Entrepreneurship

How DeHaat is making roots of Bharat stronger with technology

A miniature model of a rural farm store, perched on top of a storage unit, catches my attention inside this compact office. The workspace is characterised by open-plan desks, prominent company branding and motivational posters, and the model seems to be built to scale, showing the detailed layout and branding of the store.

I am inside the Gurugram headquarters of agritech startup DeHaat, in a nondescript commercial office building, where it occupies several other small offices as well. The 10-year-old company blends technology with physical infrastructure, such as warehouses and franchisee stores, to offer app-based agricultural solutions for farmers and other related stakeholders. With projected monthly revenues of 230-250 crore in this financial year, it is one of the oldest and largest firms in the sector. Its commercial real estate occupancy is indicative of the way startups tend to expand—one small office at a time, until they are big enough (and funded enough) to consolidate into a large workspace. DeHaat, too, moved into a larger space in Gurugram a few weeks after my visit. It also has headquarters in Patna.

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A miniature model of a rural DeHaat farm store
(Pradeep Gaur)

Agritech entrepreneurs in India have attracted substantial funding and media attention in recent times, with many offering a range of emerging business models.

Building the right model

The miniature model injects flavour into the office’s otherwise rather functional look and feel. It represents a typical DeHaat Centre, or a franchisee store, run by the company-appointed micro-entrepreneurs who service farmers in the local vicinity.

There are 10,000 such centres in 11 states, mainly in west, east and north India. The model’s presence in the office “reminds us of who we are, what we do, and keeps us rooted,” says Shashank Kumar, 37, DeHaat co-founder and chief executive.

“DeHaat is a full stack model. We have been trying to bring everything related to agriculture under one roof for Indian farmers,” explains Kumar. “That means helping Indian farmers during each stage of their farming cycle, from soil test, to the sowing stage, giving them better access to quality agricultural inputs, like seeds, fertilisers and pesticides, and advising them in a customised manner, so that they can reduce their cost of cultivation, can optimise the dosage of fertilisers, and protect soil fertility or the water table. We also offer financial services and insurance, and then towards the end of the season, we give post-harvest services in terms of logistics or the market linkage.”

Kumar is one of the earliest examples of a highly educated entrepreneur who went back to his farming roots.

Having spent his early years in rural Bihar, where his family was initially dependent on a 3.2-acre land holding for farming, he graduated from the Indian Institute of Technology (IIT)-Delhi, and worked with a consulting firm before deciding to start DeHaat in 2012.

The DeHaat team of four co-founders consists of similarly well-qualified graduates of IITs and IIMs (Indian Institutes of Management)—a breed of entrepreneurs who are as comfortable working at the grassroots level with the Indian farmer as they are collaborating with globally networked Silicon Valley-type venture capitalists.

There is perhaps a romantic appeal to this entrepreneurial trope of leaving corporate jobs for rural-based entrepreneurship, yet I believe it needs specific characteristics to succeed.

A recipe for success

First, a boots-on-the-ground approach. As the miniature model suggests, Kumar is aware of the importance of being grounded, by building a sizable local, physical presence, and by having a deep understanding of the needs of the Indian farmer, the agricultural sector, its limitations and its economic possibilities.

According to Kumar, farmers save substantially on costs because of “better price discovery and elimination of intermediaries”, and weekly crop advisory alerts result in better yields.

Market linkage to institutional buyers on the DeHaat platforms delivers better pricing, he claims.

Empathy is vital as well. Convincing farmers to adopt technology is a journey, which requires understanding their needs and demands.

Kumar says DeHaat endeavours to persuade farmers that they are long-term allies, rather than seasonal intermediaries.

”It’s not like we are providing everything they need, but whatever we do, it’s professional and transparent. Technology brings hope for the future, and they are connected to the latest farming technique, to the bigger world. It brings excitement,” he says.

Second, ambition. As the motivational posters on the walls highlight, DeHaat wants to scale. “We work with close to 1.3 million farmers. There are more than 100 million farmers in India. And given the kind of response we are receiving from farmers when replicating this model from one location to another, it gives me a lot of confidence. We are talking about working with 20-25 million farmers of India in the next four and a half years,” he says.

Even though the company has been growing 50x times in the past three years, it is an ambitious figure.

Finally, and perhaps incongruously—patience. Kumar and his co-founders spent years working on the business model before going to raise money from external investors. They have raised well over $150 million since March 2019.

“Shashank only raised money when he knew what to do with it (the money),” says Mark Kahn, managing partner and co-founder of Omnivore, one of DeHaat’s investors.

Kumar says, “If you see our journey, for the initial seven years, we did not scale at all, our scale was very suboptimal.” He adds: “First, we built the expertise for each and every function. And then subsequently, we digitised all the things, and built a digital playbook. And that’s the reason you’re seeing 50x growth in the past 30 months. We don’t need to spend another four years or five years, in any new geography. We have all the right products and services that farmers need, and that’s why the gestation period for us in any new geography is going to be very short. If you can build the right model, if you can build an institution, growth is not a question at all.”

It’s not an easy troika of skills, but to succeed in Bharat, to my mind, this is what it takes. Just as crops take time to grow, business models, and entrepreneurs, also take time to mature and prove themselves.

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Aparna Piramal Raje meets heads of organisations every month to investigate the connections between their workspace design and working styles.

 

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