Inside BENEO’s new pulse plant: pioneering sustainable protein from faba beans
In 2022, while the pandemic mercifully retreated, the necessity for agrifood tech innovations stood firm. The clear need for urgent tech disruptions in various sub-sectors of Indian agriculture is reflected in the sharp upswing in investments. Alongside the increasing volume of deals, the average round sizes have also increased significantly across all funding stages, with the overall investment volume up by 119 per cent. Furthermore, investors discovered a wealth of untapped opportunities further up agrifood value chains.
Indian agrifood startups have attracted Rs 38,079 crore in FY22, up 119 per cent year-on-year from Rs 17,381 crore in FY21, according to a report published by food and agritech-focused venture capital firms – AgFunder and Omnivore, even as the rest of the startup ecosystem struggles through a funding winter. The report titled ‘India AgriFood Startup Investment Report 2022’ said that Indian agri-food tech startups have overtaken China as Asia-Pacific (APAC)’s biggest funder of agrifood-tech innovation. The report highlighted that the deal activity for agri-food tech startups also increased to 234 deals in FY22 compared to 189 deals in FY21. The Premium Branded Food category saw a marginal 9 per cent increase in funding. Investment in Online Restaurants & Meal kits saw a remarkable recovery at Rs 2,491 crore in FY2022, almost 4X more than Rs 529 crore in FY2021.
Along with the push from the investors’ end, the government as well as the industry players in the field have been putting efforts in this direction in India. For instance, All India Institute of Ayurveda (AIIA) in association with Startup India launched the ’Ayush Startup challenge’ to encourage early-stage startups and individuals working on innovations in the Ayush Food Innovations, Ayurveda sector, and alternative healing.
Further, Nirmala Sitharaman, Union Finance Minister has announced an incentive to Agri Startups for fuelling innovations in the promising millets space in India.
At the industry end, the market leaders like Bühler, Cargill, and Givaudan joined forces to help accelerate startups that are innovating in plant-based protein in the APAC region in the form of Scale It Up! Innovation Challenge.
“The rising protein gap is a challenge too big to solve alone,” says Dr Aparna Venkatesh, Regional Innovation Lead of Bühler. “The Scale It Up! Innovation Challenge is designed to accelerate startups who are also working to close that gap. It allows regional startups to access our expertise, ecosystem, capabilities, and facilities to develop delicious plant-based meat products. We’re excited to kick off the APAC version of this unique challenge with our like-minded partners and look forward to seeing what it will bring.”
With the focus on innovations and investments happening in the food space, let’s dig into the movement of various innovative food startups in India.
Funding and deals scenario of Indian agri food tech startups in FY2018- FY2022 (Source: India AgriFood Startup Investment Report 2022 by AgFunder and Omnivore)
Addressing new pain points
Following the trends of foreign markets, Indian food startups are increasingly upgrading to keep up with the changing consumer behaviour and market demand. The pandemic-induced market transformation which was mainly ruled by innovative offerings in different industries, functional food innovations are progressively occupying the shelves. Along with the new ingredients being introduced in the Indian market, food and wellness startups are making an effort to address new pain points such as mental health, women’s health, vegan protein demand, and much more.
Hemp is one such ingredient getting recognised in the Indian food and wellness market. The Indian Hemp industry is growing at a faster pace than has been projected previously. With hemp seeds being recognised as a wholesome superfood in India as well, various hemp startups have been increasingly introducing hemp-based nutrition products in the Indian market. The entrepreneurs are ready to battle the odds and bet big on the versatile plant by creating innovative products that fit right into the wellness basket.
Commenting on hemp’s properties, Yash Kotak, Co-Founder, and Director, Bombay Hemp Company (BOHECO), India’s foremost industrial hemp and medical cannabis startup said, “The Food Safety and Standards Authority of India (FSSAI) in November 2021 notified that the seed and its derivatives – oil and flour can be sold or used as an ingredient in food. This has enabled the heightened inclusion of hemp in every-day diet.”
In July 2022, BOHECO collaborated with The Hemp Factory, India’s first hemp-based cloud kitchen in Mumbai. With the vision to transform popular dishes into healthier, nutritious meals, tailored to anyone’s diet, Mumbai-based startup Hemp Factory aims to expand from its current kitchen in Mumbai across metros through company-owned and franchise outlets, eventually setting up kitchens across India.
