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Covid-19 and the rise of the small-town entrepreneur

From Kodaikanal to Jorhat, determined young entrepreneurs in tier 2 and 3 cities have risked their savings to set up new businesses to provide livelihoods and ease the lives of people staying home during the pandemic

Experts are now seeing building up of a lot of tier 2 and 3 city-focused efforts such as last-mile delivery of consumer goods, services and vernacular content. Photo: Getty Images

Sometime in mid-April, Debodeep Khaund ran into an elderly farmer who implored him to buy a load of vegetables for 100. “They were worth at least 1,000,” says the administrator of Kaziranga University’s IT network. At the time, Jorhat in Upper Assam was facing a severe shortage of essential supplies, with a strict lockdown aimed at curbing the spread of the novel coronavirus, but which had thrown supply lines out of gear. “His suffering left a deep impact on me,” says the 40-year-old.

Khaund started thinking about the dichotomy: Students living in the hostels of research institutes, universities and the lone medical college were running short of basic provisions, while farmers were in deep distress because they could not get their produce to market. He came up with the idea of an online marketplace for essentials that would deliver across the city with a million-plus population. Within a fortnight, Bazaar 24x7 had come into being.

(left to right) Debodeep Khaund, Dipankar Sarmah, Shahbaz Khan, partners in  Bazaar 24x7. Based in Jorhat, Assam, this online venture specializes in groceries, vegetables and essential services. It even connects senior citizens to chemists after getting their prescriptions on WhatsApp
(left to right) Debodeep Khaund, Dipankar Sarmah, Shahbaz Khan, partners in Bazaar 24x7. Based in Jorhat, Assam, this online venture specializes in groceries, vegetables and essential services. It even connects senior citizens to chemists after getting their prescriptions on WhatsApp

“Besides students, Jorhat has a lot of senior citizens who live alone,” he says. With the idea in place, he started contacting engineering students and programmers, who were sitting idle during the lockdown. By mid-April, with four partners and a delivery boy, he had the website up and running. A room in his three-bedroom house was converted into a makeshift warehouse. Initially, the website was meant only for vegetables; it has since expanded to groceries and even offers plumbing and electrical services and cab tie-ups. Within a few days of its launch, Bazaar 24x7 had managed to reach 5,000 people.

Since the end of March, determined entrepreneurs like Khaund have risked everything to launch new ventures to crack seemingly intractable problems posed by the lockdown, especially in smaller towns that aren’t served by the big e-commerce and food-tech startups. These founders, now known as “covid entrepreneurs”, include small enterprise owners, startups and hyperlocal stores, particularly in tier 2 and 3 cities. Most of them are self-funded ventures, drawing on their own savings to kick-start the first phase of their enterprises. Some of them are part-time entrepreneurs, retaining their jobs as they work on their business plans, buoyed by the “new normal” of work from anywhere.

The change, accelerated by the pandemic, has been in the making for some time, facilitated by internet penetration into smaller towns and villages. India now has over 500 million active internet users and mobile data consumption is at an all-time high. On an average, an Indian internet user is consuming over 16 GB a month. “Over the next five years, India’s internet user base will get to one billion, with almost all the growth coming from tier 2, 3, 4, smaller cities and rural India,” says Rajan Anandan, managing director, Sequoia Capital India LLP. “As users from outside India’s tier 1 cities are coming online, we are realizing their unique needs. This, in turn, is leading to a new generation of startups being built for them.”

Research firms and market analysts have been racing to dissect the trends emerging from this space. One of the early surveys on the topic was the COVID-19 And The Antifragility Of Indian Start-up Ecosystem report led by the Delhi and National Capital Region chapter of TiE, a global not-for-profit. The past few months, it notes, saw more than 55% year-over-year decline in seed and early stage investing but the levels are gradually expected to return to pre-pandemic levels by the end of the year. While it’s too early to gauge the growth trajectories of the new ventures, the rise of tier 2 entrepreneurs is there for all to see.

Businesses of all shapes and sizes are now embracing digital at an unprecedented rate. “According to research by (global management and strategy consulting firm) Zinnov, India has 38,000 startups, of which 35% are outside tier 1 cities,” adds Anandan. In fact, the sectors that have been able to adapt to digitization more quickly have done better during the pandemic, he adds, especially those where the physical format of the same industry has suffered. The closure of schools and restaurants and cancellation of events, for instance, saw a boom in online classes, cloud kitchens and Zoom events.

It’s an observation shared by Anjali Bansal, founder of Avaana Capital—a platform that invests in scaling up tech-innovation businesses for impact —and a council member of the Indian Private Equity and Venture Capital Association. “We are also seeing building up of a lot of tier 2 and 3 city-focused efforts such as last-mile delivery of consumer goods, services and vernacular content. Even ventures based in metros have a point person in these cities as the demand is being driven from tier 2 and 3 segments,” she says.

