Bigger than food delivery? Investors rush to bless faith-tech startups

“Accessing astrology services anonymously at the click of a button appealed to me," he said. “I feel the need to talk to an astrologer because we deal with a lot of uncertainties. If there’s someone who claims to tell you about your future, why shouldn’t I try it?" he asked.

Anxiety about the future made another person Mint spoke to visit astrology sites. This person, in his mid-40s, believed offline consultations are outdated. App consultations, on the other hand, save time. “You do not get the right prediction every time—most astrologers give generic answers. However, it is psychological. You are talking to somebody about your problem which you cannot discuss with anybody else," this person, who didn’t want to be identified, said.

And thus, in a land teeming with spiritual gurus, priests and astrologers pledging their allegiance to assorted religious denominations, the stars are now aligning in favour of a new entrant—faith-tech.

Top investors in India, which include PeakXV Partners, Blume Ventures and Matrix Partners, have all set sight on a piece of the action in the faith-tech space. Great margins, increasing demand from young customers, and a vast diaspora willing to pay premium money to be able to connect to their roots are making this sector a hard-to-ignore opportunity.

Last week, spiritual company AppsForBharat raised $18 million in Series B funding led by Fundamentum, which has tech maven Nandan Nilekani as a co-founder and general partner. The investment round also saw participation from Susquehanna Asia VC as well as existing investors Elevation Capital, Peak XV, and Mirae Asset VC.

The investment into AppsForBharat is a testament to growing investor belief in faith-tech startups—funding into these digital platforms has surged from a total $4.3 million in 2023 to $50.7 million so far this year, according to Tracxn, a data company.

The size of India’s almost entirely unorganised religious and spiritual market was estimated to be $60 billion in 2023, and is expected to expand at a compound annual growth rate of 8.82% during 2024-2032, as per market research firm IMARC group. While that represents a large potential market for digital platforms, investors have spotted several other nuances.

High NPS

Part of the growing investor appetite is because services around religion aren’t digitised yet.

India’s faith-tech sector, which encompasses spirituality, devotion and astrology, has been building up for some time, reaching a critical mass now for a variety of reasons, according to Ashish Kumar, co-founder and general partner, Fundamentum. “If you compare with groceries and logistics, the NPS, or net promoter score, which is a customer satisfaction score, is significantly higher in the faith-tech space at this point in time. This is a sign that there is pent-up demand," he said.

“People want to participate in festivals and at their favourite temples but many of them have migrated to bigger cities. So there is a gap to be solved," said Deepak Gupta, general partner, WEH Ventures, an investor in AppsForBharat. The company runs the Sri Mandir devotional app and offers other religious services online.

Sustainability in the faith-tech space shouldn’t be an issue as religion is a strongly embedded facet of life for many Indians, added Gupta. “The challenges lie in the somewhat seasonal nature of the business and also building working relationships with large numbers of temples."

Business peaks typically from Navratri to Diwali, major festivals of the Hindu religion that faith-tech platforms cater to. This year, Navratri arrives in early October and Diwali the next month. This short stretch apart, the Hindu calendar has several other festivals including Ganesh Chaturthi and Krishna Janmashtami, although several of these are packed into the second half of the Gregorian calendar.

The economics

Given the logistics and cost of travelling to religious places such as Badrinath and Mathura from major cities, there is a good propensity to pay for faith-based digital services, said Gupta of WEH Ventures, adding that faith-tech margins can be healthy, comparable with the top end of margins for direct-to-consumer, or D2C brands.

Astrotalk has a 19% margin across all offerings, its founder and chief executive Puneet Gupta told Mint. The company’s revenue from operations grew to ₹283 crore in 2022-23 from ₹115 crore in 2021-22 while its profit increased from ₹6 crore to ₹8.5 crore.

“Earlier, nobody had proved that this model can scale. With our growth, investors also have confidence in the scalability of the business," he said.

About 83% of Astrotalk’s revenue is generated from repeat users, Gupta said, adding that the platform’s ticket size is about ₹210 for an online session with an astrologer (the pricing can change depending on the time spent). “If you look at the target addressable market, it’s comparable to food delivery apps as everyone seeks guidance. In comparison with Swiggy and Zomato, however, ours is an asset-light model. So it’s a very scalable business," he further said.

Padmaja Ruparel, co-founder of IAN Group, agreed. Unlike traditional sectors that demand large capital expenditure on inventory, physical locations, or infrastructure, faith-tech startups primarily operate in the digital space, where margins are typically quite healthy and overhead costs low, she said.

