Agriaku Gets Funding from Arise, Solve Agricultural Product Supply Chain Issues

PT Agriaku Digital Indonesia (Agriaku) is a startup argitech which provides various equipment and necessities for farmers through the agency system or social commerce. They just posted seed funding led by Arise, a collaborative managed fund from MDI Ventures and Finch Capital.

Agriaku was founded in May 2021 by Irvan Kolonas and Danny Handoko. Ivan does have experience as an entrepreneur in the field of agribusiness, currently also serves as CEO of Vasham. While Danny is a former Co-Founder & CEO Airy Indonesia. It is hoped that the collaboration between the two can combine expertise in agriculture and technology to provide comprehensive services to agro-SMEs and farmers.

With the fresh funds raised, Agriaku plans to increase the number of farmers in its network to successfully penetrate the $17 billion market in Indonesia. Since its inception, Agriaku has empowered more than 6 thousand partners and thousands of small farmers throughout Indonesia through technology. Agriaku has a dream to become super app for agri players in Indonesia.

“Agriaku's ability to empower farmers through Toko Tani in a measurable way through technology is transforming a very traditional business in Indonesia. We are proud to partner with the Agriaku team and excited to see great things in the future," said Arise Partner Aldi Adrian Hartanto.

Solve supply chain issues

In the initial phase, my farm still focused on increasing the number of their partners. This partnership model is considered more effective than doing online sales directly to farmers, it is suspected that there are not enough farmers digitally savvy to spend on their productivity needs online.

Agricultural products usually become more expensive when they reach the farmers. Because in the supply chain process it must go through principals, distributors, retailers, then end consumers. On the other hand, the lack of insight and data for decision making on the distribution of agricultural products also sometimes creates its own gaps, for example the scarcity of certain products, which results in impaired farmer productivity.

Through its services, Agriaku wants to create a transparent network between all stakeholders in the system supply chain leaders agricultural products. One approach, they build a market called "Farmers Shop", connected with first-tier producers or distributors. This method is claimed to allow farmers to get a complete catalog of agricultural products at a much more affordable price.

So that even if they buy from the closest partners, which may be their own neighbors, farmers can still get attractive offers for the agricultural products they need.

“We believe that our approach to empowering local Farmers' Shops is last mile agents to distribute a batch of products and services to smallholders in Indonesia has the potential to democratize an industry that has so far been resistant to change”, said Irvan.

The agri-startup investment hypothesis

In a publication entitled "Yielding Next Gen. Agri Conglomerate Leveraging Tech Orchestration", Arise highlights four pain points main in value chain agriculture. These are limited access to capital, fragmented and inefficient supply chains, lack of access to technology, and price uncertainty due to climate change.

While this sector has enormous industrial potential, its value could exceed $500 billion of global GDP by 2030. Asia Pacific itself has the potential to contribute 8,2% of the total value. Seeing this trend, in the global arena of investment for startups argitech also continues to increase from year to year. In 2020, there were approximately 834 funding deals, accounting for more than $6,7 billion.

Even though the player agritech many have appeared – including some that are ready soonicorn like Tanihub, Eden Farm, Aruna, and eFishery—the Arise team still sees that there are some gaps that digital innovation has yet to fill. One of them is related to B2B marketplace that meet the needs of farmers. Furthermore, they will also look at management services and IoT that can help farmers manage their land.

On the global scene, several startups argitech managed to record extraordinary traction, including in relation to recorded investments. Recently, DeHaat, an Indian startup with a similar business model to Agriaku, recently raised $115 million in Series D funding from Lightrock, Sequoia Capital India and Temasek Holdings, etc.