Very recently BOHECO launched BLOSSOM, a proprietary ayurvedic medicine for symptomatic relief from PCOS (Polycystic Ovary Syndrome) & Polycystic Ovarian Disease (PCOD) and also contemporary range of beverages – Blissful (seltzers and lemonades infused with functional ingredients designed to stimulate focus, creativity, and energy). The startups claim it is a first-of-a-kind product for India and aim to open the gateway to many innovations in the hemp-powered mindful beverage space. Bombay Hemp Company has raised a total funding of Rs 48.49 crore over 7 rounds. Their latest funding round was a seed in November 2021, for Rs 16.55 crore.
New Delhi-based startup HempStreet, India’s first research to retail venture in the ayurvedic cannabis sector, has launched Sarpagandha Vati that helps treat Hypertension and Insomnia due to its calmative properties. The startup secured Rs 8.27 crore in Pre-Series A Funding round in 2020. HempStreet has become the first entity in the medicinal cannabis sector to receive a Biotechnology Ignition Grant (BIG) from the Biotechnology Industry Research Assistance Council (BIRAC) of the Department of Biotechnology.
“The product of our research that is being undertaken under this grant, has the potential to disrupt the Rs 587,40 crore (projected for 2023) global transdermal drug delivery system market, while also addressing and greatly alleviating the environmental impact through our sustainable innovation” said Shrey Jain, former Co-Founder & COO, HempStreet.
With the increasing hemp-based startups and investments in the same, innovations in the space are also on the rise. Bangalore-based hemp startup Satliva is one such innovator. The startup provides hemp dosa batter and hemp chutney along with its other hemp-based offerings.
Delhi-based Ananta Hemp Works and Health Horizons are more such hemp-based wellness and nutrition-focused startups in the space. Very recently Rajesh Kumar Gupta, a part of a Global FMCG Giant, picked up a stake in Ananta Hemp Works. On the other hand, Health Horizons has raised a total funding of Rs 2.26 crore over 2 rounds. Their latest funding round was a seed round in April 2022, for undisclosed amount with Hindustan Media Ventures Ltd and other investors.
With 42 per cent of consumers in Asia-Pacific, the Middle East, and Africa feeling unable to break away from daily pressures, there is a growing demand for food and beverage products that support mental well-being. This shift in consumer perception towards mental wellness is driving the health and wellness trend of self-care and everyday well-being and is influencing food and beverage purchases. With this, various Indian food startups have been recently exploring this space and introducing innovative offerings to the market.
Laurik, a startup based in Hyderabad and a producer of the world’s first Lauric-enhanced coconut shots, launched a new product range Laurik Bites that caters to three important categories: gut, sleep, and focus. The startup is in the process of filing a patent for Laurik bites. It has also filed for over 12 formulation patents this year.
In April 2022, Laurik raised a funding amount of Rs 3.7 crore while just in its ideation stage. Laurik is also one of the 100 brands in the world and the second nutraceutical brand in India to be awarded the Clean Label Certification from the Clean Label Project.
The funding round was led by marquee investors like Murthy Aradhi, co-founder at FastCollab and Lakshmikant PB, Director of Finance at Antler, an early-stage venture capital firm. Laurik’s unique product has also received recognition from the Telangana government and T-Hub as they recently provided the startup with a fund through the T-Fund programme.
Another wellness startup Nidra Nutrition headquartered in Coimbatore, a part of Supercluster Pi (House of Brands), launched its product line introducing the world’s first stress relief gummies containing 175 mg of Ashwagandha.
Very recently, Delhi-based cannabis wellness startup Awshad announced the launch of their new prescription product – a cannabis medicinal capsule line branded as ‘Calmasule’ to alleviate pain, insomnia, stress and various other lifestyle ailments.
Furthermore, Kerala-based TheLifekart.in, an e-commerce platform offering nutrition, healthcare, and self-care solutions introduced Algamin tablets for tension relief.
The startup has also introduced a Migraine Relief Kit. George P Joby, Director, TheLifekart.in said, “We believe the science in amalgamation with nature has solutions to all human ailments, and hence, we have launched our Relief Kit which will be a boon to humankind and will help us all in acknowledging what natural medicines can do to us. Additionally, our focus will remain towards producing more such products that will help in the removal of harmful medications from the market.”
There are more and more examples of flavoured beverages, dairy-free, carbonated drinks, alcoholic/ non-alcoholic shots, etc. However, in India, there has been increasing acceptance of beverages that have functional properties in them. The use of food ingredients in the health beverages category is now an established trend. Many of these products are an ayurvedic ready-to-serve drink that claims numerous health benefits. Indian startups in this space are not only staying on top of global trends but are also incorporating local elements in their launches so that they are rooted in familiarity.
