Accel shifts its focus to rural India in search of the next unicorns.

Accel, a prominent e-commerce and marketplace investor in India, is shifting its focus to smaller towns and villages in a search for future unicorns. The venture firm, which refers to these areas as "Bharat," believes they offer significant opportunities for entrepreneurs despite the challenges startups have faced there.

Accel partner Anand Daniel highlighted in an interview with TechCrunch that rural areas are often perceived as poor, but the top 20% to 30% of spenders in these regions have considerable purchasing power, estimated to exceed $250 billion. This segment's monthly spending surpasses that of about half of the urban population.

Accel plans to make this new focus a major theme in its next early-stage investment program, diverging from other venture investors in India who typically target startups serving urban markets. The firm has a notable track record, holding stakes in about a fifth of all Indian unicorns, including early investments in companies like Flipkart, Myntra, and Swiggy, despite not deploying as much capital as some of its peers.

The firm's confidence in rural India is supported by improvements in infrastructure, widespread smartphone use, affordable internet, and enhanced logistics and warehousing. These developments have facilitated the adoption of digital services and faster deliveries. Additionally, rural consumers are increasingly opting for higher-end products, such as 125cc bikes over 100cc models, double-door fridges instead of single-door units, and used iPhones.