Accel defines Bharat as middle-income households earning between INR 5 to 15 lakhs annually and spread across Tier 2, Tier 3 and rural India.
In an exclusive interview with IANS, Anand Daniel, Partner at Accel, spoke about the immense potential of construction for Bharat. Startups have historically struggled in these markets due to inadequate infrastructure, limited digital penetration and insufficient understanding of consumer preferences, Daniel said.
Recent advances in technology, logistics and payment systems have laid the foundation for sustainable growth in these underserved regions, he added.
Despite the common belief that rural means poor, the top 20-30% of this untapped market spend more per month than about half the population in urban cities, Daniel told IANS. This highlights substantial purchasing power in rural areas that is often overlooked.
In a recent blog, Accel wrote that contrary to conventional notions, which describe this demographic as primarily price-sensitive, this segment is very ambitious and shows a growing preference for products and services that promise a better lifestyle and reflect upward mobility. This trend is exemplified by an increase in demand for used iPhones in Tier 2 cities and beyond, the VC firm added.
“We believe this market is more ripe than ever for disruption. Founders must take advantage of the Bharat opportunity,” Daniel said.
The theme of “building for Bharat” has gained momentum among investors like Accel and entrepreneurs alike, reflecting a strategic shift towards developing business models that cater to this segment of India and its unique needs.
But why have startups failed to build for Bharat so far? Until recently, startups aiming to serve rural India struggled due to inadequate infrastructure, unserved customer behavior and a lack of focus, according to Accel. Challenges included poor delivery networks, incomplete PIN code coverage, and inefficient reverse logistics, which inflated the costs of handling small orders. Few digital payment options and unreliable internet connectivity added to the problems.
However, recent advances are reshaping the landscape. The introduction of the UPI payment system has revolutionized transactions, while initiatives like Jan Dhan accounts have significantly boosted financial inclusion. Logistics companies now offer broader PIN code coverage and faster delivery times, marking a fundamental improvement. These advancements will unlock opportunities for startups looking to tap into Bharat, potentially transforming the way services are delivered and accessed in rural areas.
Accel anticipates that several durable e-commerce companies valued at more than $1 billion will emerge for Bharat in the next decade. Financial services are also poised to expand, providing affordable credit solutions to underserved segments.
"From personal loans to livestock loans to housing finance, a new set of lending companies can leverage technology and offer customized products at the right price to serve the aspirational and underserved in Bharat," Daniel said.
Healthcare is also a great opportunity for innovators. On top of that, educational technology platforms will proliferate, addressing skills gaps and employment needs with cost-effective education and certification programs. With the advancement of artificial intelligence, startups are innovating across the board.
"We are looking for the first AI consumer company, which will enable reaching a massive Bharat audience across sectors," he said.
In an exclusive interview with IANS, Anand Daniel, Partner at Accel, spoke about the immense potential of construction for Bharat. Startups have historically struggled in these markets due to inadequate infrastructure, limited digital penetration and insufficient understanding of consumer preferences, Daniel said.
Recent advances in technology, logistics and payment systems have laid the foundation for sustainable growth in these underserved regions, he added.
Despite the common belief that rural means poor, the top 20-30% of this untapped market spend more per month than about half the population in urban cities, Daniel told IANS. This highlights substantial purchasing power in rural areas that is often overlooked.
In a recent blog, Accel wrote that contrary to conventional notions, which describe this demographic as primarily price-sensitive, this segment is very ambitious and shows a growing preference for products and services that promise a better lifestyle and reflect upward mobility. This trend is exemplified by an increase in demand for used iPhones in Tier 2 cities and beyond, the VC firm added.
“We believe this market is more ripe than ever for disruption. Founders must take advantage of the Bharat opportunity,” Daniel said.
The theme of “building for Bharat” has gained momentum among investors like Accel and entrepreneurs alike, reflecting a strategic shift towards developing business models that cater to this segment of India and its unique needs.
But why have startups failed to build for Bharat so far? Until recently, startups aiming to serve rural India struggled due to inadequate infrastructure, unserved customer behavior and a lack of focus, according to Accel. Challenges included poor delivery networks, incomplete PIN code coverage, and inefficient reverse logistics, which inflated the costs of handling small orders. Few digital payment options and unreliable internet connectivity added to the problems.
However, recent advances are reshaping the landscape. The introduction of the UPI payment system has revolutionized transactions, while initiatives like Jan Dhan accounts have significantly boosted financial inclusion. Logistics companies now offer broader PIN code coverage and faster delivery times, marking a fundamental improvement. These advancements will unlock opportunities for startups looking to tap into Bharat, potentially transforming the way services are delivered and accessed in rural areas.
Accel anticipates that several durable e-commerce companies valued at more than $1 billion will emerge for Bharat in the next decade. Financial services are also poised to expand, providing affordable credit solutions to underserved segments.
"From personal loans to livestock loans to housing finance, a new set of lending companies can leverage technology and offer customized products at the right price to serve the aspirational and underserved in Bharat," Daniel said.
Healthcare is also a great opportunity for innovators. On top of that, educational technology platforms will proliferate, addressing skills gaps and employment needs with cost-effective education and certification programs. With the advancement of artificial intelligence, startups are innovating across the board.
"We are looking for the first AI consumer company, which will enable reaching a massive Bharat audience across sectors," he said.
