Lightrock’s agtech investing targets ‘systemic problems’ in Indian agriculture

Lightrock, the impact investing firm backed by international banking group LGT and the Princely Family of Liechtenstein, has told Agri Investor that it has a “strong focus” on agriculture investments in India, following two further investments in Indian agtech firms since the beginning of 2022.

In January, the firm participated in a $117 million Series D funding round for WayCool Foods alongside LightBox, FMO, Lightsmith, World Bank’s IFC, Redwood Equity Partners and Gawa Capital. WayCool Foods’ operations cover product sourcing, food processing, branding and marketing, last-mile distribution and farm inputs, and it aims to become the world’s largest food distribution services company.

Also in January, Lightrock co-led the $46 million Series C funding round, alongside Luxembourg investor Asia Impact SA and US-headquartered Quona Capital, for agtech start-up Arya, which helps farmers across south Asia store and sell produce and secure credit.

Both businesses fit into one of the three “systemic problems” in Indian agriculture that Lightrock attempts to solve through its investments, Vaidhehi Ravindran, the partner responsible for the firm’s ag investments in India, told Agri Investor.

“We think of the agri problem in India along three lines: there needs to be a growing transformation, there needs to be market transformation, and there needs to be a supply chain transformation,” Ravindran said.

The investment in Arya fits into the market transformation bucket, Rivindran said, through its efforts to provide a “credible platform” that will allow people to buy and sell grain and other produce, by providing more transparency into the supply chain.

WayCool, in which Lightrock first invested during 2017, falls under the supply chain transformation bucket.

“We have pushed the narrative of agri investing in India, ahead of other investors. We have made investments when other investors thought it to be a risky space – therefore we have pushed the design of the solution, and have a more hands-on view of this ecosystem,” Ravindran said.

“The last decade in Indian agriculture was about going from the physical to the digital. I think we will see more technology-first agribusinesses [catering to] digitally-native farmers. The three problems I’ve mentioned are more systemic in nature – we are starting to see more niche problems that can plug into these transformational platforms, too.”

On the potential for large-scale farmland investing in India, Ravindran argued that the structure of the market meant it would be extremely difficult to aggregate land at a scale attractive to institutional investors.

“Given the level of disaggregation, we are not a market of consolidation, ever. We are a market of formalization and collectivization, and I think the rest of the world is going that way because everything is decentralized. We also don’t have legacy systems [in India] to build on top of,” she said.

Ravindran said that the majority of Lightrock’s ag investments in India come from the Lightrock Growth Fund I, a vehicle launched in 2020 that invests in India, Europe and Latin America. The fund has a portfolio of 27 companies and closed five times oversubscribed in July 2021 at $900 million. Half the capital for the fund came from LGT, with the other half from LGT’s private banking clients.

The fund invests along three themes: people, planet and productivity. Lightrock’s investments in sustainable food and agriculture generally fall under the second theme of ‘planet’.