Shashank Kumar, Co-Founder & CEO DeHaat chats with Gaurav Ranjan, VP Investments Prime Venture Partners.

Listen to the podcast to learn about

05:20 - “We Started when AgriTech was Agriculture”

14:40 - Scalability and Monetisation in AgriTech

23:00 - Role of Tech(Enabler or Revenue Generator)

37:10 - Managing Scale in a Fast Growing Startup

43:30 - New Startup Opportunities in AgriTech Space

Read the complete transcript below

Gaurav Ranjan 00:40

Hello listeners, today we have Shashank Kumar, founder and CEO of DeHaat and agri-tech startup. And happy to have you here, Shashank. Welcome to the podcast. Look forward to an engaging discussion.

Shashank Kumar 00:55

Thanks, Gaurav. Thanks for having me.

Gaurav Ranjan 00:57

Great. I mean, briefly you could just explain what DeHaat does and then we can dig deeper from there.

Shashank Kumar 01:05

Well, so DeHaat essentially, it’s a one stop solution for Indian farmers,I go a step back. So in India, most of the farmers are small, that means their average land holding is less than one to two hectare. And regardless of the crop they grow, in fact, and obviously they have certain basic agriculture needs in terms of they want access to quality seed, fertilizer, pesticides. They need information, advisory, financing, of course, they need market. But in reality, because of the small holding, a land holding, building economies of scale for these farmers at an individual level is very difficult. And that’s the reason why they have to go through ample difficulties during each stage of their farming cycle, whether it’s pre-harvest or post-harvest. And as a result, again, we all know that the average income of one Indian farmer’s household in a year is just 70, 80,000 rupees.

As a result, we all are aware that in India, the overall farm productivity is not that great and obviously, in fact that is triggering another challenge related to food security or safety and so on and so on. But interestingly again, if you look at the different part or another part of the value chain where 14% of the national GDP exists actually, so there is a large market which is equivalent to $350 billion, but the challenge and the problem for this multi-billion dollar market is the lack of transparency, lack of efficiency.

So this is the way how as DeHaat, we defined our problem statement that why we cannot connect every individual Indian farmer to the various agricultural businesses, whether they are agric input companies or agric output buyers or an insurance companies or a financial institution as a lender. And which will bring a lot of efficiency for all these agricultural businesses in their own respective business. But at the same time, it will help millions of these farmers to maximize their agricultural income, and hence improve their basic livelihood. So that’s about DeHaat, that’s exactly what we have been doing since more than a decade. So long story short, we are a bridge between businesses and farmers.

Gaurav Ranjan 03:30

Got it, got it. Very interesting, very interesting. I mean, a lot of the way things would have evolved in the last 10 years, but when you started 10 years back, what was the key insight or inspiration with which you started and going after the farmers? What was that key insight that you had that led you to start this?

Shashank Kumar 03:50

Something similar to what I just said, but just to elaborate, I think the key insight was one, that in India, if we talk about the number of farmers, there are more than 100 million farmers. I mean, they have been into farming since ages, but still as on date, they are looking for quality agriculture value chain services related to input advisory, output financing or so. And at the same time, again, the overall inefficiency in this multi-billion dollar industry, that’s huge.

So that means the overall sample size of the problem statement is humongous, and hence if you build a right model, scalability is not a question. And at the same time, the impact quotient is going to be huge. So I think these are the two first thoughts when we started considering this sector: that one, you can build a very, very large business with such a high degree of impact. And again, that has always been the source of motivation for us to again stay in the sector.

Gaurav Ranjan 05:00

Got it, got it. And you started DeHaat when, of course agric-tech in startup parlance was not cool as it is today, 10 years down the line. So what has been the journey like over the last 10 years? What are some of the key breakout moments for you which defined DeHaat and the way the company has evolved over the last 10 years?

Shashank Kumar 05:20

Oh, I keep saying that we started when agric-tech was agriculture. So I think many, yes but the good part is that we have been evolving. Somehow, again, we could solve those challenges, or somehow we could overcome all those breakout moments. But yeah, I mean if I highlight a few of those, so during the early stage, I think the challenge was the acceptance from farmers. I think that was the first setback because that, “Hey, so we are here in some village of Bihar. We have quit our cushy job so called and we came back here to change your life, but still you don’t want to change. One side, you’re saying that you’re not very happy with the return from agriculture, but at the same time, there is a high inertia in terms of whatever you have been doing since years.” So that was something which was very difficult for us to understand.

