VC Insights | Issue# 1 [July 09, 2024]
A recent blog by Anand Daniel (partner, Accel) gives us some key insights about areas the early-stage VC fund is keen on focusing for investments in the future.
What?
Anand identifies “Bharat” – the non-urban and rural consumers in India, as a key segment with promising potential for growth. Accel would be happy to bet on the startups solving for Bharat in the future. Summary and key insights from the blog below.
Focus on “Bharat”
Accel defines “Bharat” as the middle-income (INR 5 L-15 L) household in the Tier 2 and Tier 3 towns and cities, and rural areas in India. This is essentially the ‘non-urban’ population spread across India. The strategic shift towards investing in Bharat acknowledges the untapped potential of these regions and their evolving consumer preferences.
Promising Sectors
The VC fund is bullish on sectors, such as (a) e-commerce, (b) fintech, (c) edtech (includes upskilling and recruitment), (d) healthtech, (e) content platforms, (f) consumer brands, and (g) consumertech platforms with a focus on AI-based solutions in the non-urban markets. Startups across the aforementioned areas have a significant potential for creating business opportunities and addressing the unique needs of the non-urban consumers. Read more to understand which sub-sectors across these sectors look promising.
Rising Demand
There has been a noticeable increase in demand for products, such as used iPhones, 125 cc bikes, and double-door refrigerators among the highly-aspirational non-urban consumers. Such consumers are underserved and the evolving preferences reflect a readiness for offerings that match aspirations for an improved lifestyle and upward mobility. This is also an indication of a growing consumer base with increasing purchasing power in the non-urban areas.
Challenges
Traditionally, startups solving for Bharat have faced challenges that include logistics for delivery and returns (E-commerce), low payment inclination (content creation), high distribution costs (Fintech), and lower Average Order Values (AOVs) and inadequate marketing returns (FMCG).
Opportunities
Improvements and technological innovations in online, financial, and delivery infrastructures create new opportunities for startups to offer scalable, cost-effective solutions to Bharat.
Thoughts
Accel has already invested in multiple companies solving for Bharat, such as Apna Mart, Citymall, and Arivihan. Accel is confident that India will see several $1 Bn+ startups solving for Bharat. This does look like a great opportunity for startups solving for such Bharat-enablers (if we may refer to them as that) to impress the leading early-stage VC.
I have always looked forward to the invaluable strategic insights about the Indian startup and VC ecosystem from industry pionners like Accel. Personally though, I feel, “Bharat” comprises of both segments of the Indian population – urban, as well as non-urban and rural. With Accel pushing the peddle and more startups solving for the non-urban consumers, I am sure the gap in offerings for the urban and the non-urban, rural consumers will bridge soon, and it would be easier for us to unanimously refer to the country’s consumers across those segments as Bharat or India. It is evident that Accel is not only able to foresee such a future, but is willing to take strong bets on the same.
If you are interested to learn more, feel free to check out this blog post by Anand and this coverage of the blog by YourStory.
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Acronyms used in the blog that have not been defined earlier: (a) Venture Capital (VC), (b) Lakh (L), (c) cubic centimeters (cc), and (d) Billion (Bn).