Next Half billion

The N t Frontiers

Our Investment Thesis

Innovating for the NHB

By Roopa Kudva and Siddharth Nautiyal

January 2021
About the Authors

Roopa Kudva

Managing Director at Omidyar Network India

Siddharth Nautiyal

Partner at Omidyar Network India

A special thanks to 

Aman Totla, Badri Pillapakkam, Kartik Sahni, Rohan Vyavaharkar,
and Shreya Deb

About Omidyar Network India

Omidyar Network India invests in bold entrepreneurs who help create a
meaningful life for every Indian, especially the hundreds of millions of
Indians in low-income and lower-middle-income populations, ranging from
the poorest among us to the existing middle class. To drive empowerment
and social impact at scale, we work with entrepreneurs in the private,
nonprofit and public sectors, who are tackling India’s hardest and most
chronic problems.

We make equity investments in early stage enterprises and provide grants

to nonprofits in the areas of Digital Society, Education, Emerging Tech,
Financial Inclusion, Governance & Citizen Engagement, and Property Rights.
Omidyar Network India is part of The Omidyar Group, a diverse collection
of companies, organizations and initiatives, supported by philanthropists
Pam and Pierre Omidyar, founder of eBay.

To learn more, visit www.omidyarnetwork.in, and follow us on LinkedIn

(Omidyar Network India) and on Twitter (@on_india)
About the Authors

Roopa Kudva

Managing Director at Omidyar Network India

Siddharth Nautiyal

Partner at Omidyar Network India

A special thanks to 

Aman Totla, Badri Pillapakkam, Kartik Sahni, Rohan Vyavaharkar,
and Shreya Deb

About Omidyar Network India

Omidyar Network India invests in bold entrepreneurs who help create a
meaningful life for every Indian, especially the hundreds of millions of
Indians in low-income and lower-middle-income populations, ranging from
the poorest among us to the existing middle class. To drive empowerment
and social impact at scale, we work with entrepreneurs in the private,
nonprofit and public sectors, who are tackling India’s hardest and most
chronic problems.

We make equity investments in early stage enterprises and provide grants

to nonprofits in the areas of Digital Society, Education, Emerging Tech,
Financial Inclusion, Governance & Citizen Engagement, and Property Rights.
Omidyar Network India is part of The Omidyar Group, a diverse collection
of companies, organizations and initiatives, supported by philanthropists
Pam and Pierre Omidyar, founder of eBay.

To learn more, visit www.omidyarnetwork.in, and follow us on LinkedIn

(Omidyar Network India) and on Twitter (@on_india)
 Table of Contents
Executive Summary 3

Chapter 1
Recap of our NHB thesis 6

Chapter 2
NHB definition 8

Chapter 3
Digital journey of the NHB 10

Chapter 4
Progress on the barriers that the NHB face 13

Chapter 5
Building an NHB focused portfolio 17

Chapter 6
The evolution of NHB business models 21
6.1 From online to “mobile-first”; and “consumer” solutions to “small business” solutions

6.2 Local language provides the breakthrough into the NHB

6.3 The rise of the “utilitarian” segments

Agri-tech: from eliminating intermediaries to serving the entire agriculture value chain
Education: from brick & mortar to online; asynchronous to live learning
Financial Inclusion: from consumer credit to financial health; early stages of inclusive
solutions for small businesses
Health-tech: from content to community, medical advice and commerce
Mobility: from travel information to ride sharing
SME digital solutions: from bringing small businesses online to embedded solutions

Chapter 7
The next frontiers 28

Chapter 8
Conclusion 32

Annexure 33
 Executive Summary

The Next Half Billion (NHB) refers to the nearly 500 million Indians who will come online for
the first time by 2022, and predominantly from the bottom 60% of India’s income
distribution. Our investment thesis postulated that internet and mobile phones could
unlock greater incomes, opportunities and choices for the NHB through new tech-led
business models. Five years since we began focusing on this segment, this paper takes
stock of how our thesis is playing out and how NHB-focused business models have
evolved. It also anticipates the next frontiers in the NHB’s digital journey and the
opportunities for entrepreneurs serving them.

A
Significant progress in addressing barriers in the NHB’s digital journey, though much remains
to be done
Expansion of internet and mobile services, public digital infrastructure and entrepreneurial
innovations have spurred an increase in both the quantum and range of uses of the internet.
Covid-19 significantly accelerated this trend.
Affordable access to data: Good progress

Low data costs, due to the advent of Jio

Availability of Indian language content: Getting better

Local language content proliferating; video becoming the dominant mode of content
consumption

Local apps for social/entertainment: Start made | more to be done

Local apps competing with international ones

Design for extreme affordability: Progress made | needs to be more ingrained

Frugal innovation has enabled affordable offerings

Low confidence in transacting online: Progress made | needs to be more ingrained

Online social communities, simple payment mechanisms and vernacular language are
increasing trust

Low rates of internet access amongst women: Progress made | more to be done

Women’s use of mobiles and women-centric digital platforms seeing traction

Adapting UI/UX to the NHB’s context: Getting better

Use of relatable language and inclusive user interface/experience (UI/UX)

03
B
“Utilitarian” sectors have taken centre-stage in serving the NHB
“Utilitarian” sectors have gained momentum as the NHB became more comfortable with
accessing various services on the internet. Business models in each of these sectors have
evolved alongside the NHB’s digital journey:

Agri-tech:

from eliminating intermediaries to serving the entire value chain

Education:

from brick-and-mortar to online; from asynchronous to live learning

Financial Inclusion:

from consumer credit to their financial health; early stages of inclusive solutions for small
businesses
Health-tech:

from health content to community, medical advice and commerce

Mobility:

from travel information to ride sharing and intra-city mobility

Small and Medium Enterprise digital solutions:

from bringing small businesses online to embedded solutions

C
Next frontiers for NHB business models will see deepening of “utilitarian” sectors
The digital journey of the NHB will continue to accelerate post-Covid-19.
The constrained income growth of the NHB will require frugality and patience, as
monetisation may be slow post-Covid
Entrepreneurs will have to push the bar on addressing barriers in the NHB’s digital journey,
such as addressing language barriers, contextualising models for the NHB and increasing
women’s participation.
Focus on essential services and products will be accentuated; shifts towards the more
aspirational areas will be slower than previously anticipated.
We will see new opportunities and greater deepening in the utilitarian segments below:

