(Why agristartups fail? Part 2)
1. Context: From “hot sector” to funding desert
Between 2018 and 2022, agritech in India rode a wave of optimism. Global agtech funding peaked around 2021–22 at about $10.9 billion a year , and India emerged as a serious geography for agrifood-tech, drawing over $2.4 billion in 2022 alone.
But the party has ended:
- Global agtech funding fell by more than 50% by 2023.
- In India, several analyses now estimate agritech-specific funding down by roughly 70–80% from the 2021 peak, a pattern echoed in commentary around the shutdown of BharatAgri.
- Investors are shifting from “growth at all costs” to profitability, consolidation, and distressed M&A.
The closures and forced mergers of multiple agritech startups are symptoms of this correction—but the root causes are structural.
2. Structural realities agritech underestimated
Before going into individual companies, it is worth stating the underlying constraints most of them ignored:
- Margins in agriculture are inherently thin.
- Perishability magnifies execution risk.
- Trust and relationships matter as much as price.
- Farmers’ willingness (and ability) to pay is limited.
Many agritech startups tried to capture a slice of existing value without fundamentally changing these realities.
3. Case studies: What actually went wrong?
3.1 BharatAgri – agronomy + advisory cannot live on hope
Model: BharatAgri offered an app-based, AI-driven agronomy service, promising precision advisory and better yields against subscription and input-linked revenue.
What happened:
- Despite reporting ~78% revenue growth in FY24 and claiming positive unit economics, BharatAgri could not raise the $6–8 million it was seeking.
- Overheads remained high; the company had not reached full profitability.
- Fundraising attempts stalled through 2025, leading to layoffs and eventual shutdown due to funding crunch.
Deeper issues (beyond “funding winter”):
- Value capture vs. value creation:
- Weak ecosystem integration:
- Investor narrative mismatch:
This is a classic case where the story (AI + data) was more attractive than the underlying business reality (boots-on-ground agronomy).
3.2 Otipy – farm-to-consumer in the quick-commerce crossfire
Model: Otipy, based in Delhi-NCR, ran a farm-to-consumer fresh grocery model using community resellers, later integrating more conventional online grocery delivery. It had raised around $44 million across funding rounds.
What happened:
- The company struggled to secure an additional ~$10 million round.
- In May 2025, Otipy abruptly shut down operations, impacting about 300 employees and a large network of gig workers.
Deeper issues:
- Trying to own the full downstream chain: from farm procurement to last-mile delivery, in a category (fresh fruits and vegetables) with 15–20% gross margins at best.
- Competitive shock from big quick-commerce players (Zepto, Blinkit, Swiggy Instamart) who had deeper pockets, larger tech + logistics scale, and could cross-subsidise vegetables with high-margin categories.
- Limited farmer-side transformation:
Otipy sat in the same thin slice of margin as large grocery players, and when capital cost rose, it simply could not survive.
3.3 Fraazo – dark stores + fresh produce = cash bonfire
Model: Fraazo operated a “farm-to-fork” quick-commerce model using a dense network of dark stores to deliver fruits and vegetables quickly in urban centres.
What happened:
- From mid-2022, Fraazo shut operations in multiple cities, closing dark stores and laying off staff in large numbers.
- By late 2022, investigative reports described the company as having effectively “shut shop,” leaving employees and vendors unpaid.
Deeper issues:
- Hyper-asset-heavy model: rentals for hundreds of small dark stores, cold-chain equipment, and delivery fleets—all serving a low-margin, highly perishable category.
- No differentiated value for farmers: procurement was essentially another buyer at mandi or aggregator level, not a system that de-risked farmers or offered better contracts.
- VC-fuelled land grab: the model only made sense if Fraazo could dominate a large share of the urban perishables market quickly and later increase take rates—exactly the behaviour you described as “acting like multinational giants.”
When fresh capital dried up, the underlying economics were exposed.
3.4 Deep Rooted (Clover) – controlled-environment farming meets demand volatility
Model: Clover Ventures built a network of greenhouses and a “Deep Rooted” brand to supply premium vegetables to modern retail and later to consumers directly. The company managed 100+ acres of greenhouses and supplied to restaurants and retail chains.
What happened:
- The initial B2B model supplying HoReCa and retailers was heavily hit during COVID-19.
- Clover pivoted to a consumer brand (“Deep Rooted”) and raised more capital, but struggled to sustain a direct-to-consumer model at scale.
- Reports in 2024 indicated that Deep Rooted, after attempting a B2B pivot via quick-commerce platforms, was planning to shut down operations due to persistent financial stress.
Deeper issues:
- Full-stack ambition: controlling production (greenhouses), aggregation, branding, and last-mile distribution—again, too many capital-intensive links for the available margin.
- Concentration risk: dependence on high-end urban consumers and restaurants makes the model vulnerable to shocks (pandemic, demand shifts, competition).
- Limited ecosystem sharing: Instead of enabling existing greenhouse growers or FPOs with better tech and market access, Clover/Deep Rooted tried to internalise most of the chain.
