Sathguru Management Consultants has announced plans to raise a $100 million accelerator fund to support early-stage ventures leveraging technology to address food, nutrition and agricultural issues in India.
Sathguru’s fund management unit, Sathguru Catalyser Advisors, will manage the Innovation in Food and Agriculture Fund and the parent company has committed $1 million to the fund.
Fund chairman Vijay Vijayaraghavan told Agri Invesor in an email that Sathguru expects to reach a $50 million first close around May and a final close in August, with investments coming from both Indian and international investors.
The fund plans to make between eight and 12 significant minority equity investments averaging approximately $8 million in sectors including crop yield and trait improvement, animal and human nutrition and value-added food ingredients.
Sathguru expects the fund to make its first investment by the middle of 2017, according to a company statement.
The Innovation in Food and Agriculture Fund is designed to provide early-stage growth capital to companies that have “already created channel partners and developed product on a commercial level “but may be struggling to “move up to the full-fledged growth stage,” said Sathguru director Venu Gopal Chintada.
Hyderabad-based Sathguru was founded in 1985 and is primarily a consulting firm focused on mergers and acquisitions, technology transfer and other advisory services. The firm’s website describes how supportive governmental policy, the infusion of advanced technical know-how and the increasing mechanization of farming support a strong outlook for the agricultural sector in India.
While there are a number of private equity funds known to be active in India’s agribusiness sector in recent years, including vehicles from Rabo Equity, Omnivore Partners and Lok Capital, there have also been indications that the pace of investments slowed dramatically.
An October report from VCCEdge highlighted a 78 percent drop in private equity investments into Indian food and agriculture in the year prior, which its authors attributed partially to the “irrational exuberance” the sector experienced in 2015.
The report found that while packaged foods, farming and processing all saw declines during the previous 12 months, only India’s dairy and poultry sectors saw growth in investments.
Vijayaraghavan wrote that while consumer-facing brands have received much of investors’ attention, India remains a very competitive market.
“Franchise models also have the limitation of low returns due to easy replicability and obviousness. Investments in brands tend to reach saturation sooner in an emerging market environment, unless they are backed by innovation to sustain competitive forces,” he wrote.