04
 Transition towards agri-outputs (from inputs) | newer
agri-verticals (e.g. dairy, livestock) | wider range of
Agri tech
business models (e.g. marketplaces, SaaS, IoT
mechanization)

Continuing momentum in ed-tech | early childhood

Education education | foundational literacy and numeracy | life
skills | parent engagement | workforce readiness

Beyond credit solutions for NHB (e.g. insure-tech,

savings) | inclusive financial services for small
Financial Inclusion
businesses (formal financial services and business-tech
services)

Tech-led patient-centric solutions | information and

Health tech networks | digital health services | IT solutions & analytics
| digital therapeutics

Intra-city mobility solutions | first- and last-mile linkages

Mobility | public transportation infrastructure innovation |
electric vehicles

Other Areas Civic-tech | legal-tech | privacy-tech | prop-tech

At Omidyar Network India, we have built a ‘tech-led’ portfolio focused on the NHB, shaped
by our thesis on their digital journey. We have seen that while tech-based innovations might
initially serve customers higher up in the income pyramid, over time, they tend to find
acceptance amongst the NHB. Nearly 33% of our investees’ customers are from the NHB; we
aim to increase this to 50% in the next two years. Our equity portfolio, including ~50 active
investments, has reached 365 million1 Indians. As early stage investors, it is encouraging to
see that over half the companies we have invested in are impacting more than one million
lives each, valued at more than INR 5 billion, or both. We are encouraged by this experience,
which reinforces our conviction about the potential to build large, sustainable and valuable
businesses serving the NHB.

1 As of June 2019; reach does not include unique lives since the same individual might be served by multiple investees

05
Recap of our NHB thesis
In December 2017, our publication “Innovating for the Next Half Billion” (NHB) laid out a
thesis on the internet journey of India’s NHB - the next wave of new internet users coming
online through their mobile phones for the first time by 2022. Our thesis was rooted in the
belief that technology has the power to connect individuals and dramatically increase
people’s incomes, opportunities and choices,as witnessed in the case of India’s urban
middle class in the last two decades. We envisaged the NHB’s journey as starting with
them coming online, then moving forward step-by-step to eventually making commercial
transactions on the internet for essential as well as aspirational products and services.

The NHB differ in many ways from the initial waves of mobile internet users – they have
very different income profiles, education levels, language skills, and social/cultural milieus.
We had outlined seven barriers that the NHB face in their internet journey and how
addressing them could create exciting business opportunities for purpose-driven
entrepreneurs wanting to serve this segment.

Much has changed during the intervening period since our thesis was first published.
Internet access has continued to expand at a rapid pace and India’s entrepreneurial
ecosystem is brimming with innovation. Yet, the growth in income of the NHB, and indeed
the country as a whole, has been slower than we had anticipated. To add to this, a
devastating pandemic has created several uncertainties and accelerated many
pre-existing trends. Three years on (and five years since we started focusing on this
segment), this paper takes stock of how our thesis is playing out. It also anticipates what
lies ahead in the digital journey of the NHB and opportunities for entrepreneurs to serve
this segment.

India’s NHB – the next wave of new internet users

coming online through their mobile phones for the
first time by 2022. Our thesis was rooted in the belief
that technology has the power to connect individuals
and dramatically increase people’s incomes,
opportunities and choices.

07
 02
NHB Definition
The Next Half Billion refers to the 500 million Indians who will come online for the first time

by 2022. The NHB come predominantly from the bottom 60% of India’s income distribution.

They encompass a wide spectrum – a portion of middle income, the lower middle-income

(aspirers) and a portion of lower income (deprived) households. Within this spectrum, the

“aspirers” comprise the bulk of the NHB.

The NHB’s income

The NHB typically earn under Rs. 21,000 (~USD 300) per household per month

Figure 1

Rich

Middle Income

2
Aspirers
Domestic help, small shop owners, entry
level white collar jobs security guards
60%
2
Deprived
Small farmers, rural
artisans

We’ve anchored the Deprived definition on World Bank’s 2011 global poverty line (<$1.9 per person per day in 2011 PPP)
and the Aspirers definition on the low income line ($3.2 per person per day in 2011 PPP). We have used $9 per person per
day in 2011 PPP as the Middle Income threshold, which aligns with CMIE (2018) data. 2. We have used the average
exchange rate for 2018 i.e. 1 USD = 68.41 INR. 3. The total population of India is 1.353B in 2018 (World Bank) and the average
number of people per household is 4.85 (NSSO, 2011). 2018 NSSO data is expected to be published in a few months, at
which point, we will refine our analysis.

Annual Household income (2018) in M households in M people

Above Rs. 700k (Above $10.4k) 20 (7%) 95

~ Rs. 250k -Rs 700k (~$3.7k- $10.4k) 92 (33%) 446

~ Rs. 150k -Rs 250k (~$2.2k-$3.7l) 109 (39%) 528

Below Rs.150k (Below $2.2k) 59 (21%) 284

Traditionally, the NHB have been underserved, excluded and disempowered.

Notwithstanding the differences in incomes, education levels and internet access that

exist within this group, all of them tend to have significant unmet financial and daily living

needs and are vulnerable to economic shocks. However, with the proliferation of mobile

phones and affordable mobile data they can benefit from tech-led business models that

provide them access to a range of affordable services and products that can improve their

lives. With the mobile phone, businesses and governments can also reach and serve this

segment much more easily than they previously could.

09
 03
Digital Journey of the NHB
 Although a large segment of the NHB has internet access via a mobile device, that has yet
to drive significant economic activity, since the number of users conducting financial and
commercial transactions on their mobile devices remains relatively low.

3
The number of active internet users from the NHB segment is estimated at 200-250 million.
While this still represents just a third of the total internet users in India, this segment of
users is growing at a rapid pace. The largest use case of the internet by far is for personal
communication. From there, users move gradually towards more sophisticated use cases -
consuming online content such as entertainment and gaming, engaging in online
communities and conducting low value recharge transactions and money transfers.
‘Utilitarian’ services such as education, health and travel represent the next phase. The final
transition – making regular purchases/transactions — is the hardest step in this digital
journey (see Figure 2).

