Banana startup’s bitter harvest

Fariq Naushad and Previn Jacob Varghese dreamed of transforming India’s banana trade and launched their agritech startup Greenikk in 2020. They had ambition, technological solutions, and the backing worth crores from investors who shared their vision.

Yet, four years later, they have shut their company – not in defeat, but with the knowledge that some roots run too deep for disruption.

The banana sector was not a field the duo picked at random either. After running a vegetable supply enterprise during the Covid lockdown period, they had a foretaste of how agricultural supply chains work. Once they identified bananas as a produce with immense growth potential, they set about working on it.

Before launching their startup, the founders even trekked to different banana markets in South India to get a first-hand feel of how things were at ground level.

Today, their journey stands as a sobering reminder that even the most well-planned business models can wither when confronted with the entrenched realities of tradition – especially in the agricultural sector.

The Early Wins

Greenikk started off well, securing 5.3 crore rupees in funding and the backing of some notable mentors. Their initial foray led to remarkable growth, with initial sales reaching 1.58 crore rupees. By early 2023, projections suggested they would hit 6 crore rupees by the end of that financial year. They were procuring bananas and supplying them to traders, exporting banana fibre products, and onboarding customers onto their finance platform.

Yet by September 2024, the founders announced they were shutting down operations and would repay whatever funds they had to their investors.

“Looking back, I think we chased the wrong metrics to grow and scale up. We spread it too thin as we tried to tackle problems on all fronts,” says Previn. “Moreover, the agritech dynamics changed, making it difficult to raise more funding to pivot.”

Shifting Ground

But such inferences are too simplistic. Their journey as a startup reveals a complex web of relationships, traditions, and economic realities that define India’s agricultural landscape – factors that technological solutions alone cannot untangle.

“The biggest problem we faced was ensuring a supply chain. We were trying to get produce from farmers who had been farming in their own way for decades. We gave them a lot of inputs to improve their methods, provided high-quality seeds, offered support to fight diseases with the help of experts, and helped them access finance.”

This comprehensive approach initially showed promise.

The Money Gap

As they hit the ground, they were supplying enough bananas to traders, but payments did not keep pace with expectations – especially from Kerala. Many of the traders operated on a model heavily reliant on credit, and the practice was hard to change.

Greenikk’s other main area of operation was financing for farmers who were dependent on informal sectors. It gained traction quickly, but here too, the projected repayment timeframe proved too optimistic.

“As time went on, the reality set in. The actual money we received was around half of what the revenue figures were. We had to spend months chasing what we were owed,” says Previn. Even legal notices had little effect on some defaulters.

Slowly, the founders discovered that the banana sector was ruled by a complex ecosystem of middlemen, deeply entrenched credit systems, and regional variations in trade practices. Some places graded the bananas by their thickness while some gave weightage to the length.

Farmers, constrained by lack of storage facilities and efficient transportation options, remained dependent on the established networks despite their inefficiencies.

“As new entrants, Greenikk often found it difficult even to identify who the actual growers were, as produce would pass through the hands of more than one middleman. As the farmers had been dealing with existing vendors and middlemen for a long time, they tended to rely on them even when they were at a disadvantage.”

Technology Meets Tradition

Greenikk invested heavily in developing technological solutions to streamline the supply chain.

“By the end of the second year, the startup had developed a system which could monitor the entire process online,” says Previn. “We knew where the harvesting was being done, when the loading would take place, to which market it would head, and when it would be delivered.”

However, implementing standardised processes proved challenging. Regional variations in how bananas were harvested, weighed, and graded required complex programming solutions and a team of six engineers.

An initial app-based approach failed, prompting a shift to WhatsApp-based data collection, which farmers found more accessible.

These technological interventions, while impressive, couldn’t overcome more fundamental issues, like fragmented landholdings that made uniform implementation of modern farming methods nearly impossible.

Fibre Fallacy

Banana fibre products was another component in their plan. “Under our model, farmers who were spending money to remove the stem that was considered as a waste. We collected them and transported it our fibre making plant. but a after a few months, some of them decided to charge us 50 rupees per kilo for the stem which was till then a burden to them.”

“We also realised that there were problems in making products with banana fibre. There was no machinery available that could make it despite a lot of hype about it. We realise that most of the products sold as banana fibre had a mix of some other elements like cotton. Moreover, fibre quality also was not uniform as different banana varieties gave different kind of fibre.”

The demand for banana fibre products were also was not a steady one, making it difficult to establish a streamlined production facility.

Scale-up Pressure

As with many startups, Greenikk faced intense pressure from investors to scale rapidly.

“The pressure from investors to scale up was tremendous,” Previn admitted. “Their question would always be that now that you have money, you should expand and get a team going to achieve the targets.”

This pressure led to rapid hiring and expansion efforts that, in retrospect, may have been premature given the foundational challenges they were still grappling with.

“One trick we missed was to grab all the money that came to us initially and keep that as a reserve during the earlier periods,” Previn reflected.

“We didn't want to take more than what we needed and so we let go of many offers. But looking back, that was a miss, as startups that fail to reach growth levels expected by investors will fail to raise fresh funds.”

A Broader Trend

Greenikk’s story is not an isolated incident but reflects a broader cooling in the agritech sector.

The initial optimism that technological solutions could easily transform traditional agricultural practices has given way to a more nuanced understanding of the challenges involved.

“The agritech sector has learned hard lessons and seen a drop in both new firms and funding,” says Previn. “Now investors feel that instead of trying to change the way of farming, new startups would come up with ways to better the existing trade, and they would get traction.”

The Dignified End

Many startups that sprang up in the initial enthusiasm also found the ground realities hard to change. The Greenikk founders say this is why they decided to quit.

“After four years, we realised that we were not making any innovative changes and were ending up as just another trader and finance platform. That’s when we decided to wind up,” Previn recalls.

The company decided to provide two months of severance to its approximately 25 employees and help them find new opportunities through references.

Lessons Learned

Greenikk’s journey offers valuable lessons for entrepreneurs and investors in the agritech space. Success requires not just technological innovation but a deep understanding of and patience with traditional agricultural ecosystems.

Previn says it demands capital reserves sufficient to weather extended periods of adaptation and learning. But that is not easy for startups, as no one will fund such farming projects.

And perhaps most importantly, it calls for realistic expectations about the pace of change in sectors defined by fragmented landholdings, regional variations, and deeply entrenched social and economic relationships.

Previn and Fariq are now engaged in the procedures of winding up their enterprise. Their journey is not merely one of failure but of honest confrontation with reality.

They carry with them hard-won wisdom about the gap between technological possibility and practical implementation – wisdom that many startups would do well to heed.

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