GSF
Build for Bharat, Build from Bharat
31 themes to build startups in 2024 - from India’s leading investors
AI Is Everywhere
and in Everything
“Success in creating AI would be the biggest event in human history. Unfortunately, it might also be the last, unless we learn how to avoid the risks.”
- Stephen Hawking
“I believe AI is going to change the world more than anything in the history of humanity. More than electricity.”
- Kai Fu Lee
We invited three AI investors to share their thoughts on opportunities for Indian startups in the domain of AI:
1. AI in Manufacturing
AI just like every other sector has a huge impact on manufacturing too especially when the sector is moving to Industrialisation 4.0. Indian manufacturing market is ~$600B and is expected to reach $1.5Tr by 2030. Use of AI is inevitable in manufacturing, and the penetration of AI use cases within manufacturing is expected to reach ~1-5% of the total market by 2030, which will be a $15B+ outcome atleast. For me, the most exciting use of AI within the manufacturing sector would be around
• Predictive Maintenance- where with the data collected from existing IOT devices can help predict breakdowns.
• Design and Workflow Generation- whether it is creative designs our new workflows within a factory, AI will play a huge role in growth of a manufacturing unit.
• QC Automation: Companies have already started using computer vision to automate QC, but we could see building of LLMs to make the process more accurate.
Companies like Adidas, Foxconn, P&G, Coke, etc have already started using AI within their manufacturing units, which shows that adoption will be much faster as AI becomes more mature.
2. AI driven Next-gen IT Services/BPOs
For the past 50 years, business & IT outsourcing has primarily been focused on staff augmentation & increasing the total number of human hours billed. While this was massively successful (a $250B category); we feel that with the advent of generative AI, and everything that gets unlocked with it; the broader outsourcing space across IT & BPOs will get disrupted. We can provide the same service faster, cheaper and better. The other big change we feel is going to be a tectonic shift from selling services, to selling work & outcomes. We see a huge potential for new entrants that are focusing on leveraging product & AI to deliver outcomes across industries & across service lines.
Some industries where we feel that disruption might come sooner rather than later are:
• Healthcare & life sciences
• BPOs - Call Centers, Finance & Accounting, Real Estate
• SIs - Focused on under-penetrated categories
3. Generative AI India Driven Opportunities
Generative AI startups and other companies developing AI solutions raised almost $50B in 2023, according to Crunchbase, including top AI startups like OpenAI, Anthropic, and Inflection AI.
According to the technology industry apex body Nasscom, India now has over 100 generative AI startups and the ecosystem has cumulatively raised $700M in the last three years, ET reported on January 4.
While a lot of market momentum has focused on the Foundational Model and Tooling Layer, over the long-term significant value will accrue at the Application Layer level. Given India’s IT services legacy and recent successes in the SaaS ecosystem, we are well positioned to innovate on new product experiences that leverage the core AI Models to create value in different domains. Products that utilise the benefits of each layer in the tech stack uniquely are likely to win market acceptance.
The key will be for builders to identify use cases and capture early adopters that help build a flywheel at the intersection of core competencies in - domain expertise, proprietary/unique dataset and user feedback loops. Multimodal, Open Source and Localised Foundational models are already going through a rapid evolution with leapfrog capabilities opening new use cases almost on a monthly basis.
The key industries where artificial intelligence startups capture investors’ interest and demonstrate numerous practical use cases include insurance, healthcare, banking, retail, and marketing.
Above funding numbers represent only a small percentage of the companies driving innovation in the Generative AI space. Under the surface lies a vast, untapped potential for more.
4. Build Niche AI-first, ConsumerTech, Product First, Global First Startups
Gen AI offers opportunities to consumer tech companies to build meaningful revenue while targeting a niche global audience. New products can be designed for novelty and quickly. This is where Generative AI has changed the game for consumer tech startups. AI is about very precise targeting and immediate value creation.
Think niche not mass.
Think Global from day one. This strategy requires deep focus on the target niche global audience.
To execute this strategy, startups requires a deep clarity on the entry wedge.
Backbone on such a startup is a solid technical execution capability coupled with product first thinking.
The time has come for product & tech first founders to step up and start building!
