Will DeHaat's Full-Stack Model Overcome Low Margins Challenge

9/2/2021 Will DeHaat’s Full-Stack Model Overcome Low Margins Challenge?
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Will DeHaat’s Full-

Stack Model
Overcome The
Challenge Of Low
Margins In The
Agritech Sector? 
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Shanthi S
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07 Dec'20  14 min
read
• In India, the most reliable channels for input and

output are quite far from villages, and that is
where farmers lose efficiency. Through its last-
mile network of 1,362 local micro-entrepreneurs,
DeHaat is trying to bring all agri-services under
one roof
• The startup saw a 3.5 times jump in revenue, from

INR 43 crore in FY2018-19 to INR 135 Cr in FY2019-
20
• Apart from the market-linkage startups which

have gained investors’ interest, many startups
operating in agri-inputs, FaaS, financing and other
segments are aiming to build full-stack platforms
to make the unit economics work. Can DeHaat's
unique ‘micro-entrepreneur model’ give it an
edge?
P L AY B O O KS
Farming 3.0: India’s Mission Agritech

Once least favoured, agritech is today betted as one of the most resilient
sectors. The pandemic has further pushed farmers to leverage technology
offered by the startups in the space, thereby making the sector a hotspot of
investments. Is India’s agritech on the brink of a permanent transformation or
the newly-found success a passing cloud? This playbook explores!
India has more than 100 Mn farmers who are still struggling
to access essential services such as agri-finance, the supply
of agri inputs like seeds, fertilisers and farm equipment, and
easy market access, mostly provided by agricultural value
chains. On the other hand, several agribusinesses are
unable to sell their inputs directly to farmers or procure
farm produce from them without going through multiple
agents due to a complex, multilayer supply chain. The lack 
of market access is one of the key reasons why farmers,

who constitute 60% of the Indian population and contribute
nearly 18% to the country’s GDP, are still miles away from
‘sustainable agriculture’.
Shashank Kumar, cofounder and CEO of DeHaat (registered

as Green Agrevolution) who hails from a farmer’s family,
had been exposed to these business gaps all too often when
he was growing up. And the outcomes deeply disturbed
him. After graduating from IIT-Delhi, he joined a
management consulting firm where he worked in the supply
chain space. But after some time, Kumar decided to
leverage his knowledge of technology and supply chain to
mend and strengthen a broken format.
So, DeHaat was built in 2012 in a bid to offer full-stack

agricultural services.
It did not remain a solo venture for long. Kumar was joined
by other founding members, Shyam Sundar Singh
(executive director), Amrendra Singh (director, input
services), Adarsh Srivastava (director, fruits and vegetables)
and Abhishek Dokania (director, output operations). They all
had one common goal: They wanted to streamline the
fragmented agricultural inputs channels (read retail shops
and co-operatives); bring to farmer quality agri-inputs such
as seeds, fertilisers, crop protection chemicals and
equipment, at a reasonable price; provide market access to
them; act as advisors and offer multiple services as the
company grew.
The founders had also realised early on that leveraging

new-age technology was the only way forward to resolve
this crucial challenge faced by farmers. However, the
journey ahead was not going to be easy for two key 
reasons. One, agritech was not an easy business to scale,

nor was it a favourite sector for venture capitalists in India.
Two, digital maturity was still low in villages.
So, it was not surprising that DeHaat got its first round of
angel funding, around $80K, in February 2015, three years
after the company was set up. Until then, it could only raise
a seed capital of $20K.
The startup has come a long way since those days. It is now
backed by leading investors such as Omnivore, Sequoia 
Capital India, AgFunder and the Netherlands-based FMO

Entrepreneurial Development Bank. Moreover, it is one of
the very few startups which offer multiple services,
including agri inputs aggregation, access to the market
through bulk buyers and farm advisory. It has recently
entered the agri-fintech space and aims to become a full-
stack service platform. “We are quite confident about
growth from here on,” says Kumar.
In April 2020, the Patna-based agritech startup raised $12

Mn in Series A, led by venture capital firm Sequoia Capital
India and the Dutch development bank, FMO. DeHaat also
saw a 3.5x jump in revenue, from INR 43 crore in FY2018-19
to INR 135 Cr in FY2019-20.
How DeHaat’S Micro-

Entrepreneur Model
Helped It Achieve Scale
What is the secret of DeHaat’s sustainable growth when
many of its peers are still struggling even in niche
segments, unlike the bigger, and riskier, agri-services
platform? Looking back at the journey, Kumar thinks its
micro-entrepreneur model has been a game-changer, which
enables last-mile delivery of 360-degree agricultural
services to farmers.
But there were many hurdles on the way.
Although DeHaat had unveiled a new vision towards the

right direction, convincing the farmers to adopt new
farming practices and agricultural inputs was a tough 
challenge. Add to that low smartphone penetration across

rural India, and the unavailability of reliable data about
input consumption and cropping patterns, and things got
murkier. The key was to reach out to farmers in a way that
would make them comfortable. Even though Kumar comes
from a farmer’s family, DeHaat’s employees were
considered outsiders and the trust factor had to be built
upon. Plus, the logistics required for input distribution and
output (agri produce for sale) collection had to be
simplified.
That is when the idea of micro-entrepreneurs clicked.