But yeah, I think for us, it was burned the bridges. So now we just tried to think from their perspective why this is happening. And that really helped us to understand the farmer’s perspective. And that’s when we learned that these farmers, they don’t have risk taking ability. And that’s why again, I mean, wherever they are, in fact, they have just made up their mind that, “All right, I think let’s just let it be.” If you want them to change the cropping pattern, you are proposing that because that may give them better return, but they see that more from a risk perspective. So that’s why I think that helped us to build farmer’s first approach or thesis for DeHaat. Maybe a few years later when the basic model was designed, I would say, again, they saw a risk or fear to switch from conventional to maybe an alternate distribution or aggregation network.

But again, that was the time when we learned that probably this is a sector which is not new. So probably, I think you will have to deliver first to win the trust from the industry, especially because their day-to-day business is at stake. So that’s why effectively, if you are a supplier to an FMCG company or if you are buying any agric input from a large seed company, so effectively their entire business is dependent upon your performance. And as an organization when you are already new, neither you have a scale, so their fear or risk was pretty obvious in a way. But yes, then again, we spent a few years just to build a certain scale or maybe a kind of confidence for them that, “Hey, so this seems working,” and so on.

At some point of time, again, I mean, I was not alone when I started, we were a group of five. Again, that was one of the best parts of our journey because when the model was not built, the core team was, and that really helped us again to sustain. Why? Because when one of us used to feel low, then again all others used to be the motivator or vice versa. But around 2015, 2016, again, in a group of five, one of us opted to go out, decided because again, he just wanted to do something else. Again, that was a moment which was very difficult to accept. Why? Because we thought, “Hey, so I think we are here for the rest of our life, so why is this happening?” So, yeah.

Then again in 2018 or so when we realized that model seems to be working very well. As a team, as a model, as a platform, probably, I think we are now ready to scale. And then we started talking to investors to raise our first institutional round. By that time, we had raised a couple of angel rounds. We took on a lot of debt. But in 2018 when we started hitting the market to raise our first institutional round, again, it was very difficult to explain to the people what exactly we were trying to build. Because historically, if you see, nobody else has ever built or talked about building a full stack model, which is input, output. And for all the crops, farmers are growing. I mean people have been working but either with a crop specific approach or services specific approach. So it was very difficult to convince, but again, we applied the same logic, that we started thinking from the investor’s perspective, and we saw that alright it’s a business opportunity for them. Probably that’s not a question, but I think the question is more around scalability, the execution capability, there is no footprint.

We felt more responsibility in a way. And the only thing we could do is to just keep attempting. I remember after 82 or 83, I had stopped counting how many investors basically we had approached. But yeah, April 2019, we raised our first institution round. In fact, even if I talk about the current context when we grew by 60x in the last three months, at this point. And when we have recruited more than 1500 people in the last 10, 17, 18 months. So then again, we really felt that hey, so we recruited so many people, but again, all these people are from different backgrounds, different cultures, and again, the same.

Probably none of these folks have seen the full stack version of the work, I mean, because either they had worked with any agri input company and they had been selling just one brand, one SKU, or they had worked with any, agric output buyer aggregating just one crop, one commodity in a year. So again, then it was very difficult. It is very difficult again, to align everyone as for the work. It was why, because there is a history to the organization. So yeah, I think there are many. I know I can go on and on, but the good part is that any of the setbacks or so called that in a breakout moment, never came back again. I think that’s a good part.

Gaurav Ranjan 11:45

Got it, got it. So I have a lot of follow-up questions. So I covered the business aspect of it later, but first as an entrepreneur, as an individual, I mean you started this in 2011, ’12, and by the time you raise funding, it was already six, seven years. You had initial challenges in convincing your key stakeholder, which is the farmer, and then challenges around the team, somebody moved out. So as an entrepreneur, how do you keep yourself motivated when things are not going the way you have planned it to be? And during the same time, startups around you, your peers, your colleagues would have raised money, would have built large scalable businesses. How do you keep yourself going and keep yourself motivated?