FinTech 3.0
In the great money rush of last investment cycle, fintechs sucked in 1/3rd of all venture investments. Last year saw this investment rush sobering down and a rethink emerged amongst the investors in the backdrop of Regulatory pushbacks and Web 3.0/BNPL meltdown. We requested three fintech investors to share their thoughts on whats on the horizon for Fintechs in 2024 and beyond:
5. SMB Financing in India
One of the opportunities in the fintech space is around SMB financing. The gap in this space is both large ($0.5T+) and well known, however finding economically viable solutions has been the core issue, given the high OPEX and NPA in this segment. There are a few themes that we will be of interest to us:
Investment themes
Anchor-led financing: Anchor to own /enable distribution and /or provide proprietary data for underwriting or enable auto-collections thereby reducing OPEX and NPA (Eg. Propelld)
Embedded financing: Embedding contextually in workflow to reduce loan distribution OPEX while also leveraging existing customer data to embed to the creditworthy to reduce NPAs (Eg. Credflow)
Sunrise vertical financing: First-mover to build underwriting and /or collection expertise in a sunrise vertical, where incumbents don't possess underwriting capabilities (Eg. Turno)
6. Pay Up India: Debt Collection in India
In FY23, total credit disbursed amounted to INR 170.5 lakh Cr, with projections indicating a growth to INR 274.4 lakh Cr by CY26 at a 13% CAGR. Banks’ retail loans grew at a CAGR of 25.5% between September 2021 and September 2023.
Unsecured retail lending grew by 27% during the same period, taking its total share in retail lending to 23.3%. Retail and MSME GNPA for banks were 1.6% and 4.7% respectively. With a significant increase in lending activity to consumers and MSMEs, it is imperative for institutions to ensure they have efficient and effective collection processes in place.
Debt collection, traditionally, has been handled by third party agencies. In India particularly, this space is largely unorganized with small agencies and collection agents. While outsourcing collections allows lending institutions to focus on core business activities and can lead to faster debt recovery, the cost of services can significantly eat up into the amount collected and potentially harm borrower relationships. Legacy collection channels also fail to capture behavioral nuances of borrowers and lack advanced DPD bucketing and risk modelling capabilities.
New age-debt collection platforms address this problem with a tech-first approach. They streamline and automate debt collection workflows:
- Improve collection agent efficiency
- Ensure higher yields and lower collection costs for lenders
- Tech-led initiation of legal processes
- Ensure compliance with RBI regulations
- Most importantly, these platforms integrate offline and online collections processes onto one platform
Use of artificial intelligence and machine learning in the collection process:
- Highly customizable but defined collection strategy for each DPD bucket
- ML-driven early warning engines with bounce rate prediction and data-driven insights
- Ability to microsegment borrowers to optimize on the highest collection probability
While the problem statement is relevant, companies building in this space will have to build out a strong supply-side and ensure their platform’s on-field agent capabilities are robust since there are multiple touchpoints and majority of hard collections are carried out offline.
7. Next Generation of FinTechs on India Stack
In the last couple of years a steep change in the zero-interest-rate-policy (“ZIRP”) in the US highlighted the need for sustainability of business models. There has also been a growing focus on compliance and regulatory scrutiny around Fintechs.
Therefore, going forward we will see models emerge that are an amalgamation of banks and financial institutions with fintechs. Models such as banking-as-a-service / platform banking as well as embedded finance, will emerge stronger. This move will foster greater product innovation across the segments, but also ensure that regulatory compliance is in place via strong collaboration with banks and financial institutions.
The focus on specific use-cases will continue with deeper verticalization as a key theme. Areas such as trade finance, supply chain financing, agri-financing and digitisation of secured / asset-based financing offer large opportunities.
Insurance remains an under-penetrated area in India and there is a lot of push from the government towards increasing “insurance density”. Therefore Insurtech space will continue to see a lot of activity both targeting consumers as well as SMEs.
Wealth management has come of age in the last two years, with Groww going neck-to-neck with Zerodha. However with increasing GDP per capita and overall increase in middle-class, many opportunities in wealth-tech could emerge which simplify wealth and overall money management for the masses.
DeepTech is the Next Tech
Deep tech, or deep technology, refers to those startups whose business model is based on high tech innovation in engineering or significant scientific advances. The term deep tech is intended to set it aside from its opposite, “shallow tech”. We requested three Deep-Tech focused funds to share their perspective, here is what they have to share:
8. “Lollapalooza Effect” in Indian DeepTech
"In 2024, the focus on deep technology (deeptech) is pronounced, with significant implications for India's tech landscape.
Large Language Models (LLMs) like GPT are transforming software development, streamlining coding tasks, enhancing user interaction, and accelerating testing procedures. This shift towards deep tech is driven by factors such as the commoditization of traditional software development and
Atmanirbhar Bharat policies, emphasizing indigenous innovation and aligning regulations with sectors like space tech, AI, and biotechnology.
India's tech talent has evolved from outsourcing services to building innovative products and now spearheading innovation. With a growing emphasis on deep technologies, India fosters a vibrant ecosystem of startups and R&D centers, supported by government policies and increasing investments.
The convergence of these factors creates a "Lollapalooza effect," propelling India to the forefront of technological innovation and evolving into a global leader in deeptech.
It's time to build the world from India.
9. Build at the Cross-sections of Multiple DeepTechs
DeepTech and Deep Science lead global transformation today. It is important to understand the difference between the two. Deep Tech is about significant scientific and technological innovations that interweave multiple technological and scientific domains, resulting in products that have a profound impact on humankind. On the other hand, Deep-Science is research at a fundamental level over a longer timeline.