NHB internet users (2020)

The total number of active internet users in India is ~700 million of which 30-35% (i.e.
200-250 million) are estimated to fall within the NHB

FIGURE 2

200-250M
140-170M
70-100M
25-35M
5-10M
2-5M

Communication News & free Money transfers Education,

Community Shopping
& entertainment content/information & rechargers health & travel

News in 17 Women’s social Digital Payments Online live learning Social

Whatsapp
languages network e-commerce

Chrome Local stories Social media app Indian digital Travel booking & Personal
for videos payments information digital credit

Note: User numbers are cumulative. All subsets of the graph are a subset of the preceding segments. Numbers estimated based of users figures for
market leaders in each segment. Shopping users includes both NHB and buyers. 

Source: ‘India’s Digital Future’- KPMG, ‘Unlocking Digital for Bharat’ (Bain, Google, and ONI, 2018) TechCrunch(2019), Livemint (2019), App Annie user
data literature search, ONI analysis.

3
Calculated as 30-35% of total internet users in India (~700M; Source: Statista)

11
For entrepreneurs to serve the NHB effectively and build sustainable businesses, fostering
NHB trust and confidence in the internet and online transactions / purchases is essential.
Success requires addressing the barriers that this population segment perceives and
experiences, as well as being attuned to their cultural contexts and social norms. The first
step is simply to get more people online more frequently. The next step is to build their
comfort level and trust with using the internet. That will likely follow the same evolution
from simple to more sophisticated use cases outlined in the chart above.
The Covid-19 pandemic has been a game changer in this respect. It has rapidly increased
comfort in using the internet and undoubtedly accelerated the digital journey of the NHB
by several years. For instance, rural mobile data consumption in India grew nearly 30% in
the first three months of the nation-wide lockdown imposed in March 2020, bridging the
gap with urban consumption, which grew at 15-20%4. Indians on average spent nearly 30
minutes extra per day on their smartphones during the lockdown compared to earlier5.

Not only did the quantum of mobile and internet usage increase, the reasons for using
them have also changed. At the heights of the lockdown during the pandemic, four out of
five smartphone users relied on their device for information about government schemes,
weather updates and market-related information on agricultural produce6. As children
became homebound, schools increased digital3 instruction and outreach. All this has
perforce provided a massive surge in exposure of NHB families to the digital medium,
building a familiarity and comfort that would otherwise have taken much longer to
achieve. Vedantu and Doubtnut, which provide app-based and online education
solutions to children, witnessed rapid growth in customer adoption during the pandemic,
with number of users growing 3-5x and number of paid users growing by more than 5x.

The Covid-19 pandemic has been a game changer in

this respect. It has rapidly increased comfort in using
the internet and undoubtedly accelerated the digital
journey of the NHB by several years.

The descriptor text for the images will go here.

4 https://economictimes.indiatimes.com/tech/internet/rural-india-beats-urban-in-data-usage/articleshow/79253465.cms
5 https://www.business-standard.com/article/economy-policy/covid-19-lockdown-effect-every-second-indian-now-on-internet-in-

cities-120050801805_1.html
6 https://www.livemint.com/news/india/use-of-smartphones-for-productivity-grew-120-during-lockdown-in-india-report-

11597222796805.html
12
 04
Progress on the barriers that
the NHB face
The digital journey of the NHB is not without obstacles. At the time of publishing our thesis,
we had identified seven such barriers that the NHB face. Over the years, we have built a
portfolio of investments addressing these barriers and creating business models to provide
the NHB access to aspirational services. Figure 3 below provides some examples:

FIGURE 3
The barriers the NHB face along their digital journey and our portfolio

Companies working to address them

UI/UX not adapted to social

Lack of local language
Low rates of internet
Design for extreme

& cultural context content access for women affordability

Lack of local apps for social

Lack of access to fi
Low con dence in online

& entertainment affordable data transactions

How has India progressed on addressing some of these barriers? Indeed, significant
advances have been made. Digital maturity has dramatically increased in recent years
and the average Indian mobile phone user today consumes more mobile internet data
than users in more advanced economies like USA, UK, China, France, Germany, and South
7
Korea. The digital infrastructure created by the government and private sector, together
with the various innovative start-ups founded by Indian entrepreneurs have helped build
far greater familiarity and comfort with the internet in the last 18-24 months. Consequently,
we have seen progress in addressing each of the barriers:

Affordable access to data

Low data costs, attributable mainly to the advent of Jio, dramatically changed the mobile broadband
landscape in India and led to data costs in India being amongst the lowest in the world. As of 2020, the
average cost of 1 GB mobile data in India was $0.09 – nearly one-90th of the per-GB cost in the US and
8
one-60th of the global average. In an important move to improve internet accessibility, the PM–WANI (Wi-Fi
Access Network Interface) was announced in December 2020. The new architecture expects to unleash
growth of 10 million small Wi-Fi hotspots in the country anchored by small retailers in low income areas. This
will enable high speed internet in low income areas as well as extra income for small retailers. At the same
time, it will make it easier for consumers to access low-cost public wi-fi on the go through a simplified mobile
app-based infrastructure.

7 Nokia Mobile Broadband Index report 2020

8 Cable.co.uk
14
 Availability of Indian language content

Healofy is India’s largest

women-focussed social network

Local language content is proliferating, and video is the dominant mode of content consumption. Nine out
ten new internet users added between 2015-20 consume content 9
in Indian languages. Nearly 70% of Indian
internet users are expected to be consumers of video content. Nevertheless, satisfaction with the local
language experience still has some way to go. A recent survey showed
10
that more than one-fourth of users
feel that the search results in their local language are inaccurate. The same survey reported that 43% of the
housewives surveyed feel that there are limited options to choose their preferred language on online
shopping websites.

Local apps for social/entertainment

Social/communication is the dominant use for the internet.

While the Facebook family (Facebook, WhatsApp and
Instagram) continues to dominate Indian users’
screen-time, new players like Josh, Roposo and Sharechat
contributed in a big way to expanding the reach into the
NHB, including giving many an opportunity to earn income
by generating their own content. For the first time, many
NHB users are not just consumers, but also producers of
digital content.

