Anup Jain, Managing Partner, Orios Ventures, believes entrepreneurs should test their products in ‘new markets beyond the top eight cities’.
Orios Ventures shot into the limelight after its investment (undisclosed angel investment between $100,000 and $500,000) in Ola. It made the angel fund very popular in the VC community; it has now invested in over 25 startups and is betting on “misfits”.
Misfits are entrepreneurs who are betting on the next 300 million internet-using Indians, who live beyond the major metros in smaller cities, towns, rural areas, and are local language speakers.
YourStory spoke with Orios’ Managing Partner Anup Jain on what he means by the next 300 million Indians and why these people are underserved.
Edited excerpts from the interview:
YourStory: What does Orios mean, and what is the idea behind starting the fund?
Anup Jain: Orios is the Egyptian God of Learning. We are continuously learning as a fund as we meet many startups with bright ideas and new business models. Let me tell you why we meet many startups. We believe most businesses today are focused on the current population of 100 million in the top eight or 20 cities. But there are 300 million Indians living in other urban centres. Why are these people untouched? Why haven’t startups been able to reach out to them? That’s why we are betting on the next 300 million.
There will be 330 million smartphones sold by the end of this year. These 300 million people will want services. The last 10 years catered to English-speaking consumers. The remaining 90 percent of Indians who are comfortable speaking in their own languages were underserved.
YS: Why are these people under-served?
AJ: This was because startups only operated in the top eight cities. We will see startups building services in content and health care either enabled by tech or using tech. Look at the retail industry where 90 percent of the business is disorganised. A majority of these businesses - there are 55 million SMEs - are in smaller towns and I see this as a big business opportunity.
Imagine these businesses being served in their own language; this is what startups must do. The demand and aspiration for ecommerce businesses exists, but I also think we will see new business models emerging. The other opportunity is in lending; only 20 percent formal lending has reached these towns.
YS: What should entrepreneurs do to capture this new set of consumers?
AJ: Entrepreneurs should test their products in new markets beyond the top eight cities. Do not make the mistake of trying your ideas in Bengaluru, Delhi, and Mumbai. The models tried in cities do not work in “real” India.
Cities like Kolhapur, Solapur, and Sangli don’t want business models that serve the metro cities. These cities don’t want a taxi service to cover a 10 km distance. These consumers want funding, healthcare, education, information, entertainment, and news. There are audiences for these kinds of services. There will be new-age brands too.
YS: The Karnataka government actively promotes the branded millets story. Likewise, do you see consumption going local, instead of being sourced from farms and serving large cities?
AJ: We are going local and we are going back to our roots. There is a need for local products to be branded and enter the FMCG or consumer businesses. We can promote local food to Indians instead of importing from other countries. I get a lot of pitches every day and when we announced an event around the next 300 million, I was overwhelmed by the responses.
There were 400 applicants who wanted to serve this market. Importantly, these were entrepreneurs from smaller towns that submitted business models that could serve that market. I believe business models should have a personal touch with consumers, focus on customer loyalty, and build businesses on sound bottom lines. I believe once the business models work, large sums of capital will follow. As a VC I will always observe the breadth of ideas that make an impact on the theme that we follow.
YS: What are your thoughts on new technologies?
AJ: Artificial Intelligence (AI), Blockchain and Machine Learning are foundations on which today’s businesses should be built. The name of the game is innovation and serving the customer with that innovation. B2B businesses have enough opportunities to work with corporate organisations, whether it is a POC that is free or paid.
I believe startups are making an impact in the corporate world. My team spends a lot of time with a startup when the founders are confident about what they want to achieve. Entrepreneurs surprise me every day and this is why I chose this as a career. I advise entrepreneurs to develop the idea further before they go to investors because entrepreneurship is a tiresome and lonely journey. It is not easy. We look for strong numbers and a strong team. They can run it past their mentors before they come to VCs.