The emerging hubs are now places like Amroha, Raipur, Pinguli, Ernakulam and Chhota Nagpur. Deepak Bagla, managing director and CEO of Invest India, the national investment promotion and facilitation agency, says the segments seeing most traction are edutech, food delivery, agritech and IoT (internet of things). Bansal agrees, saying she has seen a lot of first-time entrepreneurs from both metros and tier 2 cities, covering segments ranging from fintech, direct-to-consumer services in food and personal care, health and wellness. Edutech too is moving beyond curriculum-based, exam-led content to coding and cognitive development. Since its launch in January 2016, Invest India's 'Startup India' has received close to 200,000 business requests, with 70% now coming in from tier 2 and 3 cities. “The moment we are free of the virus, the new India will be driven by entities in smaller cities. The growth will be bottom up,” says Bagla. Given the number of startups and small enterprises coming from beyond the metros, Invest India’s startup hub now has 21 local language options.

The pandemic has propelled the trend, giving those who had dreamt of starting their own enterprises the time to work out the details of their ventures. “During the pandemic, people started working from home. They had time to think about the kind of business they wanted to set up. So, you will find a lot of people going for part-time startups, a culture which is huge in the US,” says Rohit Kashyap, founder of the Maytree School of Entrepreneurship, Patna, which offers mentorship programmes to students and professionals wanting to launch their own businesses. Maytree has so far incubated over 50 revenue-generating startups. Over the last few months, says Kashyap, he has got queries from Saharsa and Raipur too.

Kashyap is just 19. One of the country’s youngest startup owners, this teenager from the small town of Jaynagar says more people are continuing at their jobs in software companies while starting online foodtech, agritech, payment gateway or craft enterprises. “The best thing is that everyone is now operating within a level playing field. You can work out of anywhere. I went to my home town during the lockdown and I was contributing to digital mentorship just as much as my team member in Bengaluru,” says Kashyap.

Khaund too continues to work with Kaziranga University, a job that he enjoys, as he scales up his business. It offers him a security cover for his wife and seven-year-old daughter. He has moved beyond groceries to provide essential services, immunity boosters made from indigenous herbs, even cab tie-ups. “We don’t have Ola and Uber in Jorhat. But this is the age of collaboration. We are now offering a platform to those who own a transport business,” he says. People are hesitant to hire cars at the moment due to fear of infection, but Bazaar 24x7 comes with an assurance of hygiene for customers, while also directing more business to cab owners. The site has now started connecting city dwellers with organic farmers from villages nearby to enable people to source fresh produce.

The team is so small that Khaund often delivers essentials in his own car. They had to shut down for a month, when Khaund and a colleague tested positive for covid-19, to ensure they did not compromise the safety of customers. They have restarted only recently, with enhanced sanitation and hygiene checks in place.

Malik Aadil launched Groxery on 15 July as an online grocery delivery app. It now reaches 25-30 pin codes in Srinagar. Within two months of launch, the app has seen 25,000 downloads on Android and 5,000 on iOS.
Malik Aadil launched Groxery on 15 July as an online grocery delivery app. It now reaches 25-30 pin codes in Srinagar. Within two months of launch, the app has seen 25,000 downloads on Android and 5,000 on iOS.

Thousands of kilometres away, in Srinagar, 27-year-old Malik Aadil has been nurturing his brainchild, a hyperlocal grocery marketplace, Groxery, that he worked on during the lockdown and launched on 15 July. Malik, who has a master’s in business administration from the Alliance Business School in Bengaluru, worked with online grocery delivery service Grofers from 2015-17. He quit to work on ProBranding365, a company for branding and marketing solutions, which now has a presence in 10 cities. Just as news of the pandemic broke, he returned home to Srinagar. Malik had always dreamt of starting a business in his home town—now, he had the time and opportunity. Today, Groxery covers over half the city, delivering to 25-30 pin codes.

The journey hasn’t been easy. “One of the biggest challenges for an e-commerce business in Kashmir is the 2G internet. It takes at least 20 minutes for a customer to browse, select items and then make the payment,” says Malik, who wanted to give Srinagar residents the option and convenience of ordering groceries online. Slow speed hasn’t been a deterrent. Within two months of launch, the Groxery app has seen 25,000 downloads on Android and 5,000 on iOS; it gets 200-250 orders daily.

Groxery now gets around 200-250 orders daily and aims to promote local products such as the Kashmiri breads. Photo: iSTOCKPHOTO
Groxery now gets around 200-250 orders daily and aims to promote local products such as the Kashmiri breads. Photo: iSTOCKPHOTO

Both Khaund and Malik’s enterprises are similar in that they offer a platform to local producers and professionals. About 90% of Malik’s team is from Kashmir, while others are based out of Bengaluru and Delhi. Keen to promote local products, Malik has just introduced the local Kashmiri bread shop, kandurwaan, as an online offering. “It’s now getting cold in Kashmir, and people can’t move around as much due to the pandemic. Breakfast is unthinkable without the bread, so I thought why not bring it to the consumers?” says Malik. “Groxery is the first online platform to bring the kandurwaan home to bring happiness to the city.”

