The decision of banana farmer-centric digital ecosystem provider Greenikk to wind down operations is a sobering reminder of agritech startup challenges. Agritech was once hailed as the next frontier of innovation in agriculture, but it is being witnessed more complex than initially thought of.
The story of Greenikk is similar to startups. It started with a promise in Thiruvananthapuram. It was founded by Fariq Naushad and Previn Jacob Varghese. They sought to provide much-needed financial, advisory and market support to banana farmers. Its Enablement Centres (ECs) spread across key banana-producing regions in Kerala, Tamil Nadu and Karnataka. The agricultural sector is highly unpredictable and startups are often found grappling with challenges including loan defaults.
Greenikk spent six months and recovered 80% of its ₹6 crore loan. Defaults are not uncommon, but financial setbacks can be fatal. The agritech sector is plagued by low financial literacy and inconsistent market practices.
Greenikk’s closure is the acknowledgment that the company chased wrong metrics in its quest for growth. The mistake is common among startups that raise capital during periods of high investor interest. The pressure to scale quickly after raising low-interest capital during the peak of agritech may have led to short-term decision-making at the expense of sustainable growth. Its inability to raise planned $5 million Series A funding round reflects the growing hesitance among investors.
Greenikk admitted that it could build a low-profitable business, but it could not deliver the venture capital-level return that is expected by investors. The stark reality highlights growing dissonance between vision of agritech and the real challenges.
The shutdown now is a reminder that path of profitability is blended with challenges even though the agritech sector holds promises.