Design for extreme affordability

The purchasing power of the NHB is relatively low, which necessitates a frugal approach to provide them
affordable offerings. Unified Payment Interface (UPI), a low-cost digital payment infrastructure, has been a
key enabler for frugal innovation. Between FY17 and FY20, the total number of UPI transactions skyrocketed
and grew nearly 700x (and 300x in terms of transaction value). Covid-19 gave an even greater boost to digital
transactions, with total monthly UPI transactions doubling from nearly 1 billion in April 2020 to nearly 2 billion
in October 2020.11

The descriptor text for the images will go here.

9 https://www.businesstoday.in/top-story/nine-out-of-10-people-on-internet-indian-language-users-says-nidhi-gupta-of-google-india/story
/391461.html
10 https://www.businessinsider.in/advertising/ad-agencies/news/by-december-2020-close-to-70-of-all-internet-users-will-access-the-internet
-in-their-local-languages-watconsult/articleshow/77082620.cms
11 NCPI Retail Payments Statistics, National Payments Corporation of India
15
 Low confidence in transacting online

Online social communities, which are built into the models of many start-ups, are helping build trust in the
internet. Simple payment mechanisms (e.g. UPI) are also increasing confidence in transacting online. It also
helps that many of these apps can be used in vernacular languages, further contributing to users’ comfort.

Low rates of internet access amongst women

Women play an important role in decisions relating to basic and utilitarian consumption; bringing women
online is therefore essential to be able to meaningfully harness the power of the internet for the NHB.
Women’s use of mobile phones is increasing. In 11 states/union territories, more than 70% women now have
their own personal mobile.12 Building off this, several women-centric digital platforms have emerged and are
seeing strong traction. Healofy, a women-only platform fostering communities focused on maternity and
childcare, has grown to 2 million monthly users engaging and transacting on its app. Pratilipi, a platform for
online creation and consumption of content, mostly long-form written content, counts women as the
majority of its 20 million monthly users. Nevertheless, there is much more work to be done. The digital divide
between genders remains a harsh reality– it is estimated that still nearly twice as many men use mobile
1
internet as compared to women. Research by Dvara and GSMA shows that women also use fewer features
3

1 ,1
and a smaller range of services on the phone as compared to men. They are more constrained in the
4 5

geographic location where they use the phone, for how long and for what purpose. The gender gap in
smartphone ownership is higher than the gap in mobile phone usage, and women lack agency in making
purchase decisions for smartphones. Removing the imbalance in phone usage patterns across genders
represents an important imperative for the NHB to be able to fully leverage the power of the internet.

Adapting UI/UX to the NHB’s context

Finally, mobile-based services are increasingly trying to offer an experience that is more aligned to the social
and cultural context of the NHB. Increasingly widespread use of relatable language, inclusive user interface
and user experience (UI/UX) tools, such as mobile number-based logins (as opposed to e-mail logins), simple
in-app navigation options, simplified menu options, and accompanying instructions/recommendations have
been key to how the internet is being ‘reimagined’ for the NHB. For example, IndusOS’ India-specific app-store
now has more than 100 million users.

12 National Family Health Survey; findings quoted in TOI article

13 GSMA Mobile Gender Gap Report 2020
14 https://www.dvara.com/blog/2020/06/02/womens-access-and-use-of-mobile-phones/
15 GSMA Mobile Gender Gap Report 2020

16
 05
Building an NHB focused
portfolio
Our thesis about the digital journey of the NHB has been key in shaping our investment
decisions at Omidyar Network India. Consequently, we have built a ‘tech-led’ portfolio
focused on serving this segment. These include businesses that have NHB customers, are
owned by the NHB or employ NHB workers in large numbers.

A 2019 survey of 3400+ customers of 16 organisations in our portfolio provided some useful
insights about the profile of the NHB users (see Figure 4). On average, an NHB customer is a
32-year old man, living in a household of 6, who used a smartphone in the last week. A
fourth of them are ‘new’ smartphone users, that is, those who began using a smartphone in
the last two years.
In our work, we typically see ‘mixed income’ business models that serve customers
across income levels. Based on the 2019 survey, we are encouraged to see that on
average, 33% of our investees’ customers are from the NHB (varying, across the portfolio,
from 15% to 59%). This early data validates our thesis that even though tech-based
innovations might initially serve customers higher up in the income pyramid, over time
they do tend to find acceptance amongst the NHB.

NHB CUSTOMER PROFILE

On average, a NHB customer is 32-year old man, living in a household of ~6,
who used a smartphone in the last week
FIGURE 4

End-customer demographics

Gender Age Household size

< 25 yrs (35%) 41-50yrs (10%) 1-3 (5%) 8-10 (15%)

Male (70%)
26-30yrs (20%) 51+yrs (5%) 4-5 (25%) 11+ (10%)
Female (30%)
31-40yrs (30%) 6-7 (45%)

Note: This illustration represents only our end-customers who fall within the NHB; i.e. earn less than $3.20 (2011 PP) per person per day.

Sample size is ~1270

Source: Lean Data studies for 16 investees conducted in partnership with 60 Decibels in mid-2019

Smartphone usage

Used in <7 days Smartphone tenure

Yes (80%) <1yr (10%) 2-3 yrs (20%)

No (20%) 1-2 yrs (15%) 4+yrs (55%)

18
We believe our experience provides an emerging answer to the oft-asked question about
whether it is possible to build large, sustainable and valuable businesses serving the NHB,
given their lower income levels. As an early-stage investor, it is encouraging for us to see
several examples of investees heading towards meaningful scale and valuations. In Figure
5 below, 14 early-stage startups (indicated in bold) have both a reach of 1 million+ lives
and a valuation exceeding INR 5 billion. Another 12 more have either touched 1 million+
lives or have valuations exceeding INR 5 billion.