This is a good illustration of how trying to “own the chain” concentrates risk rather than spreading it.
3.5 ReshaMandi – digital silk ecosystem that broke under its own weight
Model: ReshaMandi attempted to build a digital marketplace and supply chain for silk and other natural fibres, integrating farmers, reelers, weavers, and buyers. It also dabbled in credit and inventory-heavy operations.
What happened:
- By 2023–24, the company faced severe financial strain, delayed salaries, and mounting liabilities.
- It failed to secure a planned Series B; in 2024, reports indicated full workforce layoffs and shutdown of its website.
Deeper issues:
- Complex, multi-layered chain: silk involves cocoon farmers, reelers, twisters, weavers, exporters; trying to digitise and control this entire system in one platform is extraordinarily complex.
- Credit + inventory exposure: once you start financing inventory and offering trade credit, you are not just a platform—you are a quasi-NBFC with commodity-price risk.
- Governance and controls: rapid scale without strong financial discipline led to legal disputes with creditors and severe reputation damage.
This is another case where attempts to dominate a value chain created fragility instead of resilience.
3.6 Gramophone – not dead, but forced into consolidation
Gramophone, founded in 2016, runs an omnichannel agri-input and advisory platform with a strong farmer network across several states.
Despite raising multiple rounds, it has not escaped sector headwinds:
- In late 2025, reports emerged that Gramophone would merge with Unnati Agri in a share-swap deal, with Unnati taking majority control.
This is not a failure in the Fraazo/Otipy sense, but it illustrates:
- Pressure to consolidate to achieve scale and survive.
- Investors preferring mergers and roll-ups over continuing to fund many similar platforms.
- A shift toward B2B input distribution, where value capture is marginal unless you control large volumes and credit flows.
4. Cross-cutting failure patterns
Looking across these cases, a consistent set of issues emerges that strongly aligns with your diagnosis.
4.1 Capturing a narrow existing margin instead of creating new value
Almost all of these models sit on already thin spreads:
- Otipy and Fraazo tried to carve out margin between mandis and urban consumers.
- Deep Rooted bet that branding and greenhouse control would justify a higher margin, but consumer willingness to pay remained limited.
- Gramophone and BharatAgri add advisory and input convenience, but most revenue still comes from standard fertiliser/seed margins.
Very few fundamentally altered the yield, cost, or risk profile for farmers.
4.2 “Own the supply chain” obsession
Many startups behaved like mini-MNCs:
- Fraazo and Otipy: procurement + warehouses/dark stores + last-mile delivery.
- Deep Rooted: growing + aggregation + brand + last-mile.
- ReshaMandi: from cocoon farmer to weaver to exporter, plus credit.
Owning every link means:
- more capital expenditure,
- more operational complexity,
- more points of failure.
What was missing is a platform/partnership mindset that strengthens existing actors rather than replacing them.
4.3 Built to be bought, not built to last
In boardrooms, the “exit story” often dominated:
- quick scale with heavy discounting and incentives,
- focus on GMV and app installs, not farmer income or value-add,
- strategic positioning to be acquired by big e-commerce, FMCG, or agri-input players.
If your real customer is the future acquirer, not the farmer, you end up optimising for optics:
- chasing urban growth at the cost of unit economics,
- entering every adjacent segment to look “full-stack,”
- neglecting slow, unglamorous operational excellence.
When funding tightened and acquisitions did not materialise at expected valuations, the underlying business could not stand on its own.
4.4 Shallow understanding of field realities
Most of these companies were HQ’d in metros; decision-makers had limited exposure to:
- local credit dynamics (commission agents, input dealers),
- micro-regions’ crop risk and market volatility,
- gendered labour roles, land tenure, tenancy, etc.
The result: products that looked elegant in pitch decks but clumsy on the ground. BharatAgri’s advisory, for instance, may have been agronomically sound, but translating advice into farmer behaviour change at scale requires far more local grounding than an app.
4.5 Over-financialisation and fragile capital structures
ReshaMandi, Otipy, and others show what happens when:
- working-capital and inventory are funded mostly by equity,
- credit products are rolled out without deep risk modelling,
- governance cannot keep pace with growth.
Once a couple of quarters go wrong—bad monsoon, price crash, or competition—the whole house of cards is exposed.
5. Where does agritech go from here?
The failures are painful, but they do offer clear guidance for the next wave.
- Shift from “disrupting” to “co-creating”.
- Focus on real productivity, resilience, and risk-reduction.
- Design business models where farmers are paying, not just being “sourced from”.
- Build narrow but deep specialisations instead of empire-building.
- Adopt capital discipline from day one.
6. Closing note
Agritech is not failing because technology has no role in agriculture. It is failing where capital, technology, and ambition tried to dominate a fragile system instead of serving it.
The examples of BharatAgri, Otipy, Fraazo, Deep Rooted, ReshaMandi, and the Gramophone–Unnati consolidation all point to the same lesson:
In agriculture, you cannot sustainably take more value out than you put in.
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