Getty Images
Most of India's 1.4 billion people live in villages
Small villages in the state of Haryana, in India's rural northwest, find themselves in the spotlight these days.
Farmers' houses in hamlets around the industrial town of Rohtak are suddenly in high demand and are also used as movie sets.
Alongside the mooing of cows, it is not uncommon to hear a director shouting “lights, camera, action”.
A new start-up, called STAGE, has given birth to a burgeoning film industry in this hinterland.
“Batta,” a high-octane drama about power and injustice, is just the latest of half a dozen films in production in the region, Vinay Singhal, founder of STAGE, told the BBC on film sets.
“There were only a dozen Haryanvi films made in Indian history before our arrival. Since 2019, we have carried out more than 200,” explains Mr. Singhal.
STAGE creates content aimed at a largely underserved provincial audience, keeping in mind hyper-local tastes, dialectical quirks, and rural cultural syntax.
There are 19,500 different dialects in India, and STAGE has identified 18 that are spoken by a large enough population to merit their own film industry.
The app currently offers content in two languages: Rajasthani and Haryanvi. It has three million paying subscribers and plans to expand and include other dialects like Maithili and Konkani, which are spoken in the northeast and west coast of India, respectively.
“We are also about to close a funding round from a US venture capital firm to expand into these territories,” says Mr Singhal, who appeared with his co-founders on the Indian version of Shark Tank, an economic reality TV show. , a year ago.
Saraskanth traditional knowledge
Farmers' houses around Rohtak in Haryana state double as movie sets, thanks to start-ups
STAGE is among the growing number of Indian startups betting big on rural market opportunities as the next frontier of growth. Others include players like Agrostar and DeHaat.
Although most of India's 1.4 billion people still live in its 650,000 villages, these have until now provided little of a market for its burgeoning tech start-ups.
Asia's third-largest economy has been a hotbed of innovation, giving rise to several dozen unicorns – or technology companies valued at more than $1 billion – but they have all largely built for the “top 10%”. rich” of urban Indians, according to Anand Daniel, associate. at Accel Ventures, which has funded some of the country's most successful companies, from Flipkart to Swiggy and Urban Company.
While there have been notable exceptions, such as online marketplace Meesho and a few agtech players, the start-up boom has largely bypassed Indian villages.
This is changing as more founders successfully reach out to rural consumers and get funded for their ideas.
“Investors no longer show you the door,” says Mr. Singhal.
“Five years ago, I had no money at all. I had to start the business.
Accel itself is now sending more checks to entrepreneurs catering to the rural market, recently announcing that it would invest up to $1 million in rural start-ups through its pre-market accelerator program. priming.
Unicorn India Ventures, another local venture capital fund, says 50% of its investments now go to start-ups based in tier 2 and 3 cities. And in July this year, Japanese auto giant Suzuki announced a $40 million Indian fund to invest in creating start-ups aimed at rural markets.
Saraskanth traditional knowledge
Smartphone use increases among middle-income rural families
So what is driving this change?
The untapped market opportunities are considerable, Daniel says, and investors and founders are increasingly realizing that rural does not necessarily mean poor.
Two-thirds of India's population lives in the hinterland and spends around $500 billion a year. In fact, the richest 20% of this demographic spend more money than half of those who live in cities, according to Accel's own estimates.
“While India will add $4 trillion to GDP over the next decade, at least 5% of this will be digitally influenced and will come from 'Bharat' or rural India,” says Mr. Daniel.
This represents an additional $200 billion opportunity.
The growing penetration of smartphones among middle-income rural families contributes to this development.
Some 450 million Indians now use one outside of cities, more than the entire American population.
And one-click digital payments through the much-vaunted UPI interface have been a game-changer for businesses looking beyond metros to expand their offerings.
“Five or seven years ago, it was not easy to reach this target group – whether digitally, logistically or in terms of payment. But the timing is now much better for this generation of start-ups trying to address this market,” says Mr Daniel.
Furthermore, while most innovation was happening in cities like Mumbai and Bangalore a decade ago, a growing number of entrepreneurs are now emerging from smaller cities, driven by factors such as falling operating costs, the availability of local talent and government initiatives to promote entrepreneurship. in non-metro areas, according to a report from Primus Ventures.
Proximity to the ground may also have helped expose the founders to the potential of the vast non-metropolitan market.
Saraskanth traditional knowledge
But there are challenges: Small-town consumers are price-conscious and geographically dispersed.
But breaking up rural India is easier said than done.
The small-town consumer is price-conscious and geographically dispersed. The number of addressable consumers in a given zip code is much lower than in cities.
Infrastructure also lags behind, so “distribution is not easy and operating costs are high,” says Gautam Malik, chief revenue officer at Frontier Markets, a rural e-commerce startup that carries out last mile deliveries to populated villages. below 5,000.
Furthermore, those who use urban models and adapt them to the village context will fail, says Mr. Malik.
His company quickly understood why traditional e-commerce wasn't able to penetrate the last mile. The village customer simply did not entrust her money to a third party who was not present locally.
To create this trust factor, Mr. Malik and his team had to partner with women entrepreneurs from the village to act as sales and delivery agents.
Such differentiation and long-term commitment will be essential, he says, to capture rural India and tap this $200 billion incremental market opportunity.
Follow BBC News India on Instagram, YouTube, Twitter and Facebook.
