arya raises $21m to provide farmers in india finance and post-harvest services

Approximately one-third of the agricultural output from Indian farms ultimately reaches larger markets. Farmers whose products successfully navigate to these markets can benefit from post-harvest support services. However, a significant portion of farmers are currently excluded from these advantages.

A startup located in Noida is collaborating with all involved parties – farmers, food processing companies, traders, and financial institutions – to overcome the challenges related to post-harvest services. The company has recently received additional funding to further its mission.

Arya, a company established seven years ago, announced on Tuesday that it has secured $21 million in its Series B funding round. Quona Capital, a venture capital firm specializing in fintech within developing markets, led the investment. Existing investors, including LGT Lightstone Aspada and Omnivore, also participated, alongside supplementary debt financing from several undisclosed lenders, according to Arya.

Prasanna Rao, co-founder and CEO of Arya, explained in an interview with TechCrunch that the majority of existing post-harvest support in India is concentrated in major agricultural hubs like Kota in Rajasthan and Azadpur Mandi in New Delhi.

This concentration leaves millions of farmers across the country without access to effective options for storing and selling their crops, as well as financial resources to manage their cash flow, he stated.

“We are focused on serving the two-thirds of the market that currently lacks adequate support. For example, the Kota market has 35 bank branches within a one-kilometer radius. However, traveling just 70 to 80 kilometers from Kota significantly reduces this availability,” said Rao, who has a background in banking.

Arya addresses these issues by operating a network of over 1,500 warehouses across 20 Indian states, currently storing commodities valued at over $1 billion. This network enables farmers to store their produce closer to their farms, minimizing losses and avoiding the high costs associated with major market locations. In terms of financing, Arya has provided over $36.5 million directly to farmers, while its banking partners have disbursed more than $95 million.

“Arya is serving a large, underserved population of farmers in India, many of whom previously had limited access to post-harvest financing,” stated Ganesh Rengaswamy, co-founder and partner at Quona Capital. “We are confident that Arya’s comprehensive digital platform, which integrates finance and offers unique efficiencies for small farmholders, will shape the future of agriculture in India.”

The company’s services proved particularly valuable during the coronavirus pandemic, when New Delhi implemented strict lockdown measures earlier this year, disrupting supply chains and causing agricultural commodity prices to fall by more than 20%.

In response, Arya connected farmer producer organizations (FPOs) with buyers through its digital marketplace, a2zgodaam.com. “The urgent need for funds led to increased demand for credit against warehouse receipts. Arya’s credit portfolio experienced a threefold increase year-over-year,” noted Prashanth Prakash, a founding partner at Accel in India, and Mark Kahn, managing partner at Omnivore, in a recent industry report.

Rao indicated that Arya will utilize the new capital to significantly expand its fintech platform and broaden its warehouse network nationwide. The company also intends to accelerate the growth of a2zgodaam.com, which also incorporates unorganized warehouses, and enhance them with access to financiers, insurers, and direct sales options for farmers.