A good example of this is Bounce, India's first smart urban mobility solution. It provides
two-wheelers for short-term rentals, with the goal of making daily commute time-saving,
reliable and convenient. Riding a two-wheeler hired from Bounce is now cheaper than
taking public bus transport in Bangalore. Similarly, Zest Money uses algorithmic credit
underwriting to provide short-tenure consumer loans including personal credit lines,
consumer durable financing, and funding major life expenses like education and
healthcare. More than 30% of Zest Money’s 400,000+ customers are new to credit and have
got access to their first significant line of formal institutional credit through the
organisation. Transerve, a location intelligence platform, has impacted over 4 million
households across urban India. Its geospatial analytics platform helps address complex
urban development problems, such as inventorying city assets, revenue enhancement for
urban bodies and property records modernisation.
FIGURE 5

K12 education
Access to
Centre for Teacher
Accreditation (CENTA)
Aspirational

Blackboard Radio
Services Doubtnut
Financial Health Local Content
English Helper
0.5Bn
Varthana Healofy
Affordplan
Vedantu Pratilipi
Gramcover
Kaleidofin WhiteHat Jr.* Dailyhunt
Scripbox Uolo Vyng
Sewa Grih Rin
Swarna Pragati
MyShubhLife Utilitarian Products
Toffee Insurance & Services
Zest Money
Axio Indus OS
Digital Health Bounce Quikr
1MG CredR RailYatri
Healthkart Dealshare U2Opia*
myUpchar DrinkPrime ZipGo

Secure property
rights SME Connected
Transerve
Solutions Skilling &
Technologies Employability
GramFactory
i2e1
Indifi Ag-tech Aspiring Minds*
Intellegrow Bijak
Neogrowth Credenc
NowFloats* Krishify iMerit Technology
Pickrr
Vistaar Finance
opportunities opportunities
for
for

productivity employment

Asterisk* indicates ON India has exited company.


Companies in bold indicate a valuation of over INR 5 billion and reach of over 1 million indians.

Companies that are underlined indicate a valuation of over INR 5 billion or reach of over 1 million indians. 

This is an illustrative list. Please see Annexure for our full list of investees.
19
In many of these cases, our commitments were to ideas on paper, based on our belief in
the motivations of the entrepreneurs and conviction in their unique approaches in
improving access and inclusion for the NHB. In many others, we were the first
institutional investor, often at the seed stage. With this context, a reach of over 1 million
and a valuation of INR 5 billion represent the achievement of key maturity milestones in
the journey of our investees covering the initial rough terrain of finding product-market
fit, building the core team and initial customer acquisition.

Transerve, a location intelligence platform, has impacted over

4 million households

In many of these cases, our commitments were to ideas on

paper, based on our belief in the motivations of the
entrepreneurs and conviction in their unique approaches in
improving access and inclusion for the NHB. In many others, we
were the first institutional investor, often at the seed stage.

20
 06
The evolution of NHB
business models
The evolution of our investee portfolio at Omidyar Network India offers a fascinating insight
into the NHB’s digital journey and the progression of business models that can reach and
serve them. Over the last decade, we have noted three trends across our portfolio which
reflect the changing habits and preferences of the NHB alongside progress in their digital
journey:
6.1
From online to “mobile-first”; and “consumer”
solutions to “small business” solutions

Initially, a tech-led approach meant that our investments were in online businesses, for example Quikr, an
online marketplace and classified advertising platform that we invested in in 2009. This coincided with a period
of rapid expansion in e-commerce services in India. Since 2015, business models have moved to “mobile first”
solutions (Railyatri, Kaleidofin, Doubtnut, and ZestMoney to name a few). Additionally, from an initial focus on
consumer solutions, entrepreneurs began focusing on small business solutions, as these too created a “digital
exhaust” – data trails that enable entrepreneurs to provide tech-led, personalised and affordable services to
small businesses. Indifi, Gramfactory and Pickrr are some examples of such companies in our portfolio.

6.2
Local language provides the
breakthrough into the NHB

The breakthrough into the NHB segment came from local language solutions. Two investees, Dailyhunt and
Indus OS, were pioneers in this respect and contributed to this learning.

In 2015, the main offering of Indus OS was an Indian language mobile phone operating system working primarily
with Indian handset makers, with features many of us take for granted today – Indian language keyboard,
translation and transliteration, customised app launcher for Indian audience etc. The smartphone market in
India shifted radically and in working with top foreign handset brands, the company found good
product-market-fit with its Indian language app store App Bazaar. App Bazaar now reaches ~100 million users.
Free for users and most long-tail apps, Indus monetises the app store by charging apps that run targeted
promotional campaigns.

When we invested in Dailyhunt (VerSe) in 2010, it was a provider of value-added services that telecom
companies could offer to their customers on a subscription basis. Their core offering at the time was general
classifieds. With the acquisition of Newshunt in 2012, it pivoted to becoming an Indian language news
aggregator. Today, it has over 160 million monthly users on its app, offers 100,000 news articles in 14 languages,
and reaches 95% of India’s pin codes. In addition, Dailyhunt operates Josh, which is amongst the leading Indian
short-video creation and sharing apps, with more than 30 million monthly users.

Since then, B2C solutions incorporating Indian language or “Hinglish” in their offering has become a common
feature.

22
 6.3
The rise of the “utilitarian” segments

While e-commerce and gig-economy start-ups were in the limelight, momentum was also building in the
less high-profile but more “utilitarian” sectors such as health, mobility, job platforms, agri-tech, financial
inclusion, and education. For investors like us seeking to serve the NHB, this was an opportunity to make a
big leap forward. In recent years, these sectors have taken center-stage in the Indian entrepreneurship
ecosystem.

a Agri-tech: from eliminating intermediaries to serving the entire agriculture value chain

The earliest models in agri-tech were “farm to fork” focused on eliminating intermediaries in the
agriculture value chain. This value chain in India is indeed very complex, with at least five intermediaries
between the farm and the consumer. While startups are working on disintermediation, this has primarily
been at either of the two ends of the value chain.

