Veteran banker Anilkumar SGinitiation to rural finance happened in 2007, when he joined IFMR Trust, and was tasked with developing a microfinance solution known as Kshetriya Gramin Financial Services (KGFS).
In this role, he and his team had to low-income Indian household profile and track their assets and liabilities.
“It was then that we realized that a household does not work in a vacuum, but is part of an ecosystem. So that was it important to engage with the entire value chain,” he says YourStory Media.
Amilkumar SG, Founder and CEO, Samunnati | Photo: Medium
Seven years later, in 2014, Anilkumar would take this value chain approach to embark on his entrepreneurial adventure.
He founded– a agro-fintech startup who works towards improve links with the market for small Indian farmers, makes more accessible credit at every step of the agricultural value chain and ultimately helps agriculture to ‘operate at a better balance’, that is, to become more efficient.
The problem it solves
The goal of the Chennai-based startup was to differentiate itself from existing agro-financial and farmer welfare policies in India.
“The problem with agricultural lenders in India is their definition of farmers. Most smallholder farmers are not landowners. They are only tenants. But, they are made responsible for the entire loan amount whether or not cultivation takes place, ”says Anilkumar.
As a result, Indian farmers are not only eternally in debt, but also left with limited access to formal credit. Studies suggest that only 11 percent of the agricultural population has access to organized lenders and agricultural loans.
Samunnati impacted 54 agricultural value chains in 20 states of India
This is the problem that Samunnati wanted to solve with its agro-finance products.
Unlike traditional lenders who provide crop loans or agricultural input loans, it focuses on sspecific needs of small farmers and drawings unsecured financial products.
It also resolves the working capital needs of POs and agro-SMEs to have an impact on the entire agricultural value chain. “Nothing has changed much in terms of scope [of formal credit], but what has changed is our ability to reach farmers, says the founder.
Growth and measurable impact
Using technology, Samunnati has extended its reach to over 700 FPO (on the supply side) and Over 1,500 agricultural businesses (on the demand side) through 20 states.
In six years, he spent loans worth Rs 6,000 crore and impacted the life of four million farmers on the other side 54 agro value chains in India. The current net worth of the startup stands at Rs 505 crore.
It also reduces production cost for OPS from 7 to 15%, and improved agricultural productivity according to the seasons, cultures and climate.
Sammunati customers can enjoy working capital for one to 100 days, the average loan amount being around Rs 70 lakh and individual transactions pegged at Rs 5-10 lakh. “Our goal is to increase throughput, and remove working capital constraints for everyone in the value chain, ”explains the founder.
The startup operates on a B2B2C model, and currently has a monthly execution rate (MRR) of Rs 250 crore. Samunnati’s main source of income is the interest income (13-18 percent) he earns on loans, and costs of establishing contact with the market when transactions occur.
“We double our MRR every year,” Anilkumar shares.
Infographic: Design YS
Platforms to connect the ecosystem
Last August, Sammunati deployed its’Samaarambh platform to improve engagement and foster innovation among agrotech startups.
These startups can benefit from personalized working capital, seek advice and mentorship, and tap into wider distribution networks via the platform. More 230 startups have registered on Samaarambh until now.
Later in December, Sammunati also launched Agri raise, which the founder calls a “virtual directory of all agricultural service providers”. The platform is not transactional at this time and aims to resolve information asymmetry that exists in the agro-ecosystem.
Anilkumar specifies: “The FPOs ignore ecosystem players who can solve their problems, from farm machinery to farm inputs. Agritech startups do not have easy access to farmers who are clients of their services.
Therefore, Agri Elevate serves as agricultural service provider search engine of all kinds to discover and interact with each other.
Agri Elevate serves as a search engine for agricultural service providers
Funding cycles and market landscape
Samunnati is a well-funded startup, having raised the two debt and equity financing of Forty investors since 2016.
During his last round table in January 2021, he raised Rs 89.6 crore in debt of FMO: Entrepreneurial Development Bank and Triodos Investment Management. He will use the funds to expand his network of low-income farmers.
Huib-Jan de Ruijter, Director of Investments at FMO, stated at the time of funding,
“The loan to Samunnati meets our goals of improving access to finance in this sector, which is in dire need of more financing.”
Previously, the startup had raised a $ 20 million round of debt financing led by the United States International Development Finance Corporation (DFC) in September 2020. And before that he lifted a Round D Series Elevar Equity, Accelerate, ResponsAbility Investments, Nuveen , and debt financing others social impact investors.
Only 11% of the Indian farming population has access to formal credit
Ajay Rao, Managing Director – South Asia Region, DFC, said, “We are impressed with Samunnati’s pioneering work in agricultural value chain finance in India, which helps make agricultural value chains more efficient, allows more products to circulate in the value chain, reduces food waste and ensures an increase and stable incomes for small farmers. “
The biggest towers that Sammunati has been able to raise from local and global investors are heading to strong tailwinds in the agrotechnical sector.
The founder declares,
“Nobody needs to convince on agritech more. There is an abundance of potential and opportunity if you collaborate. Smallholder farmers and agro-industries together, it’s a $ 245 billion market. “
Agritech saw “dynamism at ecosystem level”Over the past two or three years, and is poised to experience exponential growth in that decade.
“This is Silicon Valley’s time for Indian agriculture,” says Anilkumar.