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Entrepreneurship for Bharat
This article is authored by T.N Hari, co-founder, Artha School of Entrepreneurship.
The explosive growth of India’s start-up ecosystem, and its mainstreaming, coincided with the setting up of Flipkart in 2007. For nearly a decade it remained limited to some of the major cities like Bengaluru, Delhi-NCR, Mumbai, Pune and Hyderabad. And the idea of what a start-up was meant to be in terms of the kind of problems it was expected to be solving, the rapidity of scaling, and the funding model through venture capital, remained quite narrow.
This idea of a start-up held up reasonably well so long as the problems the start-ups were addressing were those of consumers who made up the top 5%-7% of the socio-economic pyramid. The funding winter accelerated the flaws in this mindless scaling model, and it was soon evident that even start-ups solving problems with large addressable markets, through products & services aimed at the top-of-the-pyramid consumers, had very poor product-market fit.
However, things have been changing in the last decade, and more rapidly in the last 5 years or so.
Entrepreneurs hailing from smaller towns and cities, often with a deep understanding of local challenges and consumer preferences began solving real problems in a manner that do not exactly fit the stereotype of how start-ups are expected to operate. There is a degree of earthiness and authenticity in their business building approach. Not all of them would even call themselves start-ups, and not all of them would raise venture capital. This kind of entrepreneurship is more inclusive, solving real problems, building small and sustainable businesses, and creating many more livelihoods.
However, the hard truth remains that it is not easy to solve problems that consumers at the middle of the socio-economic pyramid are grappling with, for the following reasons:
- Affordability: Bharat is a price-sensitive market with much higher price-performance expectations. Keeping it affordable, yet premium in some ways, is the key to deepening one’s customer base in Bharat. ‘Value for money’ is a phrase most of us are familiar with.
- Accessibility: The Bharat market is not homogeneous and is ‘schizophrenic’ in a manner of speaking. Tailoring products to needs of small consumer categories separated by geography, demography, consumer preferences, local cultures, varying spending patterns, etc., is not easy. The distribution costs are high and there are no economies of scale either.
- Trust: Building trust is key in these markets and unlike new age India, the Bharat consumers don’t easily buy from companies they don’t know much about. And therefore, joining hands with local institutions and partnering with them can significantly help in building trust. Trust building is a slow process and involves hard work.
As this shift occurs, India's digital natives—those who have grown up in an era of rapid technological advancement—including those in Bharat are playing a pivotal role. Their familiarity with digital platforms, combined with their quest for convenience and access, has created a fertile ground for entrepreneurs.
And through all this, the definition of the entrepreneur is broadening, removing barriers in education and in language, with emphasis on founders who deeply understand the local market and its intricacies, and can adapt their offerings to cater to the specific needs of Bharat consumers. And the idea of scaling, that VCs gave shape to, is also undergoing change. When sustainability trumps scaling, business-building is back to basics.
And finally, this may call for a different type of capital that does not place its bets on just a few companies in their portfolio returning the fund, and the rest perishing.
This article is authored by T.N Hari, co-founder, Artha School of Entrepreneurship.
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