Food products and delivery is a sector that is seeing growth around the country, with a sharp rise in the number of small ventures delivering local jams, pickles and snacks online. It has been the perfect time, in fact, for the home cook to shine.

Take, for instance, Maa’s Pickles, launched by the mother-daughter duo of Anita Gupta and Mihika Daruka in March. Based in Haldwani, in the foothills of the Himalaya in Uttarakhand, it specializes in pickles made with indigenous ingredients and masalas ground at home. Some of their most popular offerings include kale chane ka achaar and khatte meethe baingan pickle. “My mother’s pickles are very popular in Haldwani. She has sold them at my father’s sweet shop and restaurant in the past,” says Daruka, a 30-year-old former public relations professional who shuttles between Pune and Jhumri Telaiya, Jharkhand, with her husband. She handles the marketing while her mother, 56, does the cooking in Haldwani.

There has been a sharp rise in the number of small ventures delivering local jams, pickles and snacks online. This is the time for the home chef to shine. Photo: iSTOCKPHOTO
There has been a sharp rise in the number of small ventures delivering local jams, pickles and snacks online. This is the time for the home chef to shine. Photo: iSTOCKPHOTO

They hope to tie up with Amazon for deliveries before Diwali, but for now, they use regular couriers. With truck movement erratic, the biggest challenge has been getting the right kind of produce. The situation is on the mend, though, and they are now taking orders from 19 states. “We have employed two people to chop vegetables. We are very careful as covid-19 cases are still rising. For Diwali, we have tied up with a self-help group in Kumaon for festive boxes. Women in some parts of the state face a lot of domestic violence and we hope to help them in some way,” says Gupta.

The USP of such ventures is that they serve peculiarly local needs while being contemporary in format and technology. “For instance, how do you create water pumps that don’t require electricity? Some of them are frugal innovations, with the founders having grown up in an environment of thrift and paucity,” says Bagla. Their solutions are competitively priced. The coming months, in fact, may see a number of multinationals linking up with these startups, even outsourcing services to them in small towns and cities. “Significant innovation is taking place in this space. A number of self-help groups and other local enterprises are providing support to these startups to access mentors, markets and finances from across the globe,” he says.

Maa’s Pickles was launched by the mother-daughter duo of Anita Gupta (seated) and Mihika Daruka in March. Based in Haldwani, Uttarakhand, it specializes in pickles made with indigenous ingredients and masalas ground at home.
Maa’s Pickles was launched by the mother-daughter duo of Anita Gupta (seated) and Mihika Daruka in March. Based in Haldwani, Uttarakhand, it specializes in pickles made with indigenous ingredients and masalas ground at home.

These ventures, in turn, are working to ensure members of self-help groups make it through these crisis-ridden times. For instance, The Smritsonian, based in the Tamil Nadu hill station of Kodaikanal, is making rag dolls modelled on iconic women. Started by former journalist Smriti Lamech in September, the startup works with Prowess, an SHG that provides a livelihood to seamstresses. It all started when Lamech moved temporarily in October last year from Gurugram, Haryana, to Kodaikanal to be closer to her children’s boarding school. Disappointed with the local tailor, who couldn’t even do basic alterations, she started taking odd jobs to Prowess. Over the past few months, she learnt how badly the pandemic had hit incomes and decided to realize her dream of starting a venture that brought together craft and women. She was inspired by childhood memories of growing up in Prayagraj, when rag dolls made by “Aunty Abel”in the neighbourhood brought such joy to all the children. “For your birthday, parents would give the tailor and Aunty Abel the same set of fabrics. So, you and your rag doll would be dressed identically,” she reminisces. Her mother owned a boutique, so Lamech was familiar with textiles and fabrics. “For my venture, I wanted to do something unique, handmade, with well-thought-out detailing,” she says.

The Smritsonian, started by former journalist Smriti Lamech, is based in Kodaikanal, Tamil Nadu. She works with a self-help group, Prowess, to make rag dolls modelled on iconic women.
The Smritsonian, started by former journalist Smriti Lamech, is based in Kodaikanal, Tamil Nadu. She works with a self-help group, Prowess, to make rag dolls modelled on iconic women.

