1Mby1M Virtual Accelerator Investor Forum: With Chandrashekar Kupperi, General Partner of Peaceful Progress Fund (Part 4)

Sramana Mitra: What are some examples of really good companies that are focused on that segment?

Chandrashekar Kupperi: There is a company which is into chocolates. They chose tier 3 and tier 4 markets because you have the big companies in tier 1 and tier 2. What this has done is has led to the increased wallet size. Another thing they’ve realized is there are certain pockets with the ability to spend. You can even have product ranges with some premium launches.

Sramana Mitra: In tighter wallets, you have to hit the priority segments. India being India, EdTech must be on top of that list.

Chandrashekar Kupperi: Yes. There’s a lot of focus on EdTech. The actual consumer and the actual customer are different people. The customer has the willingness to pay. If the EdTech is able to entice the student, it becomes a big game. I can tell you that there are almost 4,000 EdTech startups. There are some EdTech startups that do not touch academics. You’re right to say the EdTech has significant eyeballs, but it depends on what sort of segments they’re playing into. Academics is extremely crowded.

Sramana Mitra: Is there any EdTech that is doing well in tier 3 and tier 4?

Chandrashekar Kupperi: There are a couple. When I say they’re doing well, there are two things that we need to understand. One is their ability to increase their user base. The second is their ability to increase customer lifecycle. If you’re able to give an add-on package, it becomes even more interesting.

Sramana Mitra: The question really is monetization. Getting a whole lot of free users is not a business.

Chandrashekar Kupperi: Exactly. What is important is ensuring that you have a customer lifetime value that is, at least, three to four times of your cost of acquisition. Most of them bleed. If somebody can track the user behavior and ensure that average revenue per user goes up, this can become a big play.

Sramana Mitra: Interesting. There will be some companies that will come out of the bottom of the pyramid. I don’t think we know which ones are going to be the big successes. I think it’s a very important segment. When the India story started getting traction, everybody was talking about a billion consumers. The whole story was focused on the tip of the pyramid. Only after Jio did that secondary market open up but I don’t know if we have cracked that yet.

Chandrashekar Kupperi: One is the ability of the startup to survive and get the right level of funding. The world of VC and funding has not evolved to support startups who are saying that they can make a difference. It is happening but not to the level that we want.

Sramana Mitra: The pace of growth is not there. The VCs are trying to grow from zero to a hundred million in seven years. The tier 3 and tier 4 markets are not offering that kind of trajectory.

Chandrashekar Kupperi: It takes time. It takes time because of two reasons. One is to ensure that there is penetration. The second is you also need people who will ensure that the message is passed on correctly. You also need the vernacular language.

Sramana Mitra: It’s the vernacular internet and not the English internet. Thank you for your time.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Chandrashekar Kupperi, General Partner of Peaceful Progress Fund
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