Indian Startups Beyond Metropolises

The technological advancement has helped India's startup ecosystem to look beyond metropolises. It has enabled the rural population to start their own venture. The Indian middle class has been earning more and saving more, which has made the rural strata more lucrative customers to the emerging startups. Startups based in rural India account for almost 50 per cent of the total startups operating in India. Founders who have launched their venture and reached the milestone of an IPO (initial public offering) are an inspiration to all aspiring entrepreneurs in the country's Tier 2 and Tier 3 cities.

After the United States and China, India has the world's third largest start-up ecosystem. The Department for Promotion of Industry and Internal Trade in India has over 770,000 registered startups. The startups, which include 108 unicorns, have a combined valuation of more than $400 billion.

Over 850 million people live in rural India. However, the majority of rural founders lack resources when compared to entrepreneurs based in metropolises. "To take India to the number one spot in the global startup ecosystem, focusing on Bharat is imperative. As investors, we too are keen on spotting founders who are passionate about solving problems in rural India rather than catering to urban cities. Enhancing communication, transport, and infrastructure (rural) are key ingredients for scaling the operations of these startups. The government is also providing funds and grants through various schemes for seeding business ideas and models in rural India," said, Dhianu Das, Co-founder of Agility Ventures.

According to a report by the financial services platform StrideOne, Indian start-ups will create 230,000 jobs by 2022. The total number of jobs created by start-ups increased at a compound annual growth rate (CAGR) of 78 per cent between 2017 and 22, and is expected to increase at a CAGR of 24 per cent between 2022 and 2027.

Given the fact that rural populations have less access to resources, entrepreneurs across the country are not all in the same state, however, to tackle this problem, governments across states are coming up with initiatives to incubate and promote budding founders. The Credit Linked Capital Subsidy for Technology Upgradation (CLCSS), the Startup India Portal, the National Initiative for Developing and Harnessing Innovations, the Startup India Seed Fund Scheme, the SCO Startup Forum, and Prarambh are among the initiatives.

Rural entrepreneurs have more berries to conquer than those of a Tier 1 entrepreneur, Tanul Mishra , Founder and CEO, Afthonia Lab, stated, "To build, scale, and grow a business, one needs access to resources, capital, knowledge, a network, and a market. These are not easily accessible to rural entrepreneurs. It is therefore necessary to help founders all the way from the idea stage with access to infrastructure, networks, knowledge, and markets that incubators can bring forth."

Today's increasing number of young entrepreneurs in Tier 2 and Tier 3 cities adds more value to society and the economy as a whole. The country is witnessing an ideal situation in which people are leaving urban life to work at the grass-roots level, developing deeptech ventures in artificial intelligence and the internet of things across multiple verticals.

Anirudh A. Damani, Founder, Artha Group, explained four key problems that rural startups are facing. First, there needs to be better awareness within the investor community about the startups getting set up or incubated in rural towns. Secondly, the government should facilitate connecting rural startups with potential customers and partners through trade shows, networking events, and other initiatives since these startups often struggle to connect with customers and markets.

Thirdly, there is a problem with the availability of skilled talent required to develop and grow a startup business. We, thus, need to curate skill development initiatives that provide talent that rural startups could hire. This would go a long way toward creating an ecosystem for Indian startups. Finally, the fourth pillar on which the government has made significant progress is improving rural infrastructure. However, it needs to continue catalysing and supporting the startup ecosystem. While this infrastructure is mostly taken for granted in Tier I and II cities and has shown significant improvements in rural India, much more still needs to be done.

He added, "As a VC, we are always on the lookout for ways to use our investment dollars to shine a light on the investing blind spots, and the potential for creating wealth from investing in rural startups is a significant blind spot to illuminate."

Improved digital infrastructure connectivity is driving economic integration and consumption growth in lower-tier cities. This improved access for young entrepreneurs from these cities to information, resources, people, talent, markets, and other opportunities. As a result, these entrepreneurs could now benefit from a global exchange of ideas, knowledge, skills, and capital. Tier 2 and 3 startups have limited access to information and services in the absence of multiple, diverse connections.