Shashank Kumar 12:30

Well, I think two things. One, you always look at the size of the problem statement. Size and the importance of the problem statement, that is a very serious problem. So, if not you, then who else? And you can’t expect that anyone else, I mean, that somebody from outside of India will come and solve this India specific problem. So, that was one. But the second and more important reason or the way how we could keep ourselves motivated was that we stayed very close to the problem statement. That means, again, some village, wherever we had our DeHaat centers or nodes and the size was very small, but at that small size, the change or the impact was quite visible.

And I think that really helped us to stay motivated, because a number of farmers would let just few thousands, but again, all those farmers, in fact the way how they were getting benefited on day-to-day basis while buying any seed from DeHaat or while selling their produce, while getting basic advisory, when we could see those around that how as DeHaat, we are helping them to maximize their income from agriculture, which is as high as 50 to 70% within a season or two. So I think that kept us motivated. That model seems to be working. I think it’s all about figuring out how we can replicate this model from one geography to another.

Gaurav Ranjan 13:50

Got it, got it. Getting back to the business point of view, something I covered in the beginning as well, in agri, everybody wants to work with the farmer, because that’s where everything originates from. But the challenge in India, more than 80% of the farmers have less than two hectare in terms of land holding, so very marginal, very fragmented. So two questions come up. One is in terms of scalability, how do you scale and reach maximum farmers? That is one. The second question is in terms of monetization, these are small farmers with marginal output. So how do you get onto the monetization part of it? So one is the scalability part. How do you reach out to these multiple farmers who were not on the digital platforms at least five years back? And then how do you monetize this segment? Is there where the monetization lies or does monetization happen somewhere else?

Shashank Kumar 14:45

I’ll answer the second part first. So monetization is through commerce. When farmers buy agri input, that’s one. And similarly, when they sell the produce, whether it’s fruit or veggies or staples. So, that’s two. And we are not a marketplace, it’s an inventory led model. It’s a buy-in, sell model. So we buy all the agri input, we sell to farmers. Similarly, we buy the farm produce from farmers, we create it, we sell it, we pack it, and then we sell it to all the institutions. And to the first part of the question, so basically that’s where our advisory comes into the picture. So we’ve really invested a lot in building very localized, personalized, customized crop advisory services for farmers. So whichever crop they grow, whichever variety they’re growing, based on the weather, based on the date, schedule, they get very exhaustive and thorough crop advisory services from pest management, to disease management, to irrigation, to fertilizer, soil test, everything. And we don’t charge farmers for this.

So that’s how basically we use advisory to onboard or to acquire the farmers. Yes, during early days when mobile penetration, the data penetration was not that great, it used to be manual. So I still recall, we used to use paper and pen literally to register each and every individual farmer. And again, you won’t believe it when we used to ask for their cell phone numbers so that we could call them to advise them. Even we used to feel the resistance that, “Hey, so why should I share my mobile number?” Obviously, this was probably 2012, ’13, ’14 or so.

But again, at the same time, we did not invest in the technology at that point of time and neither did we had resources to invest. But for the first few years, we actually built our content, the advisory content. And then since 2015 onwards, we started building technology, and by that time we could experience the point of inflection in terms of adoption of feature phones followed by 3G, 4G or so on. And then obviously we kept investing.

Gaurav Ranjan 17:00

Got it, got it. That is interesting. So you mentioned some of the changes in behavior over time, people having no phone to feature phone, smartphone. So overall how has the sector evolved with time in the last 10 years? One is of course the consumer behavior, how has that changed? And second, are there some ecosystem drivers that have enabled a lot of agric companies to build and scale in the last five, seven, 10 years?

Shashank Kumar 17:30

I think a lot. So within this little time, I think the overall, both physical as well as digital infrastructure improved a lot. And that is one of the strong enablers for sure. So that means onboarding a farmer is getting easier and easier. Setting up your warehouse, setting up your processing or collection center, that is becoming easier and easier regardless of the location of the state you want to operate in. So, that’s one. And obviously the entire ecosystem has been working towards this, the right policies such as Jan Dhan, UPI, I mean these are just a few names. But in a way, I think it really helped farmers to start thinking about digital transaction, at the same time, mainstream transaction or communication, whatever it is.

