This promising agri-tech startup is working to bring positive changes in agriculture through the digital marketplace.
--BY MANISHA BALAMI
The last nine months of the Covid-19 crisis has translated into an event of misfortune for many Nepali startups leading the budding companies towards collapsing altogether. In contrast, there have been some companies that have been able to scale themselves up at the same time. One such startup is Kheti, which has seen its business growth increase by 50 percent even during the present pandemic times. Kheti is an agri-food tech digital platform and flagship product of the agri-tech company DV Excellus Pvt Ltd.
Started with a seed capital of Rs 8.5 million, Kheti is being run by seven shareholders and over 30 staff. The startup that started its operations collaborating with 1,300 farmers of Kaski, now works with more than 10,000 small farmers in 11 districts.
Recently, Kheti collaborated with Upaya City Cargo and EOS Ventures Group to secure an investment of Rs 10 million.
Tulsi Giri, CEO of Kheti, had been operating Development Voyage, a company which has worked with farmersfor more than a decade. He started The Bazar, a business brand as well as a cooperative. They supported farmers to produce organic food and also helped in the marketization of the agro produce. By around 2015, the team felt a gap in its business initiatives. Although they were working in production and fresh vegetables and fruits, they realised the lack of data. There was no way to know if the farmers’ productivity had actually increased or not, and they also didn’t have any data on food wastage, post-harvest loss, supply chain and so on.
In 2016, partnering with another company Excellus Solution, Giri planned to work in R&D. While doing research, they found out that there was high loss and lack of data. They then thought of moving into the digital realm in order to resolve the issues. This led to the merger between Development Voyage and Excellus Solution to form DV Excellus.
In January 2019, Kheti formally started working in two major parts - farm side (backward linkage) and food side (forward linkage) of agriculture.
Kheti Farm (backward linkage) provides support to farmers and builds up the support system required on the farmer’s side such as advisory support, seed and fertiliser support, etc. The company even collaborates with banks for agri-financing and the government for providing subsidy to the farmers. Likewise, they have made a farm management tool for farmers which helps the farmers to record the data of their whole farming cycle and increase their productivity. The tool has proven important for farmers to keep a record of the seeds they have sown, total production in a year, type of machineries they have bought and day to day practices, etc.
By aggregating the practices, Kheti helps the farmers market their produce. They sell the produce through Kheti Food which is an ecommerce platform. Besides, they also allow those who want to sell their local produce, pickles, bakery items and many more as a multi-vendor through Kheti’se-commerce platform.
Through the Kheti Farm platform, their target market is B2B customers such as hotels, restaurants and through Kheti Food platform, general customers can avail the services made available by the company.
Idea versus Execution: Challenges and Opportunities
“Agricultureis a complicated sector in itself. The value chain is distorted in Nepal. There are challenges in production, market, pricing, high chances of wastage, and problem in logistic as well as consumer awareness,” states Giri.
Though they did notface such problems while executing their ideas, Giri shares that they were doubtful about whether the farmers would use the digital platform or not. He says that other agri-tech companies are based on information delivery while the farmers have to record their practices every day on their own in Kheti Farm. “But to our surprise, we got information from farmers every day through a simple chat service. Then we knew that if there was easy access, then the farmers will also use the digital platform,” he says. The way B2B clients ordered online and the farmers’ engagement also motivated them.
As soon as the company started operating, it began to generate revenue. According to Giri, the transactions totaled around Rs 20 million last year. “This has encouraged us to work harder,” he mentions.
The biggest challenge for the startup was building an ecosystem. In the beginning, they were doubtful whether the B2B partners, suppliers, banks, farmers would come onboard or not.But today they have dealings with big importers and suppliers. Kheti has more than 50 restaurants in Kathmandu and more than 20 hotels and restaurants in Pokharathat are ready to becomeB2B partners. “In the business side, we have achieved more than what we’ve have expected. In the technical side as well, we are excited after seeing the adoption of our technology by farmers and other clients,” says Giri.
According to Giri, despite being a digital marketplace, Kheti is different from other e-commerce ventures. “Our existence is viable because we are an agri food-tech ecosystem builder. Our core strength is connecting farmers to the market and supporting them. So, we are different from an e-commerce company,” he says, adding, “We don’t only promote products but also promote values,” he adds. They try to apply value proposed marketing strategies. He gives an example of social media where they promote farmers through an initiative called‘I grow your food’ every week.
Besides different offers, Kheti recently introduced the concept of a subscription box which has been designed with a nutrition perspective related to the number of family members. According to the number of family members, people can choose between monthly or yearly packages. With the subscription box, customers do not have to go to the market every day as the agro produce will be delivered to their doorsteps twice a week. Apart from this, the company also does door-to-door soil testing campaigns and organises other programmes in a bid to attract more farmers.
While many startups are on the verge of collapse, the pandemic has actually been a boon to Kheti Food. Giri says that the lockdown helped them in terms of brand recognition. As soon as the lockdown was announced, the company decided to start home deliveries and cater to B2C customers. As a result, they have more than 3,000 customers at present.
“During the lockdown, we were able to establish our core values of providing local food to people and supporting local farmers among B2C customers,” expresses Giri.
However, the pandemic has also limited Kheti to some extent. “We could have worked with more farmers. But due to the restrictions, we were unable to expand our partnership with them,” he says.
Prior to the coronavirus outbreak, a large percent of the company’s revenue used to come from Kheti Food. After the lockdown, they started receiving orders from B2C clients. At that time, they received daily orders from hundreds of clients far exceeding their delivery capacity of 20-25 deliveries per day. As the situation returned to normalcy following the lifting of restrictions, Kheti has also increased its delivery capacity.
“Even after the lockdown, having more than 3,000 clients is a huge asset for us,” says Giri. In addition to this, their growth rate exceeded 50 percent in forward linkage during the lockdown while they had to face some hindrance in the backward linkage as they could not work in all 11 districts. However, they are happy and satisfied as they didn’t have to stop working.
By 2022, the company plans to slowly expand its service from 11 districts to 20 districts and increase the number of farmers associated with them to 25,000. Likewise, in forward linkage, they plan to launch market centres in Bharatpur, Chitwan, Butwal and Bhairahawa.