Deep Rooted Startup Closure

Deep Rooted, a farm to fork startup, has announced the termination of its operations, as confirmed by three sources familiar with the situation. Initially launched as a B2B enterprise, Deep Rooted managed 100 acres of greenhouses, supplying fresh vegetables and fruits to over 120 restaurants in Bengaluru. The company, however, transitioned to a B2C model following the COVID-19 pandemic.

Challenges Faced by Deep Rooted

According to an anonymous source, Deep Rooted struggled to implement an effective consumer-centric business model. In early 2024, the company reverted to a B2B model, partnering with quick commerce platforms such as BlinkIt and Zepto, but did not manage to achieve significant growth in this avenue.

Funding and Investments

Deep Rooted attracted more than $18 million in funding, which included $12.5 million in Series A investment from prominent investors like IvyCap Ventures, Accel, Omnivore, and Mayfield in September 2022. Startup data intelligence sources indicate that Accel is the largest shareholder in Deep Rooted, followed closely by IvyCap and Omnivore.

Financial Performance

Another source noted that the inability to develop a sustainable business model led to difficulties in securing subsequent funding, ultimately resulting in the decision to cease operations. Deep Rooted’s financial struggles were evident in its performance during the last fiscal year, with revenue from operations dropping over 57% to Rs 34.37 crore in FY24, down from Rs 80.97 crore in FY23. During this time, the company’s losses saw a slight increase from Rs 47.07 crore to Rs 52.21 crore.

Industry Context

This marks the second significant player in the farm-to-fork industry encountering turmoil. Previously, Fraazo shut down its operations despite securing $65 million in funding from investors including WestBridge Capital, Sixth Sense Ventures, Equanimity Investments, and Apar Group. Other companies in the same sector, like Otipy (also backed by WestBridge Capital), as well as Pluckk, Gourmet Garden, and Kisankonnect, are operating in similar markets.