Agritech startup DeHaat has begun preliminary talks to raise $100 million through debt and equity for an acquisition and other business expansion plans, two people with knowledge of the development said.
The funds will help the Temasek-backed company to acquire a seeds company for $50-65 million, the people said. “Due diligence is currently on. It is likely to close the deal over the next six months,” one person said.
“The fundraise is expected to happen at a nearly flat valuation of about $750 million with existing investors participating in the round,” the second person said.
The person added DeHaat is yet to formally begin the process but there has been a lot of inbound interest from investors. To be sure, DeHaat has cash from its previous fundraise to meet inorganic growth needs, the person said, without elaborating.
DeHaat, which is looking to expand its portfolio, has been scouting for opportunities in the seed category for some time now and has engaged with investment bankers on this matter, the second person said. The company did not respond to Mint’s request for comment.
DeHaat acquired Freshtrop Fruits’ export business for ₹77 crore in November last year. The acquisition deepened its presence in the fruit and vegetable export business, which it first ventured into with the purchase of Field Fresh in May 2022. Dehaat’s other acquisitions include Vezamart, Farmguide, Helicrofter and YCook.
Elusive unicorn
So far, DeHaat has raised over $200 million across about 10 funding rounds, as per data provided by Tracxn. Its prominent investors include Peak XV, RTP Global Partners, Prosus Ventures and Lightrock India. The company last raised $60 million in its series E funding round that was led by Sofina Ventures and Temasek in December 2022.
DeHaat is unlikely to become a unicorn – a startup with a billion-dollar valuation – in the near term, one of the people said. This is largely because investors have become wary of funding companies at unrealistic valuations, unlike in the pandemic years when capital was more easily available.
Some startups have struggled to justify the valuations they sought during the pandemic, which led to hurdles during subsequent funding rounds. This also forced many companies to raise funds at a flat valuation. Shiprocket was in talks to raise about $120 million at an almost unchanged valuation of $1.1 billion-1.2 billion, Mint reported exclusively in August.
Agritech is one of the rare sectors in India that is yet to produce a unicorn. While the sector sparked an investment boom during the pandemic, which drove valuations higher, it could not sustain the momentum, much like many others.
DeHaat’s peer Waycool sought short-term relief on repayments to lenders as it navigated liquidity challenges, Mint reported in April. It also pursued a series of cost cuts including laying off employees, redrawing its supply-chain strategy and cutting back on expansion. Other startups resorted to similar measures including changing their business models to ride through the gloom.
DeHaat, which also competes with Ninjacart and AgroStar, has clocked a steady 40-50% increase in revenue in recent years. It posted revenue of ₹2,700 crore in FY24 and its loss narrowed significantly from ₹1,094.4 crore in FY23, according to a report by The Economic Times. The company is yet to file its audited results.
Investors are increasingly backing startups that prioritise profitability, thawing the funding winter to some extent.
“We will continue to back agritech startups with strong unit economics, which were already profitable or could reach profitability soon,” said Jinesh Shah, managing partner at Omnivore, an investor in DeHaat. “Investors in this sector have always prioritised sustainable business models over rapid expansion, recognising that true value lies in long-term viability rather than inflated valuations.”
India’s agritech sector is expected to expand at a compounded annual growth rate of 50% over the next five years and address a $34 billion market by 2027, according to a 2022 report by Avendus. Over the years, the sector has grown significantly, driven by increasing digital penetration across India, recovery from covid-led supply chain disruption, growing consumer interest for quality produce, and rising PE/VC interest.