We live in times where multiple emerging technologies intersect and prosper together; such as AI, Robotics, Blockchain, Quantum, Edge computing, Cyber-Security, Renewable, Nanotech, etc.
These sectors, coupled with India's cost-effective talent, favourable government policies like the National DeepTech Startup Policy, National Quantum Mission, and India Space Policy, and a large domestic market, make it an ideal launchpad for disruptive solutions. Indian DeepTech startups with strong IP protection and a "build in India, for the world" approach can leverage India's growing STEM talent pool and lower operational costs to develop globally competitive solutions. Investing in these ventures positions VC funds to capitalize on India's emergence as a DeepTech powerhouse, potentially delivering superior returns.
10. Leverage India’s DeepTech Capabilities
Arjun Rao
General Partner,
Speciale Invest
Fundamental science and technology innovation has been at the forefront of all major leaps of humanity. India is at a unique point right now - where we have shed our tag as the world's back office and are now positioning ourselves as the innovation capital of the world. At Speciale Invest, we believe in India's deep science and deep technologies capabilities - building IP heavy products that solve for global problems. Positioning ourselves as the first institutional investors in companies, we've supported startups building rocket engines, electric flying taxis, novel battery architecture, robotics, synthetic biology, drug discovery, quantum cryptography solutions, green hydrogen electrolysis, next-gen semiconductors, and AI amongst others. We continue to look for opportunities in decarbonization technologies, life sciences, defense, semiconductors, agriculture, autonomous navigation etc.
The next decade is going to be one dominated by deep tech innovations from India and we aspire to be at the forefront of this revolution with our core thesis.
SpaceTech is the Final Frontier
“I think we are at the dawn of a new era in commercial space exploration”
- Elon Musk
Here are the thoughts of two investors on SpaceTech:
11. Emerging Opportunities in SpaceTech
The spacetech industry is rapidly advancing, fueled by rising demands for satellite services, the growth of commercial space endeavors, and innovations like small satellites and reusable rockets. Projections indicate that by 2031, there could be as many as 2,500 satellite launches annually.
India’s spacetech industry has experienced significant growth, with over 190 startups emerging and private investments surging by 77% between 2021 and 2022. The sector is estimated to reach a market size of $77B by 2030, with India boasting the world’s 8th largest fleet of operational satellites. In 2023, India became the first country to achieve a soft landing on the moon’s south pole, sparking global interest in its space endeavors. The country’s space sector has attracted approximately $233M in funding across 30+ deals, showcasing a vibrant ecosystem of innovation and entrepreneurship.
The potential for innovation and growth spans across all aspects of spacetech - from upstream activities like launch vehicles and satellite manufacturing to downstream applications such as space navigation, communication, and utilizing satellite data for purposes like crop monitoring and debris tracking.
One of the most promising avenues lies in student-led initiatives and startups. Student space clubs in universities are already playing a pivotal role in educating and nurturing talent for the spacetech industry.
With the recent liberalization of the FDI regime by the Indian government, allowing up to 100% FDI via the automatic route for certain sub-segments, the stage is set for a transformative shift. This move is a game-changer for space startups, providing them with unprecedented access to funding and resources.
12. Build Downstream or Upstream in SpaceTech
According to IN-SPACe, the Indian spacetech market is $8.4B which is 2% of the world’s spacetech market. IN-SPACe predicts the market to grow with a 18% CAGR to $44B by 2033. Spacetech can largely be broken down into 3 sub-sectors- upstream, downstream and midstream. Upstream deals with manufacturing and launching space vehicles, and midstream deals with telemetry and ground stations. Downstream deals with receiving and analyzing data received from the satellites. In India, approximately $4.5B is downstream, $2.5B is upstream and $1B is midstream.
Lets cover the trends in the downstream segment first. Vertical analytics platforms which analyze data sent from the satellites for various applications across industries. Here, the data can be provided directly to these companies or an analytics tool can be built which allows the various organizations to analyze satellite data. One other application is the purchase of space data which is currently broken and done manually. Automating the trade of space data can be an exciting opportunity.
For upstream applications, one of the often overlooked applications is space tourism from India for the world. Virgin Galactic and Blue Origins are overbooked with ticket prices ranging from $450,000 to millions of dollars. ISRO has begun to actively look for partnerships to fulfill their space tourism dreams. The Indian startup ecosystem should give this segment a serious thought given India’s capabilities to build rockets at much lesser costs than our international counterparts.
Sustainability, ClimateTech & Decarbonisation
“Climate change is the greatest threat to our existence in our short history on this planet. Nobody’s going to buy there way out of its effects.”
- Mark Ruffalo
“We are the first generation to feel the effect of climate change and the last generation who can do something about it.”
- Barack Obama
13. Build Startups in ClimateTech
ClimateTech is a large and important investment opportunity in India.
ClimateTech innovations cut across various sectors with technologies that enable just energy transition through alternate fuels, smart grid management, grid storage and alternate battery technologies, energy efficiency and resource productivity solutions. Climate smart agriculture solutions are focused on regenerative agritech, innovations that measure and manage soil carbon and technologies that support biodiversity. Finally, healthtech solutions that enable climate adaptation including phygital care delivery, smart medtech devices, genomics based diagnosis and personalized disease management are critical to ensure our health systems are equipped to respond to the dire effects of climate change on human health.
14. Build startups for the E.V sector in India
With EV penetration crossing 5% of new vehicle sales in India, the country is on the brink of a transportation revolution and the electric vehicle sector represents an exciting opportunity for innovation and growth. Ambitious government initiatives like 100% of buses to be electric by 2030 are aimed at reducing pollution and dependence on fossil fuels, coupled with increasing consumer awareness and demand for sustainable mobility solutions, the sector in India is primed for exponential expansion.
A total of ~150mn EVs will be sold in India in the next 10 years and startups focusing on this transition have the potential to disrupt the entire automotive value chain. This includes opportunities to solve challenges emerging within the traditional auto distribution channel, critical EV components that require further improvements or innovative finance, insurance and warranty products. All in all, the EV shift is not just a product change—it’s reshaping the very architecture of the mobility value chain and startups can drive this transition towards a cleaner, greener future in mobility.
15. Build for Decarbonising India
India is the third highest emitter of CO2 globally even though our per capita emissions stand at 1.8 tons per capita. The country is already facing significant impacts of climate change, with over 75% of its districts exposed to extreme events and estimated losses of $200B in the past two decades. This makes it imperative to limit global warming to 1.5°C above pre-industrial levels and take drastic measures to achieve the net zero emissions goal we have set for ourselves at COP26 in 2021. We also pledged to reduce the emissions intensity of its GDP by 45% by 2030 from 2005 levels and achieve 50% of its electric power requirements from non-fossil fuel sources by the same year.
To achieve these goals, there are 3-4 key areas which should be focussed on. The deployment of advanced energy storage technologies, such as Battery Energy Storage Systems (BESS) and flow batteries is one of those which would enable the integration of renewable energy sources into the grid effectively. Additionally, carbon capture, utilization, and storage (CCUS) technologies should be explored to reduce emissions in hard-to-abate industries like power plants, steel, and cement manufacturing.
Government has taken steps to actively pursue sustainable aviation fuels (SAF) as a promising solution for decarbonizing the aviation industry, with the potential to significantly reduce greenhouse gas emissions compared to conventional jet fuels. We, as a country, are also exploring green and blue hydrogen as fuel sources which are much cleaner to produce and consume. Logistics is also an important area when it comes to exploring hydrogen as a fuel. To support the hydrogen economy, startups can look into providing solutions around Liquid Organic Hydrogen Carriers for efficient transportation and storage of hydrogen using existing infrastructure for various industries.
If you are a startup founder building in any of the above areas, do get in touch with us.
16. Trash is Cash: Startups in Waste Management
India generates 62M tonnes of waste annually, with 70% collected but only 12M tonnes treated; the rest, about 31M tonnes, lands in landfills. Waste generation is set to soar to 165M tonnes by 2030, due to changing lifestyles and economic expansion.
India has several waste management challenges, including rapid urbanisation leading to 62M tons of urban solid waste annually, with a significant portion remaining uncollected or untreated. E-waste is on the rise and the infrastructure for garbage collection and sorting recyclables lags behind, with only about 30% of waste correctly sorted.
Globally, the waste management market was valued at $1,293B in 2022, expected to grow at a CAGR of 5.4% until 2030. India's market, worth around $10B recently, is predicted to grow at a 7% to 10% CAGR, potentially reaching $15-$20B by 2030, driven by government initiatives like Swachh Bharat Abhiyan and Waste to Wealth Mission.
India is exploring solutions like circular economy practices, sustainable packaging, pollution control, waste-to-energy projects and IoT-enabled systems to improve waste management efficiency.
The sector is on the verge of a major transformation, driven by startups aiming to redefine our approach to waste and as such GSF believes that investing in waste management innovations in India is an amazing opportunity to achieve both economic growth and positive environmental impact.
Brands for India
“A brand is a voice and a product is a souvenir.”
- Lisa Gansky
“Products are made in a factory, but brands are created in the mind“
-Walter Landor
“A brand is a promise, a good brand is a promise kept.“
-Muhtar Kent
“Product is king, distribution is god, brand is super god“
-Rajesh Sawhney
We invited three prominent investors in D2C brands to share their perspectives on building brands from Bharat and for Bharat:
17. Build Luxury Brands from India for Indians
Luxury brands are poised to become a lucrative investment sector in India due to several key factors. Firstly, the country's rapidly growing per capita income levels (growing at 10% CAGR to about $5,200 US in ‘31 from $2,400 US in ‘23) are fueling demand for premium goods and experiences. By ‘31 India will add about 25 Mn rich households( >30 Lakhs MHI) and . Secondly, with a burgeoning middle class and a youthful demographic, there's a growing aspirational consumer base seeking to flaunt luxury products as status symbols. Research highlights that India's luxury market is largely driven by millennials, who account for nearly 45% of luxury spending in the country. Thirdly, the evolving retail landscape and expanding luxury retail infrastructure in urban centres are creating more avenues for luxury brands to establish a strong presence and cater to the discerning Indian consumer. Additionally, the rise of e-commerce platforms and digital marketing strategies are facilitating easier access to luxury goods across the country. Share of premiumization to total incremental spends 21-31 is going to be >40% in categories like apparel, dining out, alcobev and personal care. Given these trends, investing in luxury brands in India presents significant opportunities for long-term growth and attractive returns for VC’s.
18. Build Direct To Consumer (D2C) Brands for Bharat
Fluid Ventures is bullish on Direct-to-Consumer (D2C) brands that are digital-first, recognizing the potential of online platforms in reaching a wider audience for marketing and sales.
Fluid Ventures looks for brands that have products with a high repeat rate, indicating strong customer loyalty and potential for long-term growth. Fluid also seeks brands targeting the mass market, especially those with traction in tier 2-3 cities, reflecting broader consumer appeal beyond metropolitan areas. Additionally, the firm understands the shifting consumer preferences towards unique and personalized products but prefers brands with a high level of product standardization (around 80%), which helps in scaling operations efficiently. A high SOM is another key criterion.
These criteria reflect Fluid Ventures' strategic approach to investing in D2C brands, especially in a market like India where internet penetration & smartphone usage are rapidly increasing with changing customer preferences.
19. Build Global Indian Brands
We have a tremendous multi-decadal opportunity to build well recognised and large scale brands selling physical products (rather than digital products, which is already a well recognised opportunity) that are made in India. India is a market leader in a number of categories which are globally popular amongst consumers: from home decor, jewellery, apparel, natural beauty and skincare products, all the way to food products, automobiles and motorcyles. Each segment initself has depth - for example, the home furnishings market includes products such as linens, towels and carpets, each of which represent a multi-billion dollar export industry.
So far, these diverse consumer product segments are almost entirely catered to by B2B exports: you could say 95% of India’s exports in these categories are white-labeled rather than sold directly to the end consumer. The world’s largest retailers from Walmart to IKEA, as well as the world’s most luxurious brands, from LVMH to Christian Dior, source their finest products from our country. Our manufacturers capture part of this value, but the vast majority of margins are captured by global brands. It’s time we captured most of the value for our companies, artisans and factory workers.
What makes India an exciting source of products is our rich heritage - block prints were exported to Ancient Egypt going back to the 15th century - as well as our vast geographic and cultural diversity. Any individual state of India has the design breadth and depth of a European country.
So how does one build a global brand sitting out of India? One way is to work with the largest marketplaces or retailers - Amazon has a target of $20B of exports from India on its global marketplaces by 2025, and Walmart is targeting $10B by 2027. These platforms are a good first step but are also intensely competitive - brand building often gives way to the smallest pricing advantage. Brands that have a differentiated and/or premium positioning on the other hand, are able to build their own distribution via stores, their own websites or finding third party shelf space: think of some early movers like The Ayurveda Experience, Royal Enfield, Good Earth, Jaipur Rugs and Nappa Dori. Brands such as Kama Ayurveda were also able to bring the right strategic investors who ultimately ended up buying their business and building global distribution.
Building a global consumer facing brand from India is in its early days, so examples for now are just that - anecdotal in nature. If you are building in this space, here are some first steps you can take as you begin raising capital: always come with a strong personal Point of View on the value, design and branding of your product; have a sense of how it might appeal to particular niche of global customers; find a mentor from within one of these early movers to learn their playbook; and get in touch with me, here.
20. Build New Age Consumer Appliances for India
We see India's smart home and consumer appliances sector as a compelling opportunity for startup innovation, especially with the developing tailwinds in domestic manufacturing and semiconductor technologies. This sector's evolution mirrors a significant shift in consumer behavior towards tech-integrated lifestyles, a change we've recognized and backed with our investment in Upliance, a smart home appliances startup. The blend of technological advancement and deep market insight is key, as we aim to back startups that are not only attuned to India's unique market needs but also have the potential for global appeal in similar markets, leveraging India's growing prowess in tech and manufacturing. Innovative startups can explore a niche and grow it as the market expands, in line with favourable demographic fundamentals like age, disposable income, and shifting wallet shares.
Our journey in this sector also highlights the interconnected nature of various tech domains, as growth in one both derives from and leads to growth in the other. Advancements in domestic semiconductor design and fabrication capabilities, directly benefit innovation in consumer sectors like home appliances, and an increase in tech-enabled appliances would in turn raise demand for a greater number and variety of enabling chips. Recognizing this, we aim to invest in semiconductor startups from our tech fund, identifying the sector as critical in the broader tech ecosystem. We believe these foundational technologies are integral to the success of consumer tech startups while being applicable across sectors like appliances, mobility, communications, devices and more.
21. Skilling Bharat in Building Bharat
Anup Jain
Leading Early Stage VC
- The AISHE ( All India Survey on Higher education) report for FY22 was released last month by the Government of India.
- When mixed with industry trends, it helps me form a strong thesis and a contrarian one in edtech investing viz focus on post- K12 up-skilling
-This helped me lead an investment into @Nxtwave while the big bucks were going into K-12 My view remains unchanged with this report being updated. The opportunity has gotten only bigger.
India had 34M undergrads in FY22, according to this report. Sadly, more than 65% of undergrad seats in the country are in disciplines that are remnants of the colonial past when clerks were needed to push files in government offices and obtain signatures. Not real skill sets needed in a fast growing economy built on 5G data , startups, AI and themes like "Make in India".
Almost all of these "degree-holders" are unemployable upon graduation and have to undergo a subsequent Masters degree in Business or a vocation upskilling course to get a decent job of Rs 4-6 lakhs p.a.
With the economy becoming more tech-oriented and becoming a hub for GCCs and manufacturing, various roles in Design, UI/UX, Digital marketing, Data sciences, Prompt Engineers, basic coding, Cybersecurity, Cloud computing, Digital Content creation present a very large upskilling opportunity for creating employable professionals from Age 18 - 35.
A very basic 12 month online upskilling course costing INR 50,000 yields a clear market of 20M x 50,000 = INR 100,000CR where the student can recover the cost in a few months of income, as a very simple ballpark. Tech skilling is never a one-time business. Multiple injections of skilling are needed through a tech career, thus creating a larger market than just this!
Add to this - India is booming with domestic and global tourism and demand for hospitality and retail professionals is at an all time high and an ask of 50M is seen over the next 5 years according to HAI.
I see an added potential for imparting upskilling in hotel management to school graduates at Rs 50,000 x 10M = INR 50,000CR p.a. Since there aren't enough seats in existing institutes!
These opportunities, to me, are staring in the face and all we have to do is fill them up to create very profitable businesses matched with demand unlike our current output from undergrad education.
22. Build for Elder Care in India
It is the Fastest growing age segment in India – from 10 CR at 10% of population to estimated 20% of population by 2050! By 2030, India will have world’s largest aging population, which is both a challenge and opportunity.
Elder care in India is already a 10B market which will double in the next 5 years. However, elder care is a complex problem and not easy to execute. Not only is the nation getting older, families are also breaking up in to smaller nuclear units and thus, traditional models of elder care are broken:
- 6% of elderly are living alone. This number will accelerate
- There is a Drastic fall in the ratio of care givers for the elderly
- Loneliness due to empty nesters / loss of spouse
- Demand for senior’s residences in India expected to grow 12X
Healthcare is the largest share of their wallets, with multiple unmet needs:
- 3-4X spend on healthcare by senior households
- 4% seniors suffer with dementia and this is increasing
- 75% seniors have one or more chronic disease
- 24% seniors have atleast one Activities of Daily Living limitation
Also, bucketing all over 60 years of age into one homegous group is a big mistake.
- 60-70: This group requires less care
- 70-80: This group requires moderate care
- 80 onwards: This group requires the most care
India isn’t one monolithic market: Regional variations are huge and so are income disparities:
- Rich
- Middle Class: Most have a retirement corpus
- Lower Middle Class: mostly do not have any retirement corpus, they need to work through their sixties
- Poor: No income, highly dependent on family
Technology and AI has a huge role to play in providing elder care. Japan is the most advanced nation in this respect and there is a lot to learn from them.
In the last 5 years, India has seen a rampant growth in creators across multiple social media platforms such as Instagram, YouTube, Snapchat, LinkedIn, Twitter, etc. This phenomenon is similar to what has happened across the world. Today there are 80M creators in India across these platforms. However only 150,000 creators have been able to monetise so far- this is less than 0.2% and that is where the opportunity lies.
As we observe GenZ behaviour, it is abundantly clear that shopping behaviour will change. And Influencer marketing will end up taking a big pie of e-commerce.
But what is stopping most creators from monetising today? I believe the “Meesho Moment” for creators has not come yet. What this means is that someone needs to do for creators what Meesho did for sellers. That is rationalise the effort versus reward equation- currently the effort needed to earn INR 5,000 as an influencer is high, discouraging several people from pursuing or succeeding in this route. A company that can rationalise the effort versus reward equation will unlock massive value.
How will this happen - could be through several routes - could be a specialized marketplace which unlocks samples for creators in a way which is net positive for all stakeholders involved solving for a big bottleneck which could help democratize content creation and monetization: availability of samples. Or it could be through AI simply removing the need for samples. It could be through micro transactions and gifts. Possibilities are endless and the landscape is evolving very quickly.
24. Despite Byju’s blow out, Build Next Gen AI powered EdTechs
The Indian Education Market is estimated to be ~ $117B (FY 2020). With more than 250M primary school students, it continues to be the largest market in the world. The Indian Edtech market is expected to touch $30B in FY 2030, which will place it among the top three world wide in terms of both fund-raising and M&A activity. India's Edtech sector is uniquely positioned to cater to the domestic demand as well as growing global requirements. We believe three key themes will drive the Indian EdTech Market over the next few years:
Accessibility: Business models driven by product, technology, and personalized learning catering specifically to the Indian K-12 segment. Tutoring and Test preparation companies supported by AI and local language remains a large opportunity
Skills and outcome focus: With GER at ~ 25%, workforce and skill development courses continue to be a large market opportunity. Specific sectors like healthcare, architecture, construction, retail, still have a huge demand for skilled labor that is job ready and trained to use the latest technology.
Study overseas : Growing income levels have led to growing aspirations with a focus on specialized study- developing niche skills abroad remains a very attractive business opportunity for the Edtech sector.
25. Build Cyber Security Startups
In its Global Risks Report 2021, the World Economic Forum highlighted cybercrime as amongst the top risks faced today. Rapid integration of technologies such as smartphones, broadband and the cloud are not only dramatically broadening the attack surface but also making it much more complex. As a result, a far broader set of the global population and businesses are exposed to significant cyber risks. Long gone are the days when these threats emanated largely from rogue internal actors and external professionals. We are now witnessing the rapid emergence of professional cyber groups, existing crime networks looking to diversify illicit funding, and state actors. If that was not heady enough, we now also have the risk of AI boosting cyber warfare capabilities and autonomously enabling offensive campaigns.
26. Build Startups in Online Media & Gaming Sectors
We see massive innovation in the Online Media & Gaming sector across sub segments. India's gamer ecosystem is experiencing a surge with 500M active gamers and 200M paid gamers. While the potential the demand side holds is truly phenomenal, the supply side needs to ramp up to cater to the growing expectations of its consumers. With regulatory clarity emerging in 2023, it is the right time to build for modern Indian gamers.
As the industry thrives, several gaps exist in the publisher ecosystem, including domestic studios, AI-powered infrastructure, and gamification tools, which have the potential to yield significant results. However, monetisation remains a challenge for major studios in India, hindering industry growth. To unlock greater prosperity, enhanced monetisation strategies are crucial, along with expanding beyond the Indian market.
27. Build for Agri-Tech & Rural Economy
At Omnivore we seek to support entrepreneurs innovating in three core areas of agriculture, climate and the rural economy. Across these, we are exploring technologies and business models that resonate with larger trends such as manufacturing in India and the shift to more sustainable supply chains. We are bullish about deeptech and hardware companies with innovations that increase the efficiency of Indian agriculture, both during production and post-harvest. This could be via use of artificial intelligence, blockchain, robotics, drones, IoT, remote sensing, and automation equipment. We are increasingly looking for entrepreneurs building businesses around “circular materials”, seeking to replace unsustainable incumbents in the current industrial supply chains with innovative alternatives from natural origin. Finally, innovation in the life sciences (ag biotech, novel farming systems and innovative ingredients) remains a core concentration for us.
28. Build for a fast growing Pet Economy
India presents great market opportunities in the pet care space. The industry has seen a huge jump in adoption during COVID. Between 2021 and 2022, the industry attracted investments totalling $77M, driven by 32M pets in 2022 up from ~22M in 2019, and growing at >13% CAGR. Recently, cat adoption trends have been accelerating at a greater pace – as compared to dogs - owing to lower commitment requirements.
Increase in disposable income, nuclearization of families and millennials delaying having children indicate a further growth in the pet population. India’s young demographic comprising future first time home owners present further opportunities in this space. Increasea in GDP and a change in mindset from pet ownership to pet parenting and a gradual movement towards ‘full-family-member status’ present premiumization opportunities in the space.
Pet food captures the majority of pet care revenue followed by accessories, grooming and healthcare; this is a stark change from about a decade ago when the industry centered around veterinary services. Going ahead we see further innovation, as well as growth in the industry doggy daycares/pet sitting and dog walking trends riding the gig economy wave.