The Smritsonian pieces are not your average rag doll, they are a reflection of Lamech’s political and feministic ideology. The dolls are fashioned on the personalities of feminist icons such as Frida Kahlo, Savitribai Phule, Kalpana Chawla, Maya Angelou, and have one distinguishing feature of each: like Savitribai’s blue sari and tilak, Kahlo’s unibrow, Kalpana Chawla in a spacesuit. She also creates buntings and torans with messages like “I Dissent” and “Fearless”. “These are not just collectibles for kids but for adults as well. As children, we didn’t have too many female role models, except, perhaps, Indira Gandhi. When I grew up, I realized that there were so many out there, it’s just we didn’t know about them. Here’s my way of acknowledging them,” says Lamech.

Each doll has one distinguishing feature of the women, such as Savitribai Phule's sari and tilak, Frida Kahlo's unibrow and Kalpana Chawla in a spacesuit
Each doll has one distinguishing feature of the women, such as Savitribai Phule's sari and tilak, Frida Kahlo's unibrow and Kalpana Chawla in a spacesuit

While she didn’t need too much money to get started, the actual production process did require effort. The women were used to making oven mitts and stuffed toys with stiff limbs, while Lamech wanted the dolls to have a personality, and movable arms. It took several prototypes and samples to get it right.

They worked in a tiny workshop, maintaining physical distance norms, occasionally seeing some of their members confined to containment zones. And today they have a long waiting list, running up to a month.

In Dimapur, Nagaland, Konger Agritech too is giving SHGs a helping hand. Incorporated as a company in July, its name literally translates from the Ao Naga dialect to “mushroom”. Its focus is on helping farmers with everything related to produce, from the spawn to the market. For founder and scientist Sosang Longkumer, the journey started a couple of years ago but he is working on a post-pandemic road map for SHGs.

Konger Agritech, the Dimapur-based company was started by Sosang Longkumer (standing) as a lab in 2018, and was finally incorporated this year.
Konger Agritech, the Dimapur-based company was started by Sosang Longkumer (standing) as a lab in 2018, and was finally incorporated this year.

Longkumer says there was a great demand for mushrooms in the state, but producers and small farmers were not able to meet it. With a doctorate in genetics, the scientist realized that mushroom spawn was extremely scarce, with even government labs producing it only during the winter months in small quantities. “To make mushroom cultivation an year-round activity, I knew I needed a spawn production lab to ensure availability to everyone who wanted to produce it,” he says.

So, Longkumer started by producing small quantities of spawn in other laboratories. After testing the market, he took a loan from the Bank of Baroda under the Prime Minister’s Employment Generation Programme and set up his own molecular biology lab, Mushroom Spawn Laboratory in 2018. “Starting a lab in a place like Nagaland, with its limited resources and connectivity, was an herculean task. I give all the credit to the Indian Council of Agricultural Research-National Research Centre (ICAR-NRC), where I worked as a research associate,” he adds. The growing interest from farmers and government agencies inspired him to set up his company, and he registered it this year. Currently, Konger Agritech is run by a small team of 10—three scientific staffers, two in the technical department, two skilled and three unskilled workers.

Kongker Agritech offers spawn and technical know-how on mushroom cultivation to 200 independent shiitake mushroom farmers and 300 oyster mushroom producers, besides a number of SHGs. The goal is to make Nagaland an organic shiitake state. Photo: iSTOCKPHOTO
Kongker Agritech offers spawn and technical know-how on mushroom cultivation to 200 independent shiitake mushroom farmers and 300 oyster mushroom producers, besides a number of SHGs. The goal is to make Nagaland an organic shiitake state. Photo: iSTOCKPHOTO

The company is offering spawn and technical know-how on mushroom cultivation to 200 independent shiitake mushroom farmers and 300 oyster mushroom producers, besides a number of SHGs. Longkumer has also tied up with the state department of forests and environment and the Japan International Cooperation Agency for a pilot project on mushroom farming in Nagaland’s Noksen, Tuensang and Mopungchuket villages. “We are also working with the Nagaland State Rural Livelihood Mission on an initiative titled Roadmap for Economic Development—Post COVID-19 Pandemic, as part of which we are activating SHGs in Mokokchung, Wokha and Kohima districts,” he says. The goal is to make Nagaland an organic shiitake state.

The TiE report suggests a compounded annual growth rate of 8-9% in the next five years for such ventures. But Kashyap believes aspiring entrepreneurs should tread with caution. “I come from a business family, so I had a sense of how the system works. I would suggest finishing your education first and working in the sector you ultimately want to base your startup in for a few years,” he says. “Do a self-assessment before you start and rate yourself on self-motivation, risk-taking appetite, people management, communication skills and investment appetite. During the pandemic, this becomes even more important as the risks attached are very high.”

Meanwhile, this new set of entrepreneurs continues to be taken by surprise at the success of their ventures during the pandemic. “I had thought that only my friends and family would show an interest in my dolls. But the venture has now taken a life of its own,” says Lamech, who is curious to see what the future holds for The Smritsonian. Until then, it is que sera sera.

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