Fintech

Report: Corner stores around the world offer a big fintech opportunity

Even with a looming recession, new data from Flourish Ventures suggests people in emerging markets will keep spending in local shops.

An employee of Jumbotail, a platform that connects retailers with brands and producers, receives payment at a grocery store, known as a kirana, in Bengaluru, India, on Monday, Jun. 21, 2021. The grocery is one of India's 20 million mom and pop stores which are emerging as key partners for Amazon, Mukesh Ambani's Reliance Industries, and Walmart's Flipkart online unit as they seek to dominate the lucrative $1 trillion Indian retail market. Photographer: Dhiraj Singh/Bloomberg via Getty Images

New data shows that customers in emerging markets are depending on their local shops more than ever.

Photo: Dhiraj Singh/Bloomberg via Getty Images

Fintech startups that depend on retail spending are struggling right now. Whether a recession is coming or already here, discretionary spending is significantly down for the first time since the 2008 financial crisis, according to a recent Goldman Sachs analysis, and isn’t expected to recover until 2023.

But there’s one bright spot in retail: the corner store. New data from the fintech venture capital firm Flourish Ventures shows that customers in emerging markets are depending on their local shops more than ever. That spells a big opportunity for fintech, from companies that can help the often cash-based businesses transition to digital payments to those that make short-term credit easier to manage.

According to the report, 94% of customers plan to use their corner shop the same amount or more in the future, despite global macroeconomic conditions. Additionally, 71% of those surveyed purchased a larger portion of their groceries from corner stores during COVID-19 lockdowns, showing the businesses are particularly resilient during downturn.

There were already some early indicators that this is a need fintech can fill. UN Global Pulse, a United Nations initiative to collect data on emerging areas of innovation, conducted research in 2018 that suggested fintech can accelerate financial inclusion by serving “micro-merchants” who lack sufficient access to traditional banking services. Mastercard began making investments in products to serve underbanked micro-merchants, including convenience stores, in 2020. And this summer, three companies appeared in Y Combinator’s batch that clearly plan to offer services to convenience store merchants: Kashin, Patika and Apprecio. Thirteen companies in Flourish’s portfolio, including Aquaconnect, Dinie, ShopUp and Zaapi, bring digitized financial services to the convenience store market or to the suppliers serving them.

Flourish Ventures has a stated mission of investing in global companies that improve financial health. Therefore, managing partner Arjuna Costa says the research isn’t only vital for helping guide their portfolio companies and the firm’s own future investments — it’s also an investment in the broader economy. The new data “highlights the urgency of getting these solutions right,” Costa told Protocol. “We can have this significant impact on the corner store owner and the customer, so shouldn’t we collectively be putting our best minds and our capital against getting the shopkeeper’s experience and the consumer’s experience just right?”

Four key areas of innovation were highlighted by the report: innovation in how convenience shops procure inventory, store performance analytics and workforce management tools, point-of-sale tech and banking services, including tools that help facilitate store-administered credit. In each area, there is a lot of regional nuance. In Egypt, for example, wholesalers use “cash vans” that drive door to door with inventory items they predict the stores, called koshks, could use, making for a uniquely inefficient process with little ordering flexibility for shopkeepers. In India, where the stores are known as kiranas, it’s common for families to obtain goods from the local corner shop and then settle their tab at the end of the month, making neighborhood stores de facto short-term lenders.

Many of these businesses operate predominantly in cash, balance their books with a paper and pen or manage inventory using personal judgment. Helping shopkeepers — many of whom are without the resources to perform deep research or analytics — track and systematize these processes can have massive impacts on their bottom line. The report stated that there could be a 60% to 100% increase in corner shop profits were they to implement effective fintech solutions. The biggest potential increase in profits comes with banking providers, who can increase store profits 20% to 60% if they decrease the cost of credit.

The study surveyed a total of more than 800 customers and 800 businesses from India, Indonesia, Egypt and Brazil. However, Costa says the study was built so that entrepreneurs and investors can apply these learnings to a wide range of countries because the four countries chosen are emblematic of regional trends. Costa also told Protocol that Flourish will soon break down the data into specific countries for stakeholders who could use more specific information.

“If you’re looking from a global perspective, you should be starting to see that this is working in Brazil, and this is working in India,” Costa said. “Clearly, there’s something going on here that needs to be paid attention to.”

Climate

This carbon capture startup wants to clean up the worst polluters

The founder and CEO of point-source carbon capture company Carbon Clean discusses what the startup has learned, the future of carbon capture technology, as well as the role of companies like his in battling the climate crisis.

Carbon Clean CEO Aniruddha Sharma told Protocol that fossil fuels are necessary, at least in the near term, to lift the living standards of those who don’t have access to cars and electricity.

Photo: Carbon Clean

Carbon capture and storage has taken on increasing importance as companies with stubborn emissions look for new ways to meet their net zero goals. For hard-to-abate industries like cement and steel production, it’s one of the few options that exist to help them get there.