The entire ecosystem has been working in this direction. If we look at few of the global or in general, the global scenarios when everyone is talking about the global population to hit 10 billion by 2050, so then somewhere I think a couple of years ago, everyone realized that, hey, so it’s very important now to start talking about small holders. I mean, because all the large agri input companies or output buyers, in fact they could reach to large farmers, but globally everyone realized that, “I think reaching out to small holders, that’s not possible for any of us. And hence basically, we need a right platform or we need an alternative channel of distribution or aggregation,” which is very, very important from a food safety or securities perspective in a way.

So that was another reason for agriculture, why in general at an industry level, there has been an acceptance towards new gen ventures or agri-tech platforms or agri-tech innovations for whichever crop or sub-sector you’re talking about. So, there are a number of things, but yes, long story short, one is the in general physical and digital infrastructure. Two is the policies or the framework, regulatory framework. And then the third is again the point of inflection from the industry side to collaborate with the agri-tech platforms for a larger reason.

Gaurav Ranjan 19:55

Got it, got it. Great. And the other thing in agri, such an important sector, at least in the Indian context, that government too has done a lot, whether it is in terms of extending credit, whether it is in terms of setting up Krishi Kendra for advisory, et cetera. And it has been going on since ages, I mean for the last 20, 30, 40 years. So do you see that has changed in the last five, seven years or are there ways to work together with the government? What is the role of government?

Shashank Kumar 20:30

More catalytic here. So being a government, again, I mean they have a budget for R&D or agricultural research or innovation. But at the same time when it comes about extension or taking those innovations to every single farm or farmer, I think that’s where obviously again, I mean, people like us come into the picture. Similarly, building infrastructure like warehouses or anything or maybe building the right policies so that you can export agricultural produce from India to different parts of the globe. So the role of government is more catalytic and I think … But it’s very encouraging the way how now in general, and you must be knowing that agri is a state subject, it’s not a central subject. But in most of the states, in fact we have been seeing now how governments are very, very inclined towards public private partnership for any of the intervention or activities.

So again, that is another point of inflection. For example, now in many of the states or even at center, especially at the level of Niti Aayog. I’m hearing now, the government is talking about building a data stack so that whatever, let’s say the public data they have is related to direct beneficiary transfer or related to fertilizer subsidy or location, or related to Kisan credit card. In fact, they’re talking about giving access to this public data again to private players. So that again, I mean, there can be some interoperability. So obviously, I think this is exactly what is expected from any government because the government cannot transact with farmers, whether it’s input or output or insurance or lending for that matter, but they can definitely become a strong catalyst or an enabler, and slowly and steadily that’s happening.

Gaurav Ranjan 22:20

Got it, got it. Moving on, talking a little bit about the role of tech in agri, because the core stakeholder is a farmer. And of course over the last few years, they have started adopting smartphones and data, et cetera. But do you see tech has a big role to play here or do you think tech will be an enabler, you need to be present on the ground, feed in the street, working with the farmers, all the mandis? Or do you think tech can change anything, have a pure maybe digital platform where people come and transact and do business?

Shashank Kumar 22:55

Well, the tech certainly has a big, big role to play and maybe … But again, largely as an enabler, or maybe the journey first as an enabler and then later as a revenue generator as well. But firstly, as an enabler. So for example, even in our scheme of things, again because of tech, now while serving one and half million farmers and while again managing close to 2.4 million hectares of land, while operating in more than 178 districts of India, while delivering agri input, while aggregating produce from more than 110,000 villages of India, imagine it’s just the tech, which is again helping us to reach to this scale. And largely, because of tech at any given point of time we have complete visibility, complete transparency, that what’s happening where. I mean in terms of where the inventory is, how inventory is moving, how basically … Again, whether the SOPs at ground level are being followed properly or not, whether …

Again, imagine that every farmer receives an advisory alert every week. Technically, we spend close to five million minutes every month while talking to farmers, while guiding them for sustainable agriculture practices. But at the same time, the team size to manage this is very, very lean. That’s not possible without tech. Every month we are onboarding thousands DeHaat micropreneurs, which is equivalent to 10,000 villages effectively. But the team size managing this space is only just five or six member teams, it’s not possible without tech. And more importantly, again, you are in the business of bringing efficiency and transparency for this $350 billion industry. So that means you have to invest in the tech so that again, you can build the transparency first for yourself, which will help you to reach out to scale, and then later to pass on the same transparency to your business associate. So that’s what I meant when I said that firstly as an enabler, and then after some point of time, again as a revenue generator too.

