Digital-First Is a Great Story - But in India, Scale Lives in the Physical Layer

“The ultimate promise of technology is to make complexity invisible.” — Eric Schmidt, Former CEO, Google

For over a decade, India has seen an explosion of digital-first innovation — from edtech platforms that gamify learning to healthtech startups that offer 24x7 consultations through your smartphone.

Yet, after years of investing, mentoring, and building in these spaces, one insight has become painfully clear:

You only unlock true scale in India when there’s something physical.

This may sound counterintuitive in the era of SaaS, D2C, and the “India Stack.” But across sectors — especially education and healthcare — the digital story alone doesn’t build enduring businesses. It needs to be rooted in physical infrastructure.

Let’s break this down.

🏫 1. Education: Great Online Experiences, but Real Trust in Brick & Mortar

India’s EdTech Boom: The Digital Dream

Post-2020, India witnessed a massive edtech explosion. Platforms like BYJU’S, Unacademy, Vedantu, and upGrad raised billions to redefine how Indians learn.

India’s edtech market was projected to grow to $10.4 billion by 2025.
More than 250M+ students were learning online at the peak of the pandemic.
Schools and tuitions were replaced by apps, YouTube channels, and live Zoom classes.

But what happened next?

BYJU’S shut down WhiteHat Jr. Vedantu opened physical hybrid centers. PhysicsWallah started launching offline Vidyapeeth centers.

Why?

The Realization: Scale = Schools, Classrooms, Mentors

Despite rich content, gamification, and adaptive AI, the trust loop in education still closes offline — especially in Tier 2/3 India.

Parents want physical accountability.
Students crave peer learning environments.
Results often demand disciplined, in-person coaching.

63% of parents in Tier 2/3 cities prefer physical classes for better discipline and focus — LocalCircles 2023

Take PhysicsWallah — India’s edtech darling. After reaching unicorn status, it doubled down on launching physical centers in 45+ cities. Why? Because retention, outcomes, and monetization were all higher in blended models.

🏥 2. Healthcare: Great UX, Real Margins in Clinics and Beds

Digital-First Healthtech: A Revolution That Helped — Temporarily

India saw 100s of healthtech startups post-COVID — telemedicine, digital prescriptions, fitness plans, remote diagnostics, mental health platforms.

Practo scaled to 30M+ users
Pharmeasy, 1mg, and NetMeds became household names
HealthifyMe, CureFit, and others built digital health journeys

The Limitation: Where’s the Touch, the Trust?

But in India, healthcare is not just data-driven — it’s deeply personal and emotional.

A doctor’s physical presence builds confidence
Patients want “someone to touch the pulse”
Most insurance claims need hospital partnerships
Chronic care needs real diagnostics, real interventions

💬 A senior healthtech executive said: “We spent $10M building an app. But a ₹10K blood pressure kiosk in a village hospital brought in more leads, data, and revenue.”

That’s why Pharmeasy acquired Thyrocare, 1mg tied up with Tata Health hospitals, and Curefit pivoted back to offline Cult centers.

Some Use Case: Health & Wellness

Digital plan: ₹499/month app-based health advice
Physical combo: ₹1499/month with in-person nutritionist, lab tests, and check-ins

Revenue retention jumped 2.4x in models with physical clinics.

💡 Why Physical Scale Wins in India

1. Trust is Physical

In healthcare and education, the ultimate product is trust. And in India, trust is earned offline.

2. TAM Lives in the Middle-Class Heartland

800M+ Indians live outside metros.
They’re mobile-first, not digital-native.
They value “see to believe” over “app-only”.

3. Infrastructure = Margins

Digital-only models often hit a plateau. Physical presence unlocks:

Higher LTVs
Cross-sell and upsell (tests, tuitions, diagnostics)
Better data collection (especially in healthcare)
Better NPS through accountability

📉 Example: A leading edtech saw 72% course completion in hybrid vs. 28% in digital-only formats.

🔁 The Rise of Phygital: New-Age Hybrids

A new wave is emerging — “Phygital-first” — where the software is still the heart, but physical infra is the backbone.

Startups leading this evolution:

Several startups in India are now pioneering this phygital evolution — combining strong digital capabilities with a growing physical presence to deliver trust, outcomes, and scale.

PhysicsWallah, a leading EdTech company, began with recorded and live online classes but has since launched its own Vidyapeeth centers across cities to enhance student outcomes and build parental trust through offline touchpoints.

Healthians, a HealthTech diagnostic player, started as an app-based service offering at-home test bookings and digital health reports. It has now expanded to operate labs across India, boosting reliability and operational control.

Practo, which became synonymous with telemedicine and e-pharmacy during the pandemic, has pivoted toward building in-person clinics to close the loop on care delivery and strengthen user loyalty.

Cuemath, originally an online math tutoring platform, now runs neighborhood micro-centers where students can interact with certified tutors in person — especially in Tier 2/3 towns.

Cult.fit, the fitness and wellness brand, began with online yoga, home workouts, and digital diet plans, