are afraid of a crop failure which means they can’t repay loans they have to take out to invest.”
“I believe the prime minister’s crop insurance scheme, inspired by the well-being of farmers, will bring about a huge change in the lives of farmers,” Modi said.
Aspada is an early-stage Bangalore-based firm which invests out of two funds: the Aspada Investment Company, a permanent capital vehicle backed by Soros’ Soros Economic Development Fund, and the SONG fund.
Last June the firm invested 200 million rupees into pay-to-use farming machinery and technology company EM3 Agri Services.
Delhi-based Lok Capital manages two funds with total assets of $85 million and is currently raising its third vehicle which is targeting $100 million.