Gaurav Ranjan 25:15

Great. That’s very helpful. You did mention earlier that you and your team, you used to stay close to the farmers, you used to stay in villages where you had farmers and customers. And of course, the tech happened much later, like 2015, ’16, ’17 is when you build the tech platform. So, if you could share some anecdotes or examples where working closely with your customers gave you some insights that help you develop the product in a much better way rather than just sitting in Bangalore or Gurgaon, then building tech for the ecosystem?

Shashank Kumar 25:45

Again, infinite funny stories. For example, I recall back in 2013 and ’14, we had introduced baby corn as a crop in Bihar. We trained farmers to grow baby corn and we gave them complete assurance to buy the produce, because obviously they had a fear that let’s say in the local market or the local aggregate or the local mandi cannot buy this produce. I think strategically, we did all the right things because we shortlisted corn farmers, I mean, those farmers who have been growing corn. And more or less, the farming practice of corn is similar to baby corn in a way. So I remember one of the evening, in fact we were there at the farm and we were guiding the farmer that “Hey, so tomorrow morning, you have to harvest it, early morning 4:00 AM, by 6:00 AM we’ll send our mini truck and then we’ll load it and we’ll take it.”

We thought that he got convinced or basically he understood what he had to do. But for him the plant was the same as corn. And obviously the harvest was small, because it was baby corn. So I remember at 2:30 or 3:00 AM, in fact he called that, “Sir, are you sure I have to harvest it because this is not grown fully. They’re still very small.” And we were like, “Hey, so no, no, we talked yesterday. I mean this is baby corn, this is not corn. You have to harvest it. Don’t worry, we’ll pay you,” but he was like … It was so difficult. So I think that was the time, and again, there were many like that. So long story short, initially we thought that farmers are doing conventional crops like rice, wheat, why can’t we encourage these farmers to grow crops like papaya, banana, baby corn or herbs, because these crops are highly remunerative crops.

It may solve their problem. But I think one of the early lessons basically we had that, hey, so again, what I keep quoting, I mean, that, “You can’t sell hide and seek to a parle-g customer.” And again, we also felt that I mean we are in the business of building trust, so that means firstly, we’ll have to work around the same crops or the prevailing crops, what they have been growing. And basically will have to bring efficiency around those prevailing crops that will bring some trust and then probably I think we should start recommending the new crops. And obviously, now that has become a DNA. The second bit is again, I mean again this maybe I’ll double click the same piece, which is the trust, is that … And we felt that again, the trust can only come when they will feel that you as a service provider know them very well.

And that’s the reason why our advisory content is super, super customized and very much localized, and not just for states, even for districts, even for blocks. Why? Because in rural areas, the same disease or same pest attack is known by different names, different lingos within a state, within a district. So I think those were a few things which really helped us to basically understand the perspective of an individual farmer. And more importantly, it really, really helped us to build that farmer’s first thesis. You talked about Krishi Vigyan Kendra, which is built by the government. So each and every district across India, there is one Krishi Vigyan Kendra. And these are the extension of agriculture universities and we were like, “Hey, it’s such great infrastructure in every district and at the same time farmers, they need advisory intervention. Why these farmers… They’re not going to KVK. Why is there such a low footfall?”

And then we understood that we are talking about a mass for whom annual income is 70,000 rupees. That means monthly 6,000 rupees, that means daily it’s 200 rupees. And it’s not like at the end of the day, they get 200 rupees in the pocket. And then the Krishi Vigyan Kendra is 50, 60, 80 kilometers far from your village as a farmer. That means your to and fro cost itself will be 60, 70 rupees, which is 30% of your P&L. That’s obvious that probably you may not spend 30% of your entire income just for one advisory query, and you know that there’ll be many such advisory related requirements every season.

These are the things, again which really help us to understand how an individual farmer in India thinks. Yeah. What we are seeing in reality, whether it’s low footfall at KVK, whether 80% of net sown area under low value crops like rice and wheat, if whether farmers are not really willing to change, but again, because of our, again, closer proximity to them or with them, we understood that what’s the reason behind these facts.

