Agritech startup Greenikk announced on Monday that it is shutting down operations and plans to return partial capital to investors. The Thiruvananthapuram-based company, which focused on providing a digital ecosystem for banana farmers, cited issues of loan defaults and funding challenges as major reasons for the difficult decision.
Founded in 2020 by Fariq Naushad and Previn Jacob Varghese, Greenikk had raised around ₹5.04 crore ($1 million) in a pre-seed funding round led by 9 Unicorn Ventures in January 2023. Despite impressive growth of 300% in FY22 with sales of ₹1.58 crore, the startup struggled with several challenges that ultimately led to its closure.
Loan Defaults and Collection Issues
One of the primary reasons for Greenikk’s shutdown was the high rate of loan defaults among its stakeholders. The company had extended loans worth ₹6 crore to farmers, a majority of which went into default. Greenikk spent nearly six months on the ground trying to collect about 80% of the receivables.“Huge receivables were stuck from certain clients as they resisted paying after reaching a significant amount,” Naushad stated in a press release. Defaults and collections have become a significant challenge in the agritech sector, with other prominent players like ReshaMandi also facing similar issues that led to their downfall.
Funding Challenges and Scaling Issues
Greenikk also faced difficulties in raising its next round of funding, a planned $5 million Series A, amidst changing industry dynamics. The company acknowledged it had chased the wrong metrics to scale after raising low-interest capital when the agritech sector was at its peak.“We may be able to build a low profitable business but justified VC level returns to our investors was not possible,” the startup added, expressing doubts about providing adequate returns with its current operating model in the agritech domain.
Winding Down Operations
As part of the winding-down process, Greenikk is offering a two-month severance package and job placement assistance to its nearly 25 employees. The company had established Enablement Centres (ECs) in key banana-producing regions of Kerala, Tamil Nadu, and Karnataka to support farmers with various services.Greenikk is projected to end FY23 with sales of ₹6 crore and counted notable clients like Beyond Snacks, Tierra Foods, Chedda Foods Mumbai, and Reshamandi. However, the founders ultimately decided that the business was not scalable enough to continue operations.
