300 Million Strong Indian Middle Class

In the previous two-part post showcasing Battery Venture’s perspective on investments in India, the 300 million strong Indian middle class and its problems were highlighted as a key target market, and hence, opportunity.

So, what are the problems that the Indian middle class faces?

To answer this question, one should ask another question : How did the Indian middle class come to be?

India has had a tremendous poverty problem, from which a certain class lifted itself out, primarily through education. They then climbed the steps to the lower middle class, then the middle class, the upper middle class, and many are now rising to affluence.

Throughout, the determining factor has been education.

NIIT understood this phenomenon really well, and built a superb technical education franchise by tuning into the middle class’s aspirations.

Today, however, the opportunity for fueling more growth via education still remains, at all levels – from K-12, as well as in colege and graduate education.

In pursuing this, one should squarely keep in mind the NIIT model, and refrain from trying to sell technology to schools. [I recently had lengthy discussions with Atanu Dey, who is researching this topic and harbors desires to do something entrepreneurial.] The Sylvan/Kumon learning center model, for one, would be very successful in India, and tutorial centers are very popular places, helping clear exams such as JEE.

Other obvious areas are the ones the Indian middle class opens its wallet for: Bollywood, cell phones, and consumer staples. Job search and matrimonial classifieds are also popular categories, and are being thoroughly addressed by the Internet investments of recent times.

It would also pay to dissect the behaviors of specific ethnic segments, and their quirks. For example, Bengalis tend to be voracious readers and consumers of culture. An online Bengali literary magazine (like Desh) that is supported by a branded TV channel with cross-marketing of culture and literature could be an interesting opportunity. [Read this article on the Top 10 World Languages; Bengali is spoken by 211 million people.]

Similarly, Telegus, Tamils, Gujaratis, and other groups have their own quirks. Tuning into these quirks will open up other such opportunities. Both Tamil and Telegu have over 60 million speakers each, while Gujarati has about 45 million. [I confess, I don’t know these quirks as well as I know the quirks of Bengalis.]

We should continue exploring other ideas from the readers, and in doing so, please feel free to use the forum.