Newer models are addressing problems across the value chain. For instance, Bijak, a company we
invested in in 2019, connects buyers and sellers of agri commodities on a real-time trading platform.
Besides helping multiple trading parties discover each other, Bijak is also helping in digitisation of
physical mandis, artiyas (commission agents), dalaals (brokers), loaders, mills, and middlemen. In 18
months, Bijak has scaled to 600 regions across 25 states, and facilitated trade in over 100 agricultural
commodities. From a gross merchandise value (GMV) of Rs 5 million in October 2019, the platform now has
an annualised GMV of over Rs 13 billion. Bijak records daily trading volumes of 2,000 tonnes. Its app has
16
connected more than 25,000 buyers and suppliers across several states.

b Education: from Brick & Mortar to online; from asynchronous to live learning

Our early investments were in brick and mortar models

such as Treehouse or ecosystem enablers like CENTA, which
supports teacher professional development. The last two
years have seen the rise of ed-tech solutions that reach
students directly through quality after-school solutions. A
majority of children and youth from middle and
lower-income segments as well as those from Tier 2 cities
are using technology for education for the first time. In a
relatively short period, ed-tech has seen a significant
penetration in the NHB segment as well. Covid-19
undoubtedly provided the sector a greater momentum.

Learning solutions have also expanded beyond curriculum-aligned after-school “tuitions” and test prep to
newer areas like doubt resolution, coding skills, and English language training. We are also seeing
experiments in education financing with models such as income-sharing arrangements and loans not linked
to parent income but to estimated earning potential of the students, like those offered by Credenc.

16 https://yourstory.com/2020/10/sequoia-surge-omidyar-agritech-startup-bijak-growth
23
 DoubtNut is a doubt resolution app for math and
science subjects for grades 6 through 12. 60% of
its users come from state board affiliated schools,
where typically the medium of instruction is not
English. And over half its 7 million monthly app
users have come online for the first time in the
last 12 months. 85% of students live outside India’s
top 10 cities. A quick study of sample student
profiles indicates locations like Balliya, Supaul,
Itarsi and Bettiah with their parents working as A student in Sitapur, Uttar Pradesh using Doubtnut
farm-labourers, drivers, vegetable sellers and for live classes
shop owners.

Another trend in the rise of ed-tech is the increasing receptiveness among schools themselves to adopt
solutions that support various non-pedagogical functions. For instance, Uolo partners with private schools to
bring the teacher-student-parent community online through its mobile app. The Uolo platform helps schools
to connect, collaborate and communicate with parents as a step to helping students learn better. Uolo works
with more than 2,000 schools and 1 million students in more than 200 Indian cities. 30% of its students are
located in Tier 3 cities with a population of below 1 million. And in 21% of its partner schools, the monthly fee
per student is less than INR 1,000.

Arguably the most exciting development has been the move from asynchronous models to live learning in
large “virtual classrooms” – this not only enhances the learning experience, but also makes ed-tech more
affordable. Live interaction with teachers helps students understand concepts, clarify doubts, and benefit
from peer interaction with other students. Self-paced learning can be hard for most students and assisted
learning helps provide guidance and structure in the learning process.

Vedantu, one of India’s leading online learning

companies, offers live tutoring from some of India's
best-curated teachers. The company’s 500+ teachers
taught more than 100,000 students in 2020 in a
one-to-many setting. Feedback from students and
outcomes are encouraging. For example, Sumit Jain is
a special needs student from Satna, Madhya Pradesh,
with impaired vision. Working with Vedantu, Sumit
progressed from All India Rank (AIR) 982 in the Joint
Entrance Examination (JEE) Main, to achieving an AIR
455 in JEE Advanced exam, and was the All-India
Vedantu helps K-12 students with after-school tutoring
topper in the ‘person with disability’ category in 2019.
& test prep

Financial Inclusion: from consumer credit to financial health; early stages of inclusive
c
solutions for small businesses

India has become a beacon for financial inclusion globally, led by rapid expansion in access to formal
financial services through bank accounts and an efficient, low-cost digital payments infrastructure. However,
the financial services industry continues to largely serve the urban, richer India, with usage among the NHB
continuing to be a challenge. The small business segment too continues to remain underserved by formal
financial services. The goal of taking mainstream finance in full measure to the masses is yet to be
accomplished.

In the past few years, many nimble fintech firms have emerged that leverage public data platforms (such as
India Stack) and seek to serve the NHB and small businesses with low-cost, low-ticket financial solutions.
Fintech firms use alternative data for underwriting and finding the best solution for the customer, and deliver
their products to the consumers using technology.

24
The visible increase in startups that go beyond payments and credit, and into areas like savings,
investments and insurance is an encouraging trend. We are also seeing the advent of neo-banks which
eschew a provider and product-centric view of financial services – instead they structure and bundle
products that are embedded in the business value chain or life of the consumers.
The evolution of our own portfolio reflects these shifts. We have constructed our financial services
portfolio with the thesis that financial solutions relevant to the context of consumers and provided in a
low-cost and personalised manner can help bridge the usage gap and increase penetration of formal
financial services among the NHB and small businesses.

Our initial investments in brick and mortar lending businesses – such as Vistaar, lending to rural SMEs;
Varthana, lending to affordable private schools; Swarnapragati and Sitara, both providing loans for
affordable housing – were followed by a gradual movement towards digital lending businesses. Today,
Sitara has helped over 10,000 families build their own homes and 47% of these properties are owned by
women.

A family in Jaipur that availed its first mortgage loan through Sitara

Indifi is a digital lending platform for small businesses that uses anchors/aggregators (for example, travel
portals) to source potential borrowers and enable digital collections. It combines this with a marketplace
model for third-party lenders (banks and non-banking financial corporations) to benefit from Indifi's sectoral
knowledge, technology platform, and underwriting capabilities. Of the 30,000+ loans that Indifi has extended
to date, 25%+ are to first-time borrowers, 20%+ are to small businesses with women promoters, 35%+ are to
businesses with less than two years of operations, and 30%+ of the borrowers do not own property of any kind.

Looking beyond payments and access to credit, we considered the wider issue of NHB financial health. This
led to investments in insure-tech (GramCover and Toffee), savings & investment products (Affordplan and
Scripbox) and neo-banks (Kaleidofin and Yelo). GramCover, for instance has reached 1.3 million unique
farmers in rural India. 90% of these customers are buying insurance for the first time. The company is now
moving beyond crop to personal accident, hospital cash, and two-wheeler insurance. Kaleidofin is a
neo-bank, providing tailored ‘wealth-tech’ solutions to customers so that they can meet their real-life
financial goals. It serves women working in the informal segment with no verifiable evidence of occupation
or income. 97% of its customers have income below INR 25,000 per month and 73% have income below INR
10,000 per month. Over 90% of Kaleidofin’s users are new to capital market products.