There is as increasing social acceptance of pets today as our society moves towards pet friendly cafes and dedicated pet parks. We, at GSF, have a deep interest in tech enabled solutions that address pets as an emerging consumer.
29. Time is now to address “Mental Health” challenge
“COVID-19 pandemic triggers 25% increase in prevalence of anxiety and depression worldwide” – WHO.
WHO forecasts India will lose $1.03 trillion in economic value owing to mental health issues between 2012 and 2030. 1.7 Lakh suicides were reported in India (2022), and between 60-70 million people in India suffer from mental disorders. Stigmatisation and financial barriers prevent timely treatment in India. Additionally, there is a severe shortage of mental health providers in India.
Digital therapeutics can play an important role in providing support for low income countries such as India. With the advancements in the technologies, personal devices have become better and more affordable. There is a multifold growth in digital infrastructure (4G networks and affordable smart phones), access to mobile health is now available to a billion people. What we now need is Innovation in digital therapeutics that will further enable mental health services to be more cost effective, accessible, scalable and sophisticated.
The integration of psychiatry with tech is well underway, with medical practitioners implementing tech-enabled techniques such as VR therapy to simulate and realistically deal with specific problems – all in real time. Technology can help increase patient engagement in mental health treatments and aid early detection. Adoption of online mental health monitoring with mobile extends the reach of practitioners exponentially.
We at GSF see tremendous opportunities in the advancements of Digital health, Telemedicine, AI enabled - Software as a medical device (SaMD), wellness apps, personalised medicine and many other emerging areas in therapeutics as well as research.
30. Cancer Research and Oncology Therapeutics
The future of cancer research in India is filled with innovation, growth, and opportunities. As more and more people face the challenge of cancer, India must step up its game to build a strong support system for fighting cancer.
By 2030, it is anticipated that the India Oncology Therapeutics Market will reach a value of $7.8B from $3.3B in 2022, growing at a CAGR of 11.4% during 2022-2030. The genomics market, crucial for personalised medicine in cancer, is expected to grow at a CAGR of around 10-12% while the oncology drugs market is anticipated to grow at a CAGR (2024-2028) of 14.65%, leading to a market volume of $3.49B by 2028.
This sector offers opportunities for developments in several key areas: precision oncology, gene-editing tools and nanomedicine, enhanced screening methods, next-generation sequencing, AI-driven diagnostic tools, targeted therapies, and personalised medicine along with the integration of digital health solutions and the exploration of new therapeutic methods, such as immunotherapies and cell-based treatments.
We, at GSF, believe startups in the cancer tech sector will transform the future of oncology in India. They aim to make cancer diagnoses less intimidating, improve the effectiveness of treatments, facilitate post cancer care and ultimately bring us closer to the possibility of cures.
31. Build Startups Catering to SMEs in India
While SMEs contribute nearly 30% to the nation's GDP, they grapple with core problems namely access to the market, finance, technology, and talent.
Opportunities
Increasing digital adoption amongst SMEs is creating new opportunities for start-ups. They have opportunities to offer the complete value chain to SMEs namely Sales- Marketing, Supply chain- Logistics, Digital payments, accounting software, other fintech solutions, business intelligence & analytics tools, CRM systems, scalable IT solutions and many other SaaS based customised offerings.
Agility & Collaboration
It is imperative for start-ups to identify a genuine problem, start small, do pilots in select geographies, learn, evolve and be consistently iterative. They need to work on outsourcing, use marketplaces, build strategic partnerships, with industry players, government bodies, financial institutions, and trade associations to build a strong ecosystem.
Do it for Me - Building Trust
SMEs often operate within tight resources, hence have inertia towards every new change. They require education, handholding & support preferably ‘Do it for me” when adopting new solutions. A simple product and DFM model help in building Trust, that is a critical factor in SMEs decision making process.
Affordability and accessibility
Start-ups need to offer solutions that are affordable and accessible to SMEs, considering their budget and resource constraints. Freemium models, laddering pricing and simple onboarding processes are integral for SMEs journey.
We have multiple success stories including IndiaMART and I am confident that a simple, innovative tech enabled solution and unwavering commitment from the Start-ups will unlock a huge potential in SMEs segments over next few years.
GSF
GSF has been investing in seed-stage startups in India since 2012, with over 140 investments encompassing everything from consumer brands to deep-tech.
This year we will invest in up to a dozen startups in the early stages of their journey. If you’re building in any of the themes identified here, or beyond them, write to us here for funding.
GSF also operates India’s largest accelerator program - GSF Founders Academy. Over a hundred startups undergo 70 days of mentorship in each cohort, with sessions led by India’s leading VC firms, founders and industry leaders. This culminates in a demo day where you present to us and the India startup investing ecosystem at large.
If you’d like to apply for the Academy S24 cohort, click here.