DeHaat pressed into service local representatives or micro-
entrepreneurs who would act as a bridge between the
platform and the farmers through a hub-and-spoke model.
For instance, institutional input providers such as Bayer

India deliver fertilisers, seeds and the likes to a
warehouse/cold storage (hub) owned by DeHaat. The
startup’s staff members then ferry the inputs to DeHaat
centres (spokes), owned by the micro-entrepreneurs. These
entrepreneurs take care of the last-mile delivery, covering
600-800 farmers within a catchment area of 3-5 km.
Similarly, when these farmers bring their produce to the

allotted spoke, a micro-entrepreneur will collect the
same. DeHaat would use third-party logistics services to
pick it up from the spoke (DeHaat centre), aggregate the
output and stock it at a warehouse or cold storage, located
within 100 km from the spoke. Finally, this will be sourced
by institutional buyers such as Grofers, Amazon, Cargill
Godrej and others and taken to retails or customers. The
warehouse or cold storage is managed by 10-15 DeHaat
employees who have experience in supply chain and
warehouse management. “At times, we engage third-party 
warehouse services, but that is only for quality control,”

says Kumar.
The startup currently has 1,362 micro-entrepreneurs, each

managing one DeHaat centre across 680K villages in Bihar,
Uttar Pradesh, Odisha, Jharkhand and West Bengal in a
self-sustainable way. They are local villagers whom the
farmers have known for years and they earn a commission
of 3-7% on each delivery and output transaction.

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“We onboard anyone with
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good knowledge of
farming. But the minimum
qualification is 12th pass
and the person should be
able to use a smartphone.
It is a win-win situation for
all,” says Kumar, adding
that each micro-
entrepreneur earns INR
20-25K every month.
Besides managing the hubs, DeHaat helps set up every

spoke and oversees its daily operations. Each micro-
entrepreneur has to contribute working capital worth INR 3-
5 Lakh and also bear recurring expenses such as electricity
and water charges. Additionally, DeHaat has developed a
full-fledged practice to train these entrepreneurs. A 20-
member team coordinates and trains them regularly.
The startup also claims that its micro-entrepreneurship

model will help resolve India’s rural-to-urban migration in
search of livelihoods. Kumar shares the story of a landless
farmer to drive home the point. Thirty-two-year-old Dilip
Kumar from Bettiah in Bihar has a family of six and wanted
to migrate to the city as his income shrank. But based on his
extensive farming knowledge, DeHaat decided to onboard
him as a micro-entrepreneur in 2018. Today, Dilip serves 644
farmers and around INR 22,500 a month, claims the
cofounder.

According to him, these micro-entrepreneurs bring

efficiency to the supply chain.
 “With small farmers,

though the ticket size or
transaction value is small,
the number of
transactions is high.
However, most reliable
channels for input and
output are quite far from
the villages, making it
inaccessible for farmers.
Through our last-mile
networks supported by
micro-entrepreneurs, we
are trying to bring
everything under one roof,
and close to the farmers,”
says the cofounder.
As of now, DeHaat is onboarding 15-20 entrepreneurs every

month and 99% of input orders are delivered within 24
hours of ordering.
What Happens At The

Backend: DeHaat’s

LATEST
Phygital Model
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DeHaat follows a phygital model by leveraging tech and

also using the last-mile network. Farmers can place their
orders for agri-inputs via DeHaat’s helpline or an app
developed by the company in Hindi. While 12-15% of the
farmers use the app, and the rest uses the customer care
service.
These orders are tracked by micro-entrepreneurs who use

the DeHaat for business app to aggregate all input demands
and deliver the same on the same day. The business app is
also used to aggregate the farm produce.
 “It is a simple interface.

