Organic farming company gets VC backing

From VC Circle:

This could be the first venture capital investment in an organic farming business. Mumbai-based venture capital firm Nexus India Capital has made an undisclosed investment in organic farming company Suminter India Organics Pvt. Ltd.

This is an interesting investment as one does not normally associate VC funding with farming. Suminter, however, attracted the investors due to its scalability. The company actually pays its contract farmers a surplus over market prices for their goods, centralizes it and then exports it to other parts of the world.

The company works on a buy-back arrangement, in which it pays farmers a premium, typically 10-15 per cent, over the market price. The harvest is processed and packaged at a central unit and then shipped overseas. It exports directly to the US and through a Netherlands-based subsidiary to Europe. The funding will be used to expand its reach to 10 Indian states.

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Forbes Magazine: Dearth of innovative SMEs not from lack of $, but lack of trained entrepreneurs

Studies have estimated that over $1 billion in possible venture capital financing has been infused into India in 2007. Instead of spurring a wave of innovative startups, however, this influx in capital has remained just that — surplus of capital. Unlike Africa or parts of Eastern Europe, the lack of wide scale SMEs in India is not due to a lack of startup funds. And given the number of qualified IIT and other engineering graduates that are pumped out of the education system annually, they are not the limiting reagent either. So what gives?

According to Sramana Mitra, India’s current engineers and management professionals are ill-exposed to areas beyond back office tasks and so do not have a refined understanding on how to place and market technology products in the market.

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