Gaurav Ranjan 31:00

That’s very interesting. I mean the point that you made about that it has to be customized to a village level, you can’t even think of a state level. If you’re giving advisory or input, it has to be customized and tailor made to a village level or at an individual level. So, that’s very interesting. Going back to the question of profit pools, you did say that the money is in distribution if you help them sell the product to the market. We have seen, at least in India, that any business eventually gets into lending. You’re not a true Indian startup, getting into Indian customers if you don’t get into lending, whether you’re SaaS, whether you are commerce, anything. So what are your point of view on the lending side of things? Do you think that is an interesting opportunity, at least in the agri landscape?

Shashank Kumar 31:45

That is an interesting opportunity, but we don’t see ourself doing by ourself. Why? Because again, we don’t have that DNA, we don’t have that capability. But we see us playing a very large role in this. And just to give you a context here, that overall lending is strongly mandated by the government, because banks are strongly mandated to lend under that priority sector lending. But despite of at ground level, you’ll find less than 13, 14% Indian farmers have got access to structured financing. And as a result, even as on date, their average borrowing rate is three to 5% monthly. Okay?

So the same story, I mean that there are a number of banks, they want to lend, but there are millions of farmers. So the reason is that again, with the banks, they don’t know the farmers in terms of data, nor in terms of any history. And that’s where we feel that as DeHaat, probably, we have a role to play. Why? Because we know the farmer, and not just we know the farmer, it’s because of any one time task or activity, but because of a series of transactions or interaction, again, we have been going through, because every season they’re buying something, they’re selling something, they’re talking to us. So hence all these communication or transactional data sets can be leveraged to bridge the gap.

Then at some point of time, we started digitizing the land parcel as well. We started putting data from satellites every week. So that means I said, okay, all right, so not just the farmer, but even now we have information about their respective farms as well with the help of that spatial data that shows how each and every individual farm is behaving. Then now we are talking about leveraging all these spatial behavioral and transactional data sets in order for the banks or financial institutions so that they can use these data sets for their own underwriting. But we are not talking neither, we are thinking about lending by ourself because that’s not our area.

Gaurav Ranjan 33:55

Got it, got it. Great. While I was doing some research, I did see that you guys have launched two brands, Honest Farms and FarmPlus. So could you share some inside what was your thought process? Because your core customers are farmers, you were helping them with advisory import and then connecting them to institutional buyers. Now, launching your own line of products-

Shashank Kumar 34:20

So I think it’s the same intent, same effort. Sorry to interrupt. But often, we speak internally, I mean, that farmers are the ones who buy everything in retail and sell everything again in wholesale. In a way they’re a manufacturer. But you’ll not find any other manufacturer with no right or option of setting the price of the produce or the product they are manufacturing. But that’s the irony with Indian farmers.

So yes, we are B2B, but at the same time we saw that a larger part of market share doesn’t belong to any institution. When you talk about fruits and vegetables, less than 15% market share belongs to modern trade retail or eCommerce players. There’s still 85% market share that’s still with the conventional folks. So it’s true on the staple side as well, so that’s why again, we thought that hey … And at the same time again, our volume has grown significantly. Imagine that every day we are aggregating currently 4,000 ton of produce.

Last year at this point of time, this volume used to be in the range of just 600, 700 ton. So that means with the same ratio next year, this will be again more than 20,000 ton in a way. I think at this point of time, it’s great that we are selling to institutions, but I think at some point of time, because our aim is to onboard as many farmers as possible. I think at some point in time probably, we may have to build a captive demand, so that probably we’ll be in a position to serve these farmers. So these are very, very early initiatives, but with this intent that how we can expand the market options or the market channels for our farmers, for their various produce, whether it’s vegetables or fruits or staples.

Gaurav Ranjan 36:30

Got it, got it. Very interesting. Switching gears, I mean we covered a lot about agri, and the way you have navigated the last 10 years. Talking a little bit about org building, you did mention that you have hired 1500 people in the last 12 months and you’ve grown like 60x in the last three months, and then from 600 tons to 4,000 tons. So what are some of the challenges that come with this scale, how they’re going about managing this from an operations point of view, from managing supply, figuring out demand, et cetera, if we just walk us through a little bit about that. Managing scale, how do you go about doing that in a short span of time?