Micro-entrepreneurs will
know what exactly to do

on a given day. They will
https://inc42.com/playbooks/farming-3-0-india-mission-agritech/will-dehaats-full-stack-model-overcome-the-challenge-of-low-margins-in-the-agr… 10/24
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pending order to be
fulfilled and how much
they have to aggregate,”
says Kumar.
The business app also helps them note down farm-level

queries and inform the same to DeHaat’s technical team in
real time.
Interestingly, the company has developed a database for all

prevailing crops and crop-related pests. “Using artificial
intelligence and machine learning-based technology and
staying in touch with the farmers throughout the year, we
have developed an exhaustive crop database and tracking
mechanism which helps in crop selection, irrigation, pest
control and harvesting schedule,” explains Kumar. As
technology is deployed at all levels, including farmers,
micro-entrepreneur and the backend team, it gives us 100%
visibility into the entire value chain in real time, he adds.
The efficient system of data collection in real time has

further helped the company add a bouquet of financial
services to its platform. For instance, using a combination
of current transactions between DeHaat and the farmers
and the database created over the years, the startup has
developed a rating mechanism for farmers that can be used
to avail credit.
The Race Is On To
Become Full-Stack 
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Service Platforms
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DeHaat has always aimed to become a one-stop destination

for farmers, helping them with crop selection, how to grow
it and where to sell it. But quite a few agritech startups are
also aiming to enter the fray in spite of considerable entry
barriers. Of course, most of the late-stage startups such as
WayCool, Ninjacart and MeraKisan are now operating in
the market-linkage segment. And growth-stage companies
like CropIn, mostly into precision farming or market linkage,
are also scaling up fast. For the rest, though, adding
multiple services is the way to grow and expand.
“As we work closely with farmers on the upstream, we have

key data that helps us connect the right farmers to the right
market-linkage startups. We can provide multiple services,”
says Sateesh Nukala, CEO and cofounder of BigHaat, which
sells agricultural products and machinery online and
provides farm advisory.
Another agritech startup that believes in a full-stack

solution is Villgro Innovation Fund-backed Krishihub, which
operates an end-to-end supply chain for fresh produce and
also offers farm advisory. According to the company, it is
imperative to build a holistic model to solve the problems of
Indian farmers at the grassroots, and this is where a full-
stack agri ecosystem comes in.
Venture capitalists also show a keen interest in full-stack

platforms.
 “When you build multiple


services – for instance,
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buy from farmers – it

builds stickiness. So, I see
that the players who have
been operating in the
agri-inputs side are now
either building their
networks or collaborating
with others to build a full-
stack ecosystem,” says
Hemendra Mathur,
venture partner at Bharat
Innovation Fund.
Adding critical layers beyond just input or output will also

help startups scale faster by keeping the unit economics
right, he notes.
Building a full-stack service platform for farmers is not an

easy job, though. “It is both difficult and expensive; so it is
certainly not appropriate for all agritech startups. But the
advantage of the full-stack approach is that you can create
holistic value for farmers across inputs, market linkages for
outputs, fintech, advisory and other services. You do not
have to maximise monetisation in any one area. And
farmers certainly appreciate an end-to-end solution for the
challenges they face,” says Mark Kahn, managing partner at
Omnivore.

This is where DeHaat seems to have a well-rounded system

in place, thanks to its efficient and accountable last-mile
networks. In fact, early-stage startups such as Agrix and
Anveshan are learning from DeHaat’s business model. “We
believe it is essential to have a physical presence in a
village. That is how you can build trust. Right now, farmers
think that city people come in with some technology and
then vanish (when help is required). That is why we are
trying to be physically accessible to every farmer through
our local representatives,” says Nilay Pandey, cofounder of
Agrix. This early-stage agritech startup that provides
farming as a service (FaaS).
The Competitive Edge

And Revenue Model 
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“We think DeHaat’s USP is
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the value it creates for the

farmers on the platform,
but the micro-
entrepreneur model is
critical to helping the
company scale quickly
and connect with farmers
in-person across rural
India,” says Kahn of
Omnivore.
Does it tally with DeHaat’s claims and outcomes?
The startup promises a 15-20% yield improvement if farmers

buy all essential inputs and an increase of 5-10% in output
pricing. “Farmers experience more than 50% increment in
their net income from agriculture,” says Kumar.
Besides creating value for the farmers, keeping the unit

economics right is the biggest challenge for agritech
startups. DeHaat claims that 69% of its overall revenue
comes from the sale of farm produce to institutions, 30%
from the sale of agri inputs to farmers and 1% from
financing services. “Our advisory services are very efficient,
but we do not charge farmers for advisory. Whenever there
is a transaction, say, when a farmer buys fertiliser, we make
money,” says Kumar.

