March 29, 2016 : Entrepreneur Media, India
Having spent close to three decades at Intel in the United States, one would have probably expected Chandra Mouli to invest in a tech startup in India. However, Mouli placed his bets on Farm Taaza, a for-profit social startup, a fresh produce supply chain management company, headed by Kumar Ramachandran.
Back in childhood days, Chandra had seen farmers in his hometown not getting the right market price for their produce. Chandra asked his grandfather, an influential agriculturist and zamindar, why he was selling his harvested coconuts so cheap when he has been to vegetable shops in Madras(Chennai now) with his parents and they sell coconuts for over 6 times that.
His grandfather said that this is the way it works “I can only get this much if I sell this at the village. If I transport it directly to the city, perhaps, I’ll get more but it is not easy.” Back then, Chandra did not understand what his grandfather was talking about is the inefficiencies in the vegetable market with layers of middlemen and commissions leaving very little for the producer.
These incidents remained in Chandra’s mind and when Kumar shared his startup idea Chandra could naturally relate to the idea Kumar was intending to resolve.
Chandra also saw people fleeing to cities from villages to get better jobs which he feels puts tremendous pressure on urban infrastructure and makes the agri-industry non-existent in India.
So what really impressed him about Farm Taaza?
Farm Taaza at its core is targeting the agricultural sector, especially the small farmer by bringing technology in play to significantly reduce if not totally eliminate the inherent inefficiencies in the supply chain from farmer to the store front and thereby passing on that savings to the small farmer in terms of higher sale price for their produce, lower pricing for the end consumer while also allowing Farm Taaza to establish and grow a strong enterprise. Essentially, it was a win-win situation for both the parties.
Secondly, the trust in the seasoned management of Farm Taaza also pursued Chandra to invest in the company. While the business value and social cause is compelling, it is critical that the leadership team can get things done, establish and maintain the aggressive pacing with razor sharp focus on the priorities and cost effective operations management ability.
Chandra said that Farm Taaza went on to solve a tangible problem as opposed to social media related services, that are intangible.
The company focused on getting the hard things done first, (i.e.) building distribution centers and then went about investing in the technology. Many companies would first spend on fancy apps and technology and later face issues completing orders.
What should an investor check before investing in a social startup in India?
The social cause should be real for one. It should add fundamental value to the people and society it targets to serve. Secondly, the management team needs to be competent with the focus and tenacity to make it happen no matter the challenges they face.
The team needs to be personally enlisted in the social cause. It cannot be focused on the monetary benefits. I truly believe that if the cause is real, and a tangible and real difference is made, for profit social enterprise will also richly reward its investors.
Why didn't you opt to invest in a tech company as per your professional background?
There are startups across the world tinkering with so many smartphone apps to enrich social life of individuals – chat, video conferences, hailing taxi rides, grocery delivery, etc. Fundamentally, they are working on making the lives easier for the middle class and the richer parts of society.
I don’t think there is anything wrong with that, we need those types of applications that make our daily lives easier. However, fundamentally, these are not as hard problems to solve, they are aimed increasing efficiency or the quality of human interactions.
What we are talking about here with Farm Taaza is a social cause which is a much harder problem to solve but much more rewarding as well. We are talking about making a difference to the lives of the small farmer in a small village and making a market for them, a market they can never ever dream of reaching with their current baseline which is to sell their produce at whatever the local buyer (Mandi buyer) is willing to pay on that day (spot price). There is no pricing leverage.
There is no visibility to what their produce sells in the end market. Farm Taaza is focused on changing this in many ways for the end farmer – provide a steady sales channel, offers a stable purchase price, teaches them quality control techniques, teaches them farming techniques to increase produce quality and output, etc.
Farm Taaza is working on making a fundamental difference to very farmer that it can reach in the country. This is very rewarding to me, we are talking about being transformational agents, not a team which is trying to make a quick buck. This is my way to give back to the society I’m from, from the roots I was created.
On his last trip in 2015, Chandra had visited Farm Taaza’s distribution centers and interacted with the core working team.
How are social startups in India different from ones abroad?
The needs in India are more basic for uplifting human needs taken for granted in the developed nations. There are deep entrenched cultural beliefs and norms that can present a huge barrier in driving fundamental change. While this can pose more challenges and sometimes cause frustration to entities driving social change, when results are achieved it can be all the more rewarding.
What are the potential areas social startups should look into in India?
Everyone on this planet deserves to have access to clean water, affordable health care (cost effective medical tests, medicines) to save lives in many cases for a few pennies that are not available to several billions of people today, clean air to breath, etc.
These are very important issues and developing nations have a huge need for bringing their capabilities closer to what is readily available and taken for granted in the west. Investing time and money in making healthcare more affordable, affordable clean energy and making clean water, not bottled water, available to households for basic daily needs are few things the startup space could focus on.
Chandra is open to invest in other social startups in India which are not directly competing with his current investment.