In a further evolution, we recognise that solutions - digital “pipes” - that enable large incumbent players to
more effectively reach a larger consumer base with insurance products, as well as reach small businesses
with digital financial products, can potentially deepen inclusive finance for the NHB. We have an active
pipeline of opportunities in these areas.

25
d Health-tech: from content to community, medical advice and commerce

1mg began its journey by empowering the consumer with

transparent information on medicines, a first in the Indian
market. The company aims to make healthcare
easy-to-understand, accessible, and affordable. Their platform
allows patients to get credible medical information, buy
medicines, book lab tests and consult doctors. 1mg has
delivered over 25 million orders, built a great team and
attracted a strong investor profile. Going forward, the
company’s efforts would be directed to building their data
science capabilities for new products (such as a ‘digital doctor’
and AI-powered health bots) and deeper penetration into
smaller cities for undeserved customers.

myUpchar offers healthcare Healofy and myUpchar led the foray into Indian language-led
services in five Indian languages health information and online community platforms. This
apart from English enabled both companies to build a strong presence outside the
metros. 64% of Healofy’s users come from outside the top 6 metro cities in India, with cities/towns outside the
top 25 cities accounting for a quarter of the company’s users. For myUpchar, metro cities account for only
10% of users, with Tier II cities accounting for 30%, Tier III towns accounting for 50% and the balance coming
from even smaller urban and rural agglomerations. Healofy is today amongst the largest women-focused
online platforms in India, and myUpchar has established itself as the leading online source of
health-content in Indian languages.

e Mobility: from travel information to ride sharing

Railyatri, one of our investments from 2015, began its journey providing information to simplify travel for
India’s nearly 25 million passengers who travel and commute daily by train. It provided its users an
estimate of the probability of their train bookings getting confirmed, train schedules, live train information,
platform of train arrival etc. It later enabled booking of tickets, buying food on trains and transportation at
passenger destinations. It has now expanded its business to become an intercity bus operator – IntrCity
SmartBus is a fleet of branded buses that provide a quality, standardised, safe, secure and comfortable
bus travel experience. IntrCity SmartBus started operations with 2 cities in early 2019, and now connects
over 100 cities across India.

A Bounce user riding in Bangalore

26
 As this sector progressed, the subsequent developments were in the form of business models offering
various mobility-sharing services for the less affluent. Bounce is a dockless self-drive scooter service. Before
17
the Covid-19 lockdown, Bounce did about 130,000 rides every day, and plans to transition to a 100% electric
vehicle fleet over the next few quarters.

f SME digital solutions: from bringing small businesses online to embedded solutions

Hardware store owners who are customers of NeoGrowth which

gives credit facilities to the urban underserved

NowFloats, an early entrant into the small business solutions space, helps SMEs establish an online and
social media presence so that their potential customers could better discover them. Business models
serving small businesses now include other embedded solutions. GramFactory is a fast growing B2B
ordering app for small retailers (kirana stores). It streamlines their sourcing, better monetises their assets
through branding support and modernising the stores, and gets them access to trade credit. It has built
expertise in sourcing and merchandising to partner with kiranas and launched 100 neighbourhood-format
branded stores offering discounted prices and large product assortment to NHB customers. The typical
kirana that partners with Gramfactory to open a neigbourhood-format modern store is able to double its
income within 3-6 months, while offering significantly lower prices to a much larger customer base.

Pickrr helps small businesses get access to best-in-class logistics services. With Pickrr, Micro, Small &
Medium Enterprises (MSME) are able to digitise their shipping workflow, lower their courier rates and
improve efficiency of delivery, resulting in greater revenue and profits.

17 https://economictimes.indiatimes.com/tech/startups/bounce-to-add-4000-electric-scooters-to-its-fleet-by-february/articleshow/7967649
0.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
27
 07
The next frontiers
What do these trends augur for the NHB and the businesses that serve them? What are
next frontiers to be overcome and where will opportunities lie for entrepreneurs and
investors seeking to play a supporting role?

As we think about these questions, we are also mindful that in the medium term, the NHB
thesis will play out in the context of the massive health and economic shock that the global
Covid-19 pandemic has created. Looking forward, there are a few trends that we expect :

7.1
The digital journey of the NHB will continue to accelerate post-Covid
Users are clearly more willing to experiment with the digital medium. This is good news for entrepreneurs – we
expect sustained innovation across all the “utilitarian” segments, with expansion and deepening of
opportunities (see point 5 below) as the openness of users to new solutions and business models increases.

7.2
The constrained income growth of the NHB will require frugality and patience
In the aftermath of Covid-19, income levels of the NHB have been adversely hit and indeed, the vulnerability of
a large part of this population has increased. Frugality will therefore be vital, and investors will need to be
patient as monetisation continues to be slow.

7.3
There is work to be done on addressing the barriers and inequities in the NHB’s
digital journey
Entrepreneurs will need to push the bar further on the language barriers, further contextualise models for
the NHB context and increase women’s participation. Through 2021, we will conduct new deep-dive
research on the digital journey of the NHB and synthesise more nuanced learnings from our portfolio on
the NHB’s digital journey and share them widely for entrepreneurs to leverage in their innovation journey.

7.4
Within the utilitarian segment, the focus on essential services and products
will be accentuated
The shifts towards the more aspirational areas (for example branded products, sports etc.) will be slower
than previously anticipated, and customers will be highly value conscious in their buying decisions. Newer
models like social commerce or group buying, which provide lower prices and better assortments in
addition to providing opportunities to earn livelihoods, will begin to take off and further drive e-commerce
adoption amongst the NHB.

29
 7.5
We will see newer opportunities and greater deepening in each of the
utilitarian segments

Agri-Tech
Investment opportunities will be driven by some clear trends:

Shift towards agri-outputs

We see a transition away from businesses providing farmer information and farm inputs through
offline and asset-heavy business models. Not only are they capital intensive, they are hard to scale and
monetise (since the farmer is the payer). Increasingly the shift is towards farm outputs and markets
with aggregation-based, asset-light plays that scale faster and are capital efficient.

Increasing interest across agri-verticals

While grains & pulses and fruits & vegetables remain the focal points, other verticals like dairy/livestock,
meat, poultry, seafood/aquaculture, warehousing, etc. will also attract interest.

