Data & Intelligence
Case Study: EM3 AgriServices Pvt. Ltd.
Aspada Investments, was chosen as one of three finalists in the EMPEA Institute’s 2017 Sustainability & Operational Excellence Challenge for its management of EM3 AgriServices, India’s first provider of farm services on a pay-per-use basis. Services on the platform are provided for the entire farm cultivation cycle including land development, land preparation, seeding, sowing, plating, crop care, harvesting and post-harvest field management.
Our three finalists were chosen by our judges for having presented one of the most compelling cases of creating value in an emerging markets portfolio company through active management while also delivering positive externalities to the communities in which the company operates.
Although India is a long-standing agrarian society—boasting the world’s second largest cultivable land base with approximately 90 million households directly engaged in agriculture—the country’s farm productivity remains well below global standards. India’s small-holder farmers face a confluence of factors negatively impacting their crop yields, including a lack of access to high quality inputs such as seeds, a rise in labor costs, prohibitively expensive technology and limited access to markets that could provide it with higher income. EM3 sought to devise a solution to help India’s farmers improve on-farm productivity in an efficient and affordable manner.
Size of EM3: US$1 million in annualized revenue (September 2017)
Investment: Aspada invested US$1.25 million in 2015, led EM3’s US$3 million Series A in 2016 and participated in its US$10 million Series B in 2017 (with Global Innovation Fund)
Aspada helped EM3 build strategic relationships with original equipment manufacturers (OEMs), distributors, farmer cooperatives, financial institutions and government entities. As just one example, Aspada worked with EM3 to implement a Memorandum of Understanding (MoU) with the government of Rajasthan to provide farm mechanization services to 100,000 farmers across 28 of 33 total districts in the state. The state government is supporting the initiative by partially subsidizing the equipment procured by asset owners that are utilized on EM3’s platform.
Aspada played a key role in shifting the company’s business model from “asset heavy” to “asset light” in order to leverage existing but underutilized farm equipment in rural areas. As a result of this and other initiatives focused on efficiency and cost savings, EM3 was able to scale its revenues from US$40,000 in 2015 to approximately US$1 million by 2017.
EM3 initially wanted to focus on farmers with slightly larger land holdings, resulting in a higher monetization per customer. However, Aspada believed that the real opportunity lay in servicing small-holder farmers—both from a social impact perspective and from the perspective of building a sustainable long-term business. EM3 agreed to shift its core business strategy and the percentage of small-holder farmers in EM3’s network grew from 63% to 79% from March 2016 to March 2017.
Renuka Ramnath | Founder, Managing Director & Chief Executive Officer, Multiples Alternate Asset Management Private Limited
Brian Lim | Partner and Head of Asia and Emerging Markets, Pantheon Ventures
David Rubenstein | Co-Founder and Managing Director, The Carlyle Group
Dr. Andrew Kuper | Founder and CEO, LeapFrog Investments
Torbjorn Caesar | Senior Partner, Actis
Drew Guff | Managing Director & Founding Partner, Siguler Guff & Company