Foodtech startups in India are starving. Funding in the sector hits 5-year low

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This morning, online food delivery startup Box8 announced a funding round of US$7.5 million from IIFL Seed Ventures Fund and Mayfield. But this startup, which cooks its own food, is an exception: others like it in India’s food sector are starved of funding.

According to a report by News Corp VCCEdge, investments in foodtech and online groceries fell by 87 percent in value this year. In 2016 so far, 62 private equity deals worth US$250 million were inked in the food and agriculture space – the lowest in terms of deal value over the last five years.

Other key findings are:

• In the year 2015, there were 153 deals worth US$1154 million – in comparison, 2016 so far has had a fall of 78 percent in deal value and 59 percent in the number of deals.
• The deal value this year is lower than half of that in 2014, which had US$523 million worth of deals.
• Foodtech and online groceries saw 33 deals worth US$67 million in 2016. The respective figures for 2015 were 85 deals worth US$504 million.
• In 2016, agriculture and processing companies raised US$79 million in 6 deals.
• Since 2012, the food and agritech sector has raised investments to the tune of US$2767 million from 406 deals.
• Since 2015, companies in the agriculture sector have raised US$722 million from 40 deals, and startups in the food industry raised US$2045 million from 366 deals.

“After the irrational exuberance which we witnessed in 2015, the self-correction mode we are witnessing this year has come in as a boon. It gives entrepreneurs running businesses in the food, agri, and consumer space an incentive to recalibrate their business models and desist from ‘me too’ ideas,” Nita Kapoor, CEO of News Corp VCCircle, said in a statement.

She sees potential in the packaged food segment because of a growing organized retail sector, changing urban lifestyles, and an increasing preference for convenient and hygienic food options.

If you’re curious about how Box8 bucked the trend, the secret could be in its full-stack model. That means the startup has its own kitchens to cook a variety of food – Indian meals, biryanis, wraps, sandwiches, and salads – which it delivers to users in Mumbai, Pune, and Bangalore. To do all that, the startup has an operational team of 1,200! Yes, you heard that right. Box8 counts it well worth the effort, saying 85 percent of its customers return to repeat their orders.

This post Foodtech startups in India are starving. Funding in the sector hits 5-year low appeared first on Tech in Asia.

from Tech in Asia https://www.techinasia.com/foodtech-online-grocery-startups-hit-5-year-funding-low
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