If you are a modern Indian consumer, chances are, you’re reading this article on your mobile phone as you relax in the back of an Ola, or on a laptop, while you catch a break from work. Today’s Indian consumer demands much more than his/ her needs met. He/ she wants luxury, entertainment, and quality experiences while shopping or making payments.
That’s why in the vast landscape of consumer technology, emerging markets like India stand out as a hotbed of entrepreneurial activity, with a plethora of startups disrupting traditional industries and attracting significant funding.
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The combination of a higher disposable income and digital adoption are the driving force for India’s consumer tech industry. As per a recent report by Chiratae Ventures, the consumer tech industry will be reaching US$300 billion by 2027. Already, every day, over 500 million Indian consumers are actively seeking entertainment and gaming services online.
“Digital today is ubiquitous and its usefulness is increasing every day,” says Roma Datta Chobey, Managing Director, Digital First Businesses, for Google India.
Scalability & Growth Potential of Consumer Tech Startups in India
The state of a country’s consumer tech market says volumes about its consumers. The modern digitally savvy consumer of India has an array of options in any industry. And this means opportunity, irresistible to investors.
Kevin Siskar, the Founder and CEO of Finta, a company that serves as a funding copilot for startup founders, says when judging a startup’s potential, investors look at market size, innovation, business model viability, and technological infrastructure. And India has got it all.
“India is a fast-growing and digitally engaged population, combined with a surge in innovative consumer tech startups, signifies immense scalability potential. The real test lies in a company’s ability to find product market fit and a strong go-to-market strategy in a rapidly evolving market,” he says.
In the second week of January 2024, Indian startups raised US$145 million in funding, a 150% increase from the first week of the year. This includes Twitter/X’s Former CEO Parag Agrawal, who raked in US$30 million for his new AI venture. Others include rewards-focused mobile internet browser Veera, which raised US$6 million, Bollywood actor Sonu Sood’s travel-focused social media platform Explurger, which raised INR37.3 crore, and digital banking platform Freo, which raised an undisclosed amount.
Trends in the Consumer Tech Startup Sector
With approx. 1.1 billion Indian consumers owning a bank account, there is an interest in investing in financial services. Today, some 880 million Indians seek to spend on fashion and apparel, and around 220 million on on-demand services. The result is an increased focus on personalisation, along with a rise in experiential retail, and, of course, the growing influence of social media.
“The rise of personalization is a major trend in 2024,” says Siskar. “Consumers are demanding products tailor-made to them specifically, both offline and online. In this decade, the rise of AI will take this ability to deliver personalized experiences to a scale never before seen.”
Personalized digital experiences are becoming a priority for Indian consumers.
“These consumer expectations extend to Tier 2+ consumers who have embraced technology and have an even greater openness to experimentation with new brands and products, and the willingness to spend on personalization and premiumization,” says Chobey.
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Competitive Landscape for Consumer Tech Companies in India
Consumer tech industries in India, including EdTech, ride-sharing, FinTech, gaming and entertainment, food delivery, e-commerce, health tech, and fitness, present a vast array of investment opportunities. With India’s population power backing internet penetration, growth in these sectors is exploding, fueled by changing consumer preferences and technological advancements.
Sudhir Sethi, Founder and Chairman of Chiratae Ventures, which has invested about $450 million into India’s consumer sector, says, “We believe that consumer tech sector is both a horizontal and a vertical play with winners at the intersections of horizontal technology disruption and vertical domains such as health, finance, education, agriculture, etc.”
Chiratae has invested in Flipkart, Myntra, Cult.fit, Firstcry, Lenskart, GlobalBees, Policybazaar, PlaySimple, Curefoods, Fibe, Rentomojo to name a few.
EdTech platforms like BYJU’S, Unacademy, and Physics Wallah are revolutionizing education delivery, especially post-pandemic. Ride-sharing services such as Ola are transforming urban mobility, with recent new entries like Meru, ONN Bikes, and BookMyCab gaining visibility. FinTech companies like Paytm, PhonePe, and Razorpay are streamlining financial transactions, tapping into India’s digital payment revolution.
As gaming surges as an Indian pastime, gaming and entertainment platforms, like Nazara Technologies and Dream11 are capitalizing on the growing demand for immersive digital experiences, while food delivery startups like Zomato, Swiggy, and DoorDash, and e-commerce startups like Flipkart, Myntra, and Meesho, are reshaping retail and dining experiences. Health tech and fitness startups like HealthifyMe, Practo, and Doceree, are leveraging technology to promote wellness and improve healthcare accessibility.
The result, investments are pouring in, and not just from within Indian shores. “Thanks to increased connectivity via software, investors in 2024 are increasingly open to funding startups from a variety of locations, in contrast to the days when you had to go on an investor roadshow and physically shake hands in person” Siskar points out.
In India’s dynamic consumer tech landscape, investors look to capitalize on diverse sectors poised for exponential growth, driven by innovation and changing consumer behaviors.
“We’ll continue to see more consumer tech launches from large enterprises — and at the same time a spill-over effect, where executives will leave Fortune 500 to found new companies, and we’ll see new innovations in consumer tech from there as well,” he adds.
He also notes that with passing time, as experienced talent leaves one company to start their own new company, emerging ecosystems flourish. “It is one of the key ways that exponential growth can occur to evolve the local landscape over ten to twenty years,” he says.
India’s consumer tech sector is teeming with innovation and potential, attracting significant investments from both domestic and international players. With a large and growing market, favorable regulatory environment, and a pool of talented entrepreneurs, India could become a breeding ground for tech startups that can make a global impact.
As these companies chart their growth trajectories, they are not only reshaping industries but also redefining the future of consumer technology in emerging markets. So expect many more comfort and luxury in the future.
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