Bharat invokes diverse imagery – from idyllic rural landscapes to densely populated urban slums. A casual stroll along any road reveals the extent to which technology has penetrated the scene. There has been a rapid increase in technology adoption over the last two years, especially in Bharat. Availability of smartphones and the internet, and the need to carry on life amidst disruptions, have helped in shifting many consumers from primarily consuming content to also doing transactions digitally. This increased comfort in going digital makes the future promising for startups. There are however three challenges that startups need to overcome to realize this opportunity.
The first is the context. Startup founders are typically advised to build products that they would themselves use. A “build fast, fail fast” approach might still work. However, when building for Bharat, founders often lack the understanding and the empathy needed to build a customer-centric solution. Copy-pasted and one-size-fits-all approaches fail to generate interest, consume the limited resources of startups and delay the progress towards product-market fit.
Distribution is the next hurdle. While Bharat offers a large enough market, reaching the intended audience can be challenging. Given the lower ticket sizes, even the best products may fail without efficient and focused GTMs. Even if achieved, a key barrier that still remains is trust. Given the higher exposure to fraud and hardships, winning the trust of the people of Bharat takes patience and the right channels for communication and delivery.
While impact-focused venture capital has been around for some time, it is only now that we are seeing the larger investor ecosystem make Bharat bets, albeit only in solutions that are ready for scale-up. There is still a significant seed capital availability gap for early-stage startups beyond angel funding. Founders are also often unaware of the pools of capital available beyond the marquee names.
In 2009 CIIE.CO, one of India’s oldest and most prominent entrepreneurship centres built at IIMA, organized iAccelerator, India’s first accelerator program for startups offering mentoring, market connections and access to capital. Since then, many accelerators have mushroomed across the country, typically working with a startup cohort over a few months to make them ready for the Demo Day with investors. However, it is now abundantly clear that generic accelerator programs offering primarily investment preparation offer limited value to startups. The impact is generated when the programs go beyond the usual – they are focused on specific sectors, offer high-quality technical assistance by practitioners in the domain and are designed to bring together an ecosystem to help the startups.
How can an early-stage Bharat focused startup be accelerated towards high growth? CIIE.CO’s Financial Inclusion Lab recommends an extensive immersion in the target customers’ environment. Mapping user’s behavioural traits and capabilities, understanding the social and economic milieu, regulatory and other constraints help identify an urgent and important problem that is solvable. An accelerator can add a booster shot to this exercise by bringing in domain experts and practitioners to mentor and assist the startup. At this point, startups often move directly into solution building, which may not be the most prudent approach. A carefully constructed go-to-market strategy that is suited for the intended target segment is a key input to building the solution. While it is essential to build for scale, there is a need to also localize the product and the communication. Customised technical assistance, rooted in the startup’s needs and the customer’s context can provide critical insights into every aspect from customer and product to human capital management and go-to-market.
Given the challenges of reach and trust, building relevant partnerships can enable faster business model validation and growth. Accelerators must strive to connect startups with potential partners who have already built a presence in Bharat. Often, founders also need to be mentored on negotiations and deal-making to ensure success. Investor connects are a given for any acceleration program. For Bharat-startup focused programs, the startups must be matched with the right kind of investors. Since many institutional investors are likely to be new to the space, accelerators also need to work with startups on investor education and familiarity with the Bharat market.
What does it take to create the right kind of support? To start with, the right people. The team running the accelerator needs the right mix of program management experience, startup orientation and Bharat market understanding to be able to effectively provide the required support. Networks need to be built within the startup ecosystem and elsewhere to enable market connections, plug knowledge gaps and support inclusive product development. Sufficient operational spend needs to be allocated towards scouting, training, field visits, mentoring and other associated costs. Lastly, a mix of soft and patient capital needs to be provided to the startups for their product building and market validation efforts.
The needs of startups change as they progress from one stage to the next. While accelerators typically work with prototype to early-revenue stage startups, adding on support for idea and growth-stage startups can help create a more comprehensive full-stack program that can identify and nurture promising ideas early, and also support scaling up of the most promising solutions. The program thus becomes a continuum of offerings that feed into each other and maximize the overall impact for the startups and outcomes for Bharat.
Sandeep Koujalgi and Priyanka Chopra
Sandeep Koujalgi - VP, Bharat Inclusion Initiative, and Priyanka Chopra - Chief Operating Officer and Managing Partner, Seed Investing at CIIE.CO and a Venture Partner at Bharat Innovation Fund. The views in this article are their own.