Yet it’s proven incredibly challenging to scale the technology, which captures carbon pollution at the source. U.K.-based company Carbon Clean is leading the charge to bring down costs. This year, it raised a $150 million series C round, which the startup said is the largest-ever funding round for a point-source carbon capture company.

Keep Reading Show less
Michelle Ma

Michelle Ma (@himichellema) is a reporter at Protocol covering climate. Previously, she was a news editor of live journalism and special coverage for The Wall Street Journal. Prior to that, she worked as a staff writer at Wirecutter. She can be reached at mma@protocol.com.

Sponsored Content

Great products are built on strong patents

Experts say robust intellectual property protection is essential to ensure the long-term R&D required to innovate and maintain America's technology leadership.

Every great tech product that you rely on each day, from the smartphone in your pocket to your music streaming service and navigational system in the car, shares one important thing: part of its innovative design is protected by intellectual property (IP) laws.

From 5G to artificial intelligence, IP protection offers a powerful incentive for researchers to create ground-breaking products, and governmental leaders say its protection is an essential part of maintaining US technology leadership. To quote Secretary of Commerce Gina Raimondo: "intellectual property protection is vital for American innovation and entrepreneurship.”

Keep Reading Show less
James Daly
James Daly has a deep knowledge of creating brand voice identity, including understanding various audiences and targeting messaging accordingly. He enjoys commissioning, editing, writing, and business development, particularly in launching new ventures and building passionate audiences. Daly has led teams large and small to multiple awards and quantifiable success through a strategy built on teamwork, passion, fact-checking, intelligence, analytics, and audience growth while meeting budget goals and production deadlines in fast-paced environments. Daly is the Editorial Director of 2030 Media and a contributor at Wired.
Workplace

Why companies cut staff after raising millions

Are tech firms blowing millions in funding just weeks after getting it? Experts say it's more complicated than that.

Bolt, Trade Republic, HomeLight, and Stord all drew attention from funding announcements that happened just weeks or days before layoffs.

Photo: Pulp Photography/Getty Images

Fintech startup Bolt was one of the first tech companies to slash jobs, cutting 250 employees, or a third of its staff, in May. For some workers, the pain of layoffs was a shock not only because they were the first, but also because the cuts came just four months after Bolt had announced a $355 million series E funding round and achieved a peak valuation of $11 billion.

“Bolt employees were blind sided because the CEO was saying just weeks ago how everything is fine,” an anonymous user wrote on the message board Blind. “It has been an extremely rough day for 1/3 of Bolt employees,” another user posted. “Sadly, I was one of them who was let go after getting a pay-raise just a couple of weeks ago.”

Keep Reading Show less
Nat Rubio-Licht

Nat Rubio-Licht is a Los Angeles-based news writer at Protocol. They graduated from Syracuse University with a degree in newspaper and online journalism in May 2020. Prior to joining the team, they worked at the Los Angeles Business Journal as a technology and aerospace reporter.

Climate

The fight to define the carbon offset market's future

The world’s largest carbon offset issuer is fighting a voluntary effort to standardize the industry. And the fate of the climate could hang in the balance.

It has become increasingly clear that scaling the credit market will first require clear standards and transparency.

Kevin Frayer/Getty Images

There’s a major fight brewing over what kind of standards will govern the carbon offset market.

A group of independent experts looking to clean up the market’s checkered record and the biggest carbon credit issuer on the voluntary market is trying to influence efforts to define what counts as a quality credit. The outcome could make or break an industry increasingly central to tech companies meeting their net zero goals.

Keep Reading Show less
Lisa Martine Jenkins

Lisa Martine Jenkins is a senior reporter at Protocol covering climate. Lisa previously wrote for Morning Consult, Chemical Watch and the Associated Press. Lisa is currently based in Brooklyn, and is originally from the Bay Area. Find her on Twitter ( @l_m_j_) or reach out via email (ljenkins@protocol.com).

Policy

White House AI Bill of Rights lacks specific guidance for AI rules

The document unveiled today by the White House Office of Science and Technology Policy is long on tech guidance, but short on restrictions for AI.

While the document provides extensive suggestions for how to incorporate AI rights in technical design, it does not include any recommendations for restrictions on the use of controversial forms of AI.

Photo: Ana Lanza/Unsplash

It was a year in the making, but people eagerly anticipating the White House Bill of Rights for AI will have to continue waiting for concrete recommendations for future AI policy or restrictions.

Instead, the document unveiled today by the White House Office of Science and Technology Policy is legally non-binding and intended to be used as a handbook and a “guide for society” that could someday inform government AI legislation or regulations.

Blueprint for an AI Bill of Rights features a list of five guidelines for protecting people in relation to AI use:

Keep Reading Show less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories
Bulletins