We at EPIC World believe that Entrepreneurial Households will drive the economic growth of India over the next few decades. Unfortunately, the perception of popular media and the investing community has not kept pace with the pace of growth in this customer segment. This has led to under-investment in this vibrant segment. Our research, and experience interacting with Entrepreneurial Households, paints a completely different picture.
In this two-part series, we aim to shift the lens through which we see this customer segment of 250M+ households in India. A lot of these insights comes from our deep-dive into this segment and the economic opportunity they present, called the EPIC Opportunity Report, which can be downloaded here.
Myth 1: They are dependant on grants and philanthropy
Entrepreneurial Households, a large number of whom reside in rural and semi-urban areas of India, are often seen as dependent on and beneficiaries of government grants and philanthropy.
Over the last 20 years, this customer segment has seen a growth in prosperity. Many Entrepreneurial Households run at least one small business, which augments income and enables them to withstand economic shocks. You can read about such examples through the real-life stories of Manjula, Yogesh and Abhijit.
As per estimates in the EPIC Opportunity Report, over 60M households run micro-enterprises, over 125M households own farmland, and over 178M households have 2-wheeler mobility - each of these indicates the entrepreneurial nature of these households.
Myth 2: They are low-income
Prosperity is traditionally measured in income terms and from the ability to make discretionary spends. This leads to the false perception of Entrepreneurial Households as low income.
Real life paints a different picture - they have multiple sources of income (including the aforementioned small businesses) which enable them to meet their aspirations. They are constantly growing and optimizing their incomes and assets to achieve financial growth and social mobility. In fact, many are already seeing their role as job-providers. Consider Yogesh, whose household already has three income streams, and aspires to create 5000 jobs for his community.
A true picture of their vibrancy is showcased not through income, but by considering transaction value - a metric we term Core Transaction Value or CTV. This number is poised to reach $100T by 2043, growing at a CAGR of 12.7%.
Myth 3: They are fragile and risky
Our interactions with Entrepreneurial Households leave us feeling they are much more prepared to weather downturns than many in urban jobs!
Entrepreneurial Households leverage multiple cash inflows to weather economic turbulence. Take Manjula, who receives income from her beauty parlour and a mess business. In addition to this, her husband gets a salary from the tours and travel company he works for. This income diversification enables them to withstand economic challenges like those created by the COVID pandemic. If one source of cash flow is impacted or stopped, they have other sources to meet their immediate and long-term goals. Other such sources often include pensions and remittances from family members working in a city, as well.
Because of these diversified income sources, Entrepreneurial Households are not ‘fragile and risky’, they are resilient. This resilience makes them primed for investment and culminates in a huge opportunity to lend to and build for households like the ones profiled above.
See part 2 of this post, where we debunk more myths about Entrepreneurial Households, here.
The EPIC Opportunity
Conventional sources of data only capture a part of the vibrancy of Entrepreneurial Households, with a large number of transactions still taking place in the informal segment. The formalization of this market potential is the EPIC Opportunity, which cuts across core sectors of education, affordable housing, healthcare, agri-solutions and MSME financing.
This is no small number - the $100T CTV outlined above shows the economic potential this segment has. It also signals the potential upside for entrepreneurs and capital allocators building for this segment’s core needs. This is the EPIC Opportunity. Read more about it here.