Interestingly, DeHaat follows a buy-and-sell model where it

makes a markup. “We cannot disclose the profit margins,
but what I can say is that our overall unit economics is very
healthy. We have a cost-effective last-mile network without
any fixed cost,” says Kumar. The startup handles 560-600
tonnes of produce every day and delivers 6,500-7,000 input
orders.
 Kumar claims that not

even a single transaction
has a negative 
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the fixed cost side, each

DeHaat hub breaks even
in 17-18 months. “We have
a 4x annual growth rate,”
he claims.
The startup deals with a wide range of agri produce such as

maize, wheat, paddy, soya, fruits and vegetables, which
further helps it scale. “For bulk buyers, we also provide
customisation. The network we have created increases the
scope of customisation. For instance, for potatoes, we pack
three varieties based on humidity levels,” says Kumar.
Mathur of Bharat Innovation Fund also thinks expansion is

easier through micro-entrepreneurs, not only in terms of
multiple services but also in terms of crop variety.
“Agriculture is the most complex and varied segment.
Services and crops differ from region to region. So, the
challenge lies in standardisation. With good training and
screening in place, DeHaat can achieve that.”
It is one of the key reasons why DeHaat continues to follow

the micro-entrepreneur model in spite of deeper digital
penetration and greater adoption of smartphones by
farmers. “Smartphone adoption is higher now. Still, we want
to continue with this micro-entrepreneur approach. With
this system in place, we are also creating our presence at
rural retail levels. When farmers see physical centres and
also see an app and a call centre for everything else, it
builds trust,” says Kumar.

Besides, this model has helped DeHaat manage delivery

and aggregation effectively.
 “We believe it is not

possible to deliver small
input orders at the village
level. But micro-
entrepreneurs are
working efficiently and
getting the orders
delivered in 24 hours, to
many houses which do
not even have delivery
addresses or house
numbers,” sums up Kumar.
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9/2/2021 Will DeHaat’s Full-Stack Model Overcome Low Margins Challenge?

AN INC42 PLUS STORY

Will DeHaat’s Full-

• In India, the most reliable channels for input and

• The startup saw a 3.5 times jump in revenue, from

• Apart from the market-linkage startups which

Farming 3.0: India’s Mission Agritech

of market access is one of the key reasons why farmers,

Shashank Kumar, cofounder and CEO of DeHaat (registered

So, DeHaat was built in 2012 in a bid to offer full-stack

The founders had also realised early on that leveraging

reasons. One, agritech was not an easy business to scale,

Capital India, AgFunder and the Netherlands-based FMO

In April 2020, the Patna-based agritech startup raised $12

How DeHaat’S Micro-

But there were many hurdles on the way.

Although DeHaat had unveiled a new vision towards the

challenge. Add to that low smartphone penetration across

That is when the idea of micro-entrepreneurs clicked.

For instance, institutional input providers such as Bayer

Similarly, when these farmers bring their produce to the

warehouse services, but that is only for quality control,”

The startup currently has 1,362 micro-entrepreneurs, each

Besides managing the hubs, DeHaat helps set up every

The startup also claims that its micro-entrepreneurship

According to him, these micro-entrepreneurs bring

 “With small farmers,

As of now, DeHaat is onboarding 15-20 entrepreneurs every

What Happens At The

DeHaat follows a phygital model by leveraging tech and

These orders are tracked by micro-entrepreneurs who use

 “It is a simple interface.

LATEST THE CRYPTO SUMMIT know ifD2Cthere is anyEXPLORE

The business app also helps them note down farm-level

Interestingly, the company has developed a database for all

The efficient system of data collection in real time has

DeHaat has always aimed to become a one-stop destination

“As we work closely with farmers on the upstream, we have

Another agritech startup that believes in a full-stack

Venture capitalists also show a keen interest in full-stack

 “When you build multiple

LATEST THE CRYPTO SUMMIT you provide inputs EXPLORE

buy from farmers – it

Adding critical layers beyond just input or output will also

Building a full-stack service platform for farmers is not an

This is where DeHaat seems to have a well-rounded system

The Competitive Edge

the value it creates for the

Does it tally with DeHaat’s claims and outcomes?

The startup promises a 15-20% yield improvement if farmers

Besides creating value for the farmers, keeping the unit

Interestingly, DeHaat follows a buy-and-sell model where it

 Kumar claims that not

LATEST THE CRYPTO SUMMIT contribution margin.EXPLORE

the fixed cost side, each

The startup deals with a wide range of agri produce such as

Mathur of Bharat Innovation Fund also thinks expansion is

It is one of the key reasons why DeHaat continues to follow

Besides, this model has helped DeHaat manage delivery

 “We believe it is not

Agritech Member Exclusive

Note: We at Inc42 take our ethics very seriously. More

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