EM3
Location
India
Sector
Agriculture
Type of Investment
Risk Capital
Project Stage
Test & Transition
Length of Investment
2017 & 2020
Website
Investment Overview
A $7.4m USD equity investment in EM3 AgriServices, Indias first pay-per-use farm mechanisation services company providing affordable farm services to smallholder farmers.
The Development Challenge
Over 50% of the Indian population is dependent on the agricultural sector for its livelihood. Low productivity among smallholder farmers contributes to millions of Indian farmers living in poverty, with rice and wheat yields within India trailing global yields by 70%. A significant barrier to inclusive growth and increased productivity is the lack of access to mechanised farming equipment, which is too expensive for most smallholder farmers. As a result, millions of farmers are left relying on an informal and inefficient market of service providers that is both unreliable and unable to address large demand.
The Innovation
EM3 has developed a first of its kind solution to tackle the challenges that Indian smallholder farmers face when trying to access mechanised farming equipment. Through an innovative business model which formalises and improves upon existing informal service channels, EM3 is making farming mechanisation affordable to millions of rural poor Indian farmers for the first time. EM3 connects equipment owners with smallholder farmers in need of services, offering on-demand, pay-per-use services of harvesters, tractors, and other farming equipment. Through EM3s platform, smallholder farmers can access end-to-end farming services such as land preparation, sowing and harvesting, all billed per acre or per hour.
Our Investment
A $7.4m USD equity investment as part of EM3s Series B round alongside Aspada Investment Company. Part of GIFs investment is subject to the achievement of certain operational milestones.
Investment Objective
To help EM3 build out the mechanisation-as-a-service market through scaling its existing centres and partnerships, and to build additional farming services lines.
Why we invested
High potential social return by providing millions of smallholder farmers with access to mechanisation as a service, leading to significant increases in incomes for smallholder farmers.
Strong management team with deep understanding of the local agricultural industry, on-the-ground experience with the Indian tractor market and proven ability to build partnerships.
Business model that is well-adapted to the local agriculture landscape, building on top of existing relationships with village agents, and benefiting each actor in the value chain.
Significant scale potential through organic growth, as well as institutional and government partnerships in a large addressable market that is currently unserved.
EM3 in numbers
Farm equipment centres created in Rajasthan
Farmers have received mechanisation services
EM3 Impact Brief
EM3 offers farmers on-time, on-demand, and professional mechanisation services at transparent prices. EM3s end-to-end service platform across the growing chain increases reliable access to a wide range of farm services. This reduces the cost of mechanisation for smallholder farmers, ultimately leading to increased farming productivity and yields.
Use of GIF Funds
GIF led an equity investment of $7.4million (as part of $8.6million Series B equity round alongside Series A investor, Aspada Investment Company). The funds were used to spur EM3’s growth including expanding the staff, technology development, and strategic purchases of farming equipment, and helping EM3 further scale rapidly into inputs delivery, procurement, and crop management advice in the future. GIF provided an additional $1.4m follow-on investment to spur development of a tractor-led Local Business Unit model.
Objectives
To help EM3 to reach profitability by increasing the number of active users, as well as the farmer retention rate, test viability of the variable cost model, and analysis of benefits.
Impact to Date
To date, EM3 has provided mechanisation services to over 200,000 acres of land and 24,000 farmers within the Indian states of Madhya Pradesh (MP), Rajasthan, and Uttar Pradesh (UP). EM3 farmers benefit from improved availability and reliability of mechanisation services at transparent prices, reliable access to a wider variety of farm services, and reduced cost of mechanisation, ultimately leading to increased farming productivity.
EM3 has also created over 300 farm equipment centres (also known as Custom Hiring Centres (CHCs)) in Rajasthan, providing monitoring and auditing functions on behalf of the CHCs to report to the government. EM3 also provides high-end inputs to the CHCs and offers other support to improve the quality of services the CHCs provide to their farmers.