The Huge Artisan Business Opportunity in India

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Why so many startups are following FabIndia’s lead and more should be

Last week the Economic Times put out an article titled: “How FabIndia’s business model has become a source of inspiration for startups”. The piece features several different startups working with artisans, including Unitus Ventures’s recent investee, Caravan Craft Retail. Though each of the featured companies are going about it in a different way, all are tapping into the large artisan business opportunity in India.

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The article points out that India’s handicraft industry is the second-largest employment generator in villages after agriculture. However, the number of Indian artisans has been decreasing and India holds only 2% of the Rs 24.7 lakh crore ($4116.6m) global handicrafts market. This presents a prime entrepreneurial opportunity.

Many that have followed FabIndia’s model and entered this market are now seeing healthy profits while simultaneously creating a much-needed market for India’s artisans. For example, Good Earth works with almost 10,000 artisans and expects to post a topline of INR 30 crore ($5m) for financial year ended March 2014. USF partner Srikrishna Ramamoorthy points out that organisations that combine social objectives with building a profitable venture will be attractive to any investor.

Each of the organizations featured, and many others that we’ve come across, are using unique business models to create these market linkages from artisan to consumer. Mother Earth, for example, is a hybrid model, that combines a for-profit entity that makes and sells goods and a foundation, which trains artisans. Craftsvilla, on the other hand, is an online marketplace, which connects buyers and sellers directly.

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There is plenty of room in this space for new ideas and new business models. Hopefully the success of these featured startups will continue the cycle of inspiration started by FabIndia, and encourage more entrepreneurs to enter the space.

Unitus Ventures is always looking for entrepreneurs have recognized market opportunities that will impact low-income communities. If you’re an entrepreneur that fits this bill, read more about Getting Funded.

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