Redefining the beverage industry and bringing all of the nutrients and proteins in the form of the world’s simplest liquid- water, Mumbai-based Aquatein (Athlex Beverages Private Limited) provides India’s first protein water. Recently backed by Suniel Shetty as an investor and Brand Ambassador, Aquatein is driving dehydration away all the while nourishing and replenishing the protein intake. Aquatein has raised a total funding of Rs 1.83 crore over 1 round (excluding the recently raised undisclosed fund from Eaglewings Ventures).
Bengaluru-based Merhaki Foods, a subsidiary of Globalbees Brands (under the brand andMe), a manufacturer and supplier of cold-pressed juice for women’s health has launched ThyroDiet Tea which takes a revolutionary approach to manage Thyroid. The startup has raised a total funding of Rs 19.19 crore over 6 rounds. Their latest funding round was a Conventional Debt in September 2021 for Rs 2.54 crore.
Indian food startups have been betting high on innovative offerings that are not just regular foods but also have generous health benefits. Acceptance and funding toward hemp have been encouraging hemp-based food and wellness startups which might continue in 2023 also. However, the funding winter that started in mid-2022 globally is starting to see its impact in India now and the next 6-9 months will be very critical for startups.
As per Namit Chugh, Investment Lead, W Health Ventures, “Startups need to build the core product, achieve metrics that will make the company lucrative once the funding winter is over; as there is ample dry powder in the country. It’s a great time to invest in pre seed/seed companies as capital required and cash burn – both are lesser.”
Startups Applying Right Taste + Economical Price
Plant-based food alternatives are no longer a novelty on the shelves for foreign markets. However, in a country like India, such innovations are the talk of the town in the current era. Governing bodies have also been putting significant attention to this matter.
For instance, the Plant Based Foods Industry Association (PBFIA), a CEO-led body formed to support and help develop India’s nascent plant-based food ecosystem, has urged the Food Safety and Standards Authority of India (FSSAI) to come up with an effective training programme to help plant-based food startups climb the high bar set by FSSAI to safeguard consumer interest.
Moreover, very recently, Agricultural and Processed Food Products Export Development Authority (APEDA) announced that GREENEST, New Delhi-based startup has shipped India’s first plant-based meat export consignment to the USA from Gujarat. The startup has raised a total funding of Rs 4.59 crore over 2 rounds (excluding their recent pre-seed funding undisclosed amount).
According to Good Food Institute (GFI) India the funding scenario in the Indian plant-based market in India was not so favourable in 2022. While in 2021, the alternative protein sector drew Rs 414,09 crore invested capital across all categories globally, with only Rs 85.71 crore flowing into India, 2022 has seen a difficult economic and market environment, on the whole. Alternative protein companies raised a total of Rs 18,219 crore of investment capital, amounting to a modest reduction from the high pace of investment growth seen in 2021.
Despite the low funding scenario as compared to 2021, as the plant-based food market is still just beginning in India, there are many startups that are very promising in the space. Some of them are as follows.
Delhi-based ClearMeat is India’s first clean chicken meat startup. Unlike using plant-based alternatives like wheat, soy, or lentils, ClearMeat uses chicken cells to artificially produce meat in an attempt to help end animal agriculture in India. The startup has also filed a patent for its Cultivated Meat Technology. ClearMeat has raised a total funding of Rs 95 lakh over 2 rounds. Their latest funding round was a seed in September 2021 for Rs 66 lakh.
Bengaluru-headquartered startup Phyx44, which is using precision fermentation of microbes to create the full stack whey and casein proteins and fatty acids to recreate dairy, has raised a total funding of Rs 10.59 crore over 2 rounds.
Karnataka-based Devigere Biosolutions is one more innovative startup to mention here. This startup is extracting proteins from horse gram and also boosting the income of farmers.
Despite the growing demand and innovations in these products, there are a few business practices startup owners need to employ to extract the maximum potential out of the segment.
Commenting on the same, Amod Ashok Salgaonkar, Co-Founder & Chief Operating Officer, A2S2 Enterprises, said “Making high sales is still far away, as this category has not even been introduced across all selling platforms in India. The most crucial problem which all founders in this segment are facing is to give a perfectly similar taste when compared with traditional products. To sell the Alternative Protein Products, the strategy of Right Taste + Economical Price should be applied.”
Mansi Jamsudkar
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