Shashank Kumar 37:10

Well, to be very honest, managing scale on the op side, I think we did not face a challenge, I think largely because of the strong foundation we have laid in the past. And at first seven years we did not grow at all because we were actually preparing ourself for this scale. So on that part, we didn’t see a scale. Every time, every year, we surprised everyone, whether the market, our investors or our team members themselves, that let’s say every time. And obviously, we’re talking the last three years when sometimes you had COVID, sometimes your supply chain was broken, sometimes … And now in the current time when the overall cost of capital has gone up, the market scenario is entirely different. So every year, in fact, we surprise people on that side. And I think that has been the strength of DeHaat, which is a unique execution capability which we have.

But I think the challenge was more again, on the team building, on the org building. Why? We could recruit people because we had all the right resources, but as I said that ensuring behavioral change in those people, and that too, again in a very quick manner, I think that’s where we faced a lot of the challenge. And why? Because you had been growing. Imagine as on 31st March, 2019, we had only 38 DeHaat centers, we had our operations only in three districts. And now we are talking about again, close to 180 districts and 10,000 DeHaat centers within 40 months.

So I think the larger challenge was more around cultural alignment, but I believe that every organization has to go through this process. And this is a very important and integral part for any enterprise in a way. We have been learning too, again, and a lot of initiatives, again, we have taken already on that piece. One, our own internal modules and academy to train people. And again, and not just a challenge, not just in terms of cultural alignment but challenge also in terms of the right skills, because as I said that nobody else as an individual had ever experienced this full stack in any aspect of the operations. So also the training, the capacity building, the skill building enhancement.

Yeah. But again, as you can understand, we are here for the rest of our life in a way. So then over the year, then again, then early this year again we launched our own academy. DeHaat Academy for our own set of people where everyone has to go through those courses. It’s similar to college in that you have to go through those courses, you have to pass the examination and all those things. So many initiatives we took. But this was the challenge actually we faced, which was not on the operation side, but more on the team building side, whether getting the right skills on the table or getting the culture aligned as per your work with us.

Gaurav Ranjan 40:20

Got it. That is very interesting. I mean when you’re preparing for scale, building an internal academy so that anybody who comes in knows what the company does, what the culture is like, so that people get the ground running as soon as they can. So, that is a very interesting take over here. So moving on the last part, we have a few more minutes. So I know a lot of things have changed in the agri ecosystem over the last 10 years, and you did have a long gestation period because you were on the ground building for scale, preparing for scale. So if you had to do it today, what you have built so far or if any new entrepreneurs are starting up in the agri space … I mean if you had to do it all over again today with the current info and system that we have, would you do anything different in terms of building this?

Shashank Kumar 41:10

Surely, because the overall situation, positioning, the circumstances have changed a lot, so obviously differently. I think when we started at that point of time, we could afford going slow for the initial few years. Why? Because again, one, the overall entrepreneurial ecosystem was not ready. Two, the overall digital ecosystem was not ready. So those were the reasons largely why we don’t have any regrets. In fact that’s one of our, again, golden days when we developed our core competency or strength in a way.

But yeah, coming to your question, I think maybe if we had to do it differently, if we had to do it again, and in the current situation, I would say I would prefer investing in technology as early as possible. And that means probably, I think then you need to manage your resources, whether it’s your own money or you raise, or how do you manage, that’s your problem. But yeah, investing in technology as early as possible because now the time is right, everyone is ready to accept, to adopt that technology. And the sector is all about scale. And without technology, again, one can never get to the right scale to bring any change.

Gaurav Ranjan 42:45

Got it, got it. Great. The other thing, I mean the scale that you are at right now with close to 175, 180 districts, more than a lakh villages dedicated to … And you work across the value chain from input to advisory to output. Through that lens in mind, of course, you see a lot of interesting opportunity areas that may come up with you, we spoke about lending a while back. But from that point of view, what are the areas that you see which are where new opportunities have come up within the agri space, where new startups can come in and build something within the agri landscape overall?

