Agriculture has been the backbone of the growing Indian economy for centuries and yet has seen little digitisation and organization across the supply chain. It contributes 16% to GDP, employs 43% of the workforce and just the processed commodities trade is over $500B annually. Poshn is a product first approach towards digitizing, streamlining and facilitating agritrade for commodities. Prime Venture Partners has led a $3.8M Seed round in to fuel the building of this exchange and we are very excited about the growth and the transformation of this sector.
The Agri supply chain and its challenges
The Agri supply chain market is highly fragmented, unorganized and has seen very little to no technology adoption. There are often 6-8 intermediaries between the farmer and the retailer and while some of them add real value to the product and the trade, a large number of these intermediaries simply add on to the inefficiency in the supply chain.
One of the most critical parts in this value chain is the procurement of commodities between food processing units i.e. manufacturers, mills, etc. and wholesale buyers consisting of wholesalers, modern trade, and B2B commerce platforms. The buyers struggle with price discovery, on-time delivery, quality of produce and working capital. Similarly, the supplier's challenges lie around demand predictability, timely payment, working capital management, and a limited and inelastic distribution network.
As a result most buyers and sellers work with a small set of counterparties with whom they have a long-standing relationship to mitigate issues around trust, transparency and working capital. At the same time, there are agents who act as market makers connecting the buyer and the supplier by forming a ‘proxy’ trust layer. To buy a commodity the buyer starts by calling his regular suppliers and agents for price and quantity discovery. After multiple discussions, he places the order with one or more suppliers. If the buyer has a good relationship with the seller he is able to get credit for a few days else he pays the amount upfront. Post order confirmation, the buyer has to constantly check with the supplier or transporter for the delivery timeline. In either case the process is offline and manual making it highly inefficient and limiting the scale of the businesses.
Poshn’s product first approach at solving the complex value chain
Poshn is operating in this space and addressing the challenges faced by hundreds and thousands of food processing units and more than two million wholesale buyers. It is taking a product first approach towards solving the complex problems in B2B trade and making wholesale procurement seamless for both buyers and sellers.
The platform adds a layer of trust by bringing in transparent pricing, quality check, on-time delivery, and providing working capital financing wherever required. By removing the working capital constraints for the buyers, Poshn helps them to procure more and increase their turnover. At the same time, sellers are able to expand their network and reach more buyers via the Poshn platform, thereby increasing their business. Poshn operates in an asset-light, zero-inventory model thereby eliminating any pricing or inventory risk.
With more than 500,000 food processing units in the country, they are adding tremendous value which will remain critical to this sector for decades to come and are in need of a rapid digital transformation.
A team with deep customer empathy and a great founder-market fit
What attracted us to Poshn is how the company frugally scaled its way to incredible traction with solid unit economics over the last eight months. At such an early stage, the company was able to grow 20x while maintaining positive EBITDA. We are also in awe of the customer love that Poshn has garnered which was evident when we spoke to both the buyers and suppliers in the marketplace. Both Shashank Singh and Bhuvnesh Gupta are missionary founders and deeply passionate about the problem and the sector in which they operate. Growing up in families with Agritrade as a business, they have a visceral understanding of both the nuances and the challenges the sector faces. They also have experience in building and scaling large market places in B2B trade and logistics which are essential pillars in building this business.
Poshn is at the very beginning of a huge trend of making the agri-trade supply chain effective and efficient. We believe a lot of innovation is needed in this sector and Shashank and Bhuvnesh are at the cusp of this transformation who will play a huge role in bringing about this change and also expand the size of the market over the next decade.
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