India is home to an estimated 93 million farmers — 82 percent of which are smallholder farmers working on less than two hectares of land — and more than half a million agricultural processing businesses. These farmers and agri-entrepreneurs often struggle with inadequate access to markets, inefficient supply chains, and lack of access to responsible financial services. Across India’s agricultural processing ecosystem, stakeholders also face various challenges in procuring raw materials, such as high costs, long delays, and unpredictable demand and supply. These problems affect everyone in the segment, including Farmer Producer Organizations (FPOs), or farmer-led cooperatives that aggregate produce from smallholder farmers and supply it to small and medium size agri-processors and buyers.

Agrizy provides a robust marketplace and technical support to connect FPOs and small aggregators with micro, small, and medium size agri-processors to address pain points across the agri-processing supply chain. We’re proud to invest in Agrizy and support them in reaching underserved agri-businesses and smallholder farmers in India’s agricultural sector as they:

Solve pain points for agricultural businesses

Traditionally, small and medium size processors of agri-products depend on their sales and marketing channels to find buyers for their food and agricultural products. Many struggle to find resources to manage inquiries, field due diligence questions, and navigate many rounds of negotiations. It can also be difficult to secure necessary inputs and supplies, manage processing capacity, ensure quality standards, and arrange logistics to meet demand and avoid costly delays.

Similarly, buyers need to identify potential product providers or agri-processors by undergoing time-consuming virtual and in-person diligence processes. Facing a vast and fragmented network of raw material providers and processors, most buyers find it costly and time-consuming to procure the right quality of processed farm products. Buyers must also negotiate pricing, quality, and logistics prior to the shipment.

Through their digital platform, Agrizy simplifies and standardizes the supply and demand processes to enable its customers to conduct their businesses in a more transparent, stable, and profitable manner while linking these small-scale agri processors to medium and large buyers, such as fast-moving consumer goods companies (FMCGs) and large spice manufacturers, both in India and across the world. On top of making these connections, the company also provides value-added services to agri-processors by helping them improve quality, get necessary certifications, and meet compliance standards set by large agrifood processors — which improves both buyers’ retention rates and revenues.

Close gaps with embedded finance

By one estimate, there is an annual financing gap of $31 billion for agri-MSMEs in South Asia. Beyond market linkages, agri-processing businesses also require financial resources to run their operations. Many of these businesses have lacked access to formal financing options due to their sizes and conventional financial service providers’ lack of understanding of the agri-processing segment. Agrizy recently launched embedded finance as part of its bundled services, which cater to the supply chain finance and working capital requirements of agri-processors in India. The company leverages transaction data, data from public sources, and partnerships with banks and non-banking financial companies to offer financing solutions to its customers, embedded in Agrizy’s platform.

The financial service offerings leverage the company’s expertise and rely on its strong relationships with its clients to bridge financial gaps and unlock previously inaccessible funding for the underserved segments. This access to capital allows agri-processors to save costs and increase customers — leading to increased household income and financial resilience of their small enterprises.

Accion Emerge will leverage its global expertise and network in the fintech sector to support Agrizy in scaling its embedded financial services and reaching more underserved clients in agri-processing value chains. Accion Emerge will provide strategic support to the Agrizy team on product development, customer experience, risk management, and governance, as well as technical assistance and consulting services related to lending partnerships, data analytics, and impact measurement.

Accelerate impact in the agritech sector in India

Agriculture is a vital part of India’s economy, employing 55 percent of the labor force and contributing 16 percent of its GDP. It provides livelihood to more than 90 million farmers and indirectly benefits around 400 million people. However, small-scale farmers, who make up nearly 82 percent of all farmers remain among the poorest, earning only 39 percent of what medium-scale farmers earn and 13 percent of what large-scale farmers earn. Agrizy aims to improve the economic conditions of its agri-processor clients, which in turn shall improve the livelihoods of the employees of these businesses.

The investment in Agrizy aligns with Accion Emerge’s new investment thesis, specifically in the agritech space. We are enthusiastic about the potential of India’s agri-processing market to provide economic opportunities for underserved people and small business owners. By addressing pain points for farmers, especially micro and small-scale farmers, and agri-processing businesses, Agrizy can help these underserved groups strengthen their businesses and their livelihoods.

We believe Accion’s investment and strategic support will help Agrizy scale its reach. We’re excited to work with Agrizy as it grows its value chain financing and broadens its financial service offerings to serve the needs of financially underserved segments in the agricultural sector in India.