Shashank Kumar 43:25

So firstly, it’s not a winner takes all. So that means, again, despite the fact that DeHaat has been working in certain geography with a certain approach or any other agri-tech there, even in the same geography with the same approach, one can find enough headroom to come. And again, and the beauty is the way how hundreds of agri-tech startups have emerged or they started their journey, especially in the last three, four years, which is great, and that’s a need of the hour from the sector’s perspective. But my view here is that there are few opportunities which are really, really untapped, such as financing piece, as I think we briefly touched already. Even as on date, you will not find even a single model which is tailor-made for farmers financing. There are a number of NBFCs, there are a number of FinTech players, but there are still B2B, FPOs, retailers, processors. But again, a farmer friendly FinTech model is still yet to be seen, yet to emerge.

So it’s true on the insurance side. I mean that’s another, again, ocean. So far, insurance is something which is being taken care of by the government, but that’s just for a tick mark with all due respect. So in the overall insurance, whether it’s weather insurance or the crop insurance or the yield insurance, again, that’s another area. The third is the agri bio, because the entire world is moving away from chemicals. And obviously it wouldn’t be good to know four years, five years, six years down the line about net import dependency for India on bio fertilizer, bio pesticide as well.

So, that means the overall bio or bio agri related innovation, it has to start today, otherwise will end up with importing bio fertilizer, bio pesticide, again, the way how we have been importing MOP and DAP from other countries in a way. So I think these three. And last, not the least, is the overall digital extension or digital advisory to farmers. Again, the time is right. Now farmers, they have the right device in their hand, they have willingness to pay…

Gaurav Ranjan 45:55

That is the question that we always keep asking. Will farmers pay for advisory? Well, you mentioned earlier that the real monetization opportunity that will help them sell their produce. So do you think it will-

Shashank Kumar 46:10

Yeah, so we chose that route. It doesn’t mean that farmers cannot pay. And why? Because again, I mean we aim to aggregate more than 30, 35 million farmers of India, but like you know, one can be happy to work with just a million farmers paying maybe $10-$15 in a year or so. So probably digital extension or digital advisory on, again pay per usage basis to farmers. I think that’s another area where one can explore.

Gaurav Ranjan 46:45

Got it, got it. So you did touch upon lending and insurance at prime. I mean, of course that’s one core focus area for us. The thing that we’ve struggled with always is the data, thin file problem of farmers, there is no GST data, there’s no transaction data. So what is the right way of going about lending? Is it first, you build advisory, first you build transactions, and once you have enough data, once you have a close relationship with farmers, that is when you do lending.? Or do you have feet on the street to acquire farmers and do it the hard way?

Shashank Kumar 47:15

Well, so that’s what I’m saying. And now because of mobile and UPI penetration, now you don’t need feet on the street. That’s one. Secondly, you can find other players, not necessarily us as DeHaat or not necessarily someone who’s only working in agri. But in general, you’ll find different players operating in rural areas as runners, or maybe as volunteers. Imagine how this entire Aadhaar detail would have been captured, and it was all by franchise equivalent people. I mean, there was not even a single person on a fixed payroll who was collecting the data. So the ecosystem is ripe. So that again, one can think about this digital innovation to collect all the right data sets, all the right risk modeling for the banks or the financial institution. That’s a business call, whether you want to lend it through your own balance sheet or not, that’s a separate debate.

Gaurav Ranjan 48:20

Got it, got it. Great. That’s very helpful. One final question and then we’ll wrap up. If you have any message for upcoming entrepreneurs, whether they’re building an agri or otherwise, given your own journey over the last 10 years with a lot of grit and patience and determination, so any message for entrepreneurs building today?

Shashank Kumar 48:40

I think the current market scenario, it’s not a bull market. And I feel that this kind of condition is the best time to build the innovation, to build the enterprise, because the great enterprises are always built in crisis. So it’s the right time, again, to build your enterprise or to start your enterprise in a way. And you’ll be valued rightly if your foundations are correct. So whatever is the thought, whichever sector, one should not fear that, “Hey, market is down, whether I’m going to get investment or not.” I think one should not think about all that crap. It’s just that I think it’s the right time to start your enterprise because history has a number of evidences that when great, all nations are built during the recession in the crisis system.

Gaurav Ranjan 49:35

Great. So thank you a lot Shashank, with that will wrap up the podcast, but pleasure chatting with you. Thanks for your time.

Shashank Kumar 49:45

Thanks Gaurav. Enjoyed the conversation.
 

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