Emergence of different types of business models

Marketplaces, SAAS, vertically-integrated brands and IoT/mechanisation plays.

Education
The new National Education Policy (NEP) emphasises early childhood education, foundational literacy and
numeracy, life skills and a greater focus on learning outcomes. We see the strong momentum in ed-tech
continuing, with the following areas seeing greater traction:

Life skills
Basic life skills, such as socio-emotional awareness and interpersonal relationships, as well as cognitive
skills, such as critical thinking, problem solving, creativity and digital literacy.

Early childhood education

With the policy focus on universal early childhood education that is integrated with the school system,
innovations in this space will emerge.

Parent engagement
The pandemic has led to a meaningful increase in parent engagement (including fathers) with their
children s education as reflected in Pratham s recent Annual Status of Education eport
’ ’ R - various
2020

family members such as mothers, fathers, older siblings and others like uncles, aunts, and grandparents
helped children in studying at home. amily involvement positively impacts children s academic
F ’

achievement. These findings point to the potential for enhanced collaboration between homes and
schools, as evidenced by our investee olo.
U

W orkforce readiness
The trend of workforce readiness has seen shifts from traditional skill development courses with limited
linkage to employment outcomes to more holistic and outcome-linked models and areas like upskilling
and reskilling. This space will see continuous evolution to meet the needs of a large young working age
population as massive changes in technology redefine the future of work.

30
Financial inclusion ₹
We are at the very early stages of the journey of solutions beyond credit for the NHB consumer. Inclusive
financial services for small businesses too are at a relatively nascent stage. In the coming years we see
significant potential for growth in insure-tech and savings opportunities for the NHB and providing small
businesses access to the full range of formal financial services and business-tech services.

Health tech
For the NHB, the most meaningful solutions will be those at the intersection of being technology-led
(asset-light, capital-efficient, scalable), patient-centric (affordability, accessibility) and focused on
improving health outcomes and not just reducing process inefficiencies or streamlining workflows of care
providers. Key opportunity areas include:
Information and networks
Tools promoting credible and relatable health information will become more prominent, such as those
providing information for preventive care, knowledge platforms for care providers and networking with
patients undergoing similar medical conditions.
Tech led access to healthcare products ser ices
- & v

D igital solutions such as e-consultations, e-diagnostics, e-pharmacy, remote monitoring solutions and
employer wellness programs have already started to emerge. nline-to-offline plays such as utilisation
O

of excess capacity for non-critical surgeries and at-home care will also gain traction.
IT solutions and analytics focused on quality care
Electronic health records (EMR/EHR) management and transmission, population health data, data
analytics on health records for early warning signals, telemedicine, remote ICU care, and AI-based
screening/ diagnostic software are some solutions that could emerge to solve critical gaps in patient
care.
Digital therapeutics
Software solutions to track, prevent and treat chronic medical disorders or diseases such as diabetes,
hypertension, congestive heart failure, asthma, anxiety, depression, Alzheimer’s and dementia using
evidence-based therapeutic interventions will emerge.

mo ilityb

With the growing urban population and increasing migration to the cities, there is tremendous need for
accessible affordable intra-city mobility solutions tailored to the needs of the NHB. Companies such as
&

Bounce are focused on providing convenient and inexpensive first-mile and last-mile linkages that can be
pivotal in accelerating adoption of public transportation infrastructure as well. oing forward, we expect
G

much of this last-mile commute infrastructure, as well as last-mile logistics infrastructure, to shift to electric
vehicles (E ). This transition should further improve affordability and help address the challenge of
V

deteriorating air uality in Indian cities.

q

O ther areas
We expect to see emergence of several nascent areas related to providing citizen services to the NHB, such
as civic-tech and legal-tech. ther areas like privacy-tech and prop-tech will also gather momentum. This
O

will create opportunities for entrepreneurs to provide these services, including by partnering actively with
the government and other stakeholders .

31
 08

Conclusion
The Next Half Billion represent the heartbeat of an aspiring India. The fortunes

of this segment will determine India’s future for the next several decades. The

shock of a world altering pandemic has placed them at a critical juncture. For

us at Omidyar Network India, it has been inspiring to partner with bold and

purpose-driven entrepreneurs who seek to improve the lives of the NHB. A deep

and nuanced understanding of this rapidly evolving segment with its diverse

age groups, occupations and income levels is essential for entrepreneurs to

successfully serve them. We are committed to contribute in building this

understanding, sharing our learnings and working with entrepreneurs who will

push the boundaries to help create a meaningful life for them.

 Annexure
ON India investments, 2009 – Present

1 1MG 21 iMerit 41 SEWA Grih Rin (Sitara)

2 AffordPlan 22 Indifi 42 Swarna Pragati

3 Agni 23 IndusOS 43 The Ken

4 Aspiring Minds 24 Intellegrow 44 Toffee

5 Axio 25 Kaleidofin 45 Transerve

6 Bijak 26 Krishify 46 Treehouse

7 BlackBoard Radio 27 MetroBikes 47 U2Opia

8 Bonfleet 28 MyShubhLife 48 Uolo

9 Centa 29 MyUpchar 49 Varthana

10 Credenc 30 Neogrowth 50 Vedantu

11 CredR 31 Newslaundry 51 Ver Se

12 DealShare 32 NextGen 52 Vistaar

13 Doubtnut 33 NowFloats 53 Vyng

14 DrinkPrime 34 Overcart 54 WhiteHat Jr.

15 EnglishHelper 35 Pickrr 55 Yelo (0.5 BN.)

16 Gram Factory 36 Pratilipi 56 ZestMoney

17 GramCover 37 Quikr 57 Zimmber

18 Healofy 38 RailYatri.in 58 ZipGo

19 Healthkart 39 Scripbox

20 i2e1 40 Scroll
 Legal Disclaimer
This whitepaper is for informational purposes only and should not be construed as investment or other
professional advice. Information has been obtained from sources believed to be reliable but Omidyar
Network and Omidyar Network India do not warrant its completeness or accuracy. Omidyar Network and
Omidyar Network India own a significant equity stake in some of the companies referenced in this report,
and expect to continue making investments in these and other companies in this sector.