“The main expenses for the majority of faith-tech platforms are related to marketing, technology development, and upkeep of a network of specialists or content producers," she said. “After the platform is set up, the only variable costs for premium content, personalized reports, subscription services, and consultations are negligible, and depending on the services and the platform’s pricing strategy, gross margins can vary from 60% to 80%."

IAN Group, a network of angel investors, has invested in Phool, which sells religious products such as incense sticks by upcycling flowers from temples. Flowers such as jasmine, marigold and rose hold great significance in Hindu rituals and thousands of tonnes are used in temples daily.

Chadhawa, or digital donations, one of AppsForBharat’s offerings, is another high-frequency proposition for the faith-tech platform, said founder and chief executive Prashant Sachan. “Which means that you can do it every single week. The monthly usage frequency of Chadhawa is three-and-half times or four times a month for a user, which is larger than food delivery in the earlier days," he said. “People look out for blessings more than they look out for food."

Sachan did not disclose the company’s margins.

Young and willing

The appeal of these platforms lies in their ability to meet the rising demand for spirituality and alternative wellness among Gen Z (born between 1997 and 2012) and millennial (1981-1996) consumers.

Roughly 30% of AppsForBharat’s users are from the merchant community, in the age bracket of 25 to 35.

Puneet Gupta of Astrotalk noted that most of the platform’s customers are in their twenties with queries related to marriage. “This customer base makes for 65% of our revenue," he said.

Another obvious customer demographic is the vast Indian diaspora keen to hang on to their roots. About 20% of Astrotalk’s revenue is generated from this customer base, for whom the pricing is higher. The pricing for an international customer is more than double than that for a domestic customer, according to Astrotalk’s Gupta.

Similarly, AppsForBharat sees about 25% of its revenue generated from outside of India, with major markets being the US, Canada, the UK, and West Asia.

“We never planned for it but people in India were recommending the app to people outside of India. That’s how we got the first set of international users," said Sachan, noting that the company will continue building services specifically for the diaspora clientele.

“When we speak to them, we realise that access is an even bigger problem there. Access to (religious) services is something that they can’t imagine at a cost that is so affordable."

Trust-first ways

Despite the obvious market opportunity in organizing and digitizing faith, a debate lingers on whether venture capitalists meant to back disruption and pioneering tech should be putting their money into faith-tech startups.

Broadly, there are three types of technology companies in India—consumer tech, SaaS (software as a service), and deeptech. Consumer tech is almost two-third of all business value, followed by SaaS (30%) and deeptech, according to Ashish Kumar of Fundamentum. “Spiritual and devotional tech platforms are firmly in the consumer tech sector… they are solving for access to consumer services. This is the same as what other industries like product commerce, quick commerce and grocery commerce have done," he explained.

AppsForBharat, for instance, enables access to devotional needs through the internet and is also building an artificial intelligence agent for devotional services called Saarthi. “The net result will be that more people can access the services, which is what technology companies do—they expand TAM (total addressable market). These services are expanding markets," Kumar said.

To transport faith to the internet, AppsForBharat partners with temples and their priests to take their services online. The platform makes money by taking a commission on digital donations or advertisements during virtual live pooja (prayers), or by offering services such as private virtual pujas, with a portion of the revenue shared with the temple.

The company has partnerships with more than 50 temples across India and also enables virtual pilgrimages, meditation and wellness services, apart from selling religious items such as puja kits and idols of deities. The platform is now testing an astrology service.

“If astrology is done in a sensational way, it’s not good—which is what the norm is. We would want to take some stance and see what’s a more trust-first way to be able to build this," Sachan of AppsForBharat said.

That would be venturing into Astrotalk’s turf, which mainly offers online sessions with astrologers. As per the company’s website, they are hired after five rounds of interviews. Astrotalk also runs the Astromall shop, which sells faith-related products and services such as religious bracelets, Reiki healing, and ‘astrology spells’.

Astrology, however, remains a practice where satisfaction may be difficult to guarantee. Companies need to make several disclosures to their customers.

Astrotalk, for instance, carries this disclaimer on its website: “The information and data contained on Astrotalk website is to be treated purely for your entertainment purposes only. Any prediction or other message that you receive is not a substitute for advice, programs, or treatment that you would normally receive from a licensed professional such as a lawyer, doctor, psychiatrist, or financial advisor".

Accordingly, Astrotalk provides no guarantees, implied warranties, or assurances of any kind, and “will not be responsible for any interpretation made by the recipient of the information and data mentioned above."