Mobile adoption is on the rise among India’s fish and shrimp farmers. With half a billion smartphone users in India, online financial tools, digital platforms and fintech applications are powering the next generation of agritech with a more systematic, customized and user-friendly approach to farming.
At the forefront of this fintech wave is a startup called Aquaconnect, an online platform that uses data and technology to help farmers maximize their income, access financial services and connect with customers. It’s proving to be a win for everyone involved and we’re thrilled to partner founder Raj Somasundaram and his passionate team who are empowering India’s farmers.
At Flourish we believe that embedded finance technology – where non-bank companies can offer financial services within everyday apps – will help small businesses streamline operations, access new opportunities and ultimately enhance their financial well being.
What’s the background?
While India’s agriculture industry employs more than 1.6M people and is growing at more than 10% year-over-year, it relies on antiquated practices that expose farmers to significant risk during crop cycles and ensures their dependency on middlemen for access to feed and potential buyers. And that’s not all:
- The industry is highly fragmented with more than 90% of farmers working less than two hectares
- The high level of water quality necessary for shrimp and fish farming is a labor-intensive and an expensive process
- Farmers face a long wait to monetize crops – typically without insurance. They lack access to bank credit, and many are forced to rely on advances from middlemen at exorbitant costs, with APRs as high as 40%-60%.
- Farmers also don’t have direct channels to export markets, where traceability across the value chain is increasingly required.
Where’s the Opportunity?
India’s aquaculture industry is estimated to be worth $33 billion and is growing at 10% a year – well above global growth rates. The shrimp sector is expanding particularly fast, driven by strong export demand from the United States and Europe. India is now the world’s second-largest producer of farmed shrimp, with a market share of 14%.
Launched in 2019, Aquaconnect offers a full-stack technology platform that has gained traction in the shrimp farming community – 30,000 farmers have downloaded the mobile app. This rising fintech has strong management team, partnerships with leading banks and insurance companies that offer credit and insurance and a growing community of farmers.
Alongside ReBright, we co-led a USD $4 million Pre-Series A round (see news story in DigFin) with participation from AgFunder, 6G Capital, Omnivore and HATCH. The funds will help the founding team scale its business and expand into new industry segments, including a post-harvest marketplace. The company’s strategy of improving access to financial services and disintermediating middlemen fits well with our Principles of Fair Finance.
We’re honored to back innovative fintech companies like Aquaconnect that not only help farmers but also leverage better data collection models to allow banks and insurance providers to get more comfortable with the risks associated with providing credit or underwriting weather and aquatic disease risks. Aquaconnect offers an embedded finance platform that gives an important, underserved segment of India’s agricultural industry access to financial services via their smartphones. It’s about time that farmers get the support they need in a manner that works with their lifestyles.