(GIST OF KURUKSHETRA) Championing Social Startups

(JANUARY-2024)

Championing Social Startups

Introduction:

Over the last decade, there has been a surge In the number of commercial and social enterprises addressing rural India’s concerns. These small businesses, which are focused on agritech, dairy, textiles, e-commerce, logistics, healthcare, travel, and hospitality, are critical to addressing rural India’s challenges and narrowing the rural-urban divide.

Key Value Chains that Startups could Focus on in Rural India

Value addition and food processing activities at the farm level: A variety of technologies, including cold storage, dryers, milling machines, small oil expellers, and food processors, can enable the value addition and processing of farm produce. Of these, cold storage and dryers have long been encouraged for usage by farmers due to their wide variety of benefits, such as increased shelf life and value addition of agricultural produce at the farm level. While the solution itself benefits farmers by preserving their produce through reliable storage and value addition, several startups have gone a step further to solve the farmers’ backward and forward market linkages.

Animal Husbandry: The productivity of cattle and rising expenses are two of the primary difficulties confronting the dairy business as demand for dairy products rises. Several startups are tackling the issues with technology and product innovations in this sector, such as through hydroponic fodder-growing machinery, multi-cropping fodder crops, concentrate feeds, and silage.
Textiles and Handlooms: A few conventional textile-based livelihood activities in rural areas, such as yarning, weaving, and reeling, entail drudgery for their mostly female practitioners and are also less productive. A few startups have mechanised some of these procedures, which not only lowers drudgery and boosts incomes but also preserves the relevance of traditional practices. A study undertaken by ‘Powering Livelihoods’, a joint initiative between CEEW and Villgro, notes that as many as 70% of female users of silk reeling machines manufactured by Resham Sutra were able to increase their incomes.

Healthcare: Despite improvements in healthcare infrastructure, some ground remains to be covered to ensure healthcare facilities in rural areas are on par with those in urban areas. In rural areas, startups working in telemedicine, supply chain management, and low-cost diagnostic and vaccination equipment, among others, are making a huge impact.
Service-related Digital Innovations: In recent years, a number of startups have emerged that provide farmers with digital solutions, such as market aggregation platforms, e-commerce platforms, digital payments, fintech solutions, Al algorithms for on-farm predictions, and expert advisory support. These companies have ensured that farmers increase their income and do not fall behind technologically.

Major Challenges:

A Lack of Ecosystem Support
Despite widespread acknowledgement and ambition among governments, financial institutions, and investors to foster the rural startup ecosystem, assistance so far has been iimited due to ecosystem players’ low-risk appetite. Since most rural businesses are early-stage with limited/no established track record or evidence of success, ecosystem players perceive these startups as high-risk. As a result, most rural startups either struggle to survive or fail without appropriate support. Therefore, it is important to bring ail important stakeholders to the same table and foster collaboration and knowledge sharing to help achieve
common goals.

Absence of Go-to-Market Strategy: Given that most rural businesses (or startups) are focused on balancing their sheets in the first few quarters, they spend little time and resources on defining their go-to-market strategy and business models, which adds to their difficulties. Many startups, we have interacted with, say they struggle to identify target consumer segments, product pricing and design, and sales and distribution channels without a clear market and business strategy. As a result, they might end up producing a product offering that does not meet the true demands of rural consumers.

Difficulty in Catering to Scattered Demand and Providing after-sales service
Startups have a limited on-the-ground presence due to low working capital, a lack of staff, and other resources. As a result, many businesses, particularly those that rely entirely on offline sales, struggle to meet geographically scattered demands. For example, a startup may be based out of Mumbai or Delhi but have potential users in the remote geographies of Jharkhand, Chhattisgarh, or Odisha. Naturally, it would be difficult for them to navigate these geographies and would need support to make inroads.
Other External Factors: Apart from the aforementioned challenges, various external factors may impede the growth of social startups in rural India. First, there is competition from low-quality, low-cost goods and services. Because the rural population is wary of overspending, they resort to purchasing lowcost alternatives. Second, natural disasters, pandemics, and climate change can all greatly impact the success of businesses.

Key recommendation:

Social startups should prioritise gathering and analysing evidence to unlock support
Social startups should strive to leverage existing government schemes
Prioritise a positive overall product experience for rural consumers
Social startups should have an explicit focus on gender mainstreaming

Conclusion

Over the last decade, there has been a surge in the number of commercial and social enterprises addressing rural India’s concerns. These small businesses, which are focused on agritech, dairy, textiles, e-commerce, logistics, healthcare, travel, and hospitality, are critical to addressing rural India’s challenges and narrowing the rural-urban divide. The rural startup ecosystem has the potential to generate jobs, boost rural entrepreneurship, and stimulate reforms in the digital, fiscal, and physical infrastructure sectors. Scaling small-scale businesses (or startups) focused on tackling issues in traditional livelihood practices might thereby pave the path for overall rural economic improvement and achieve the vision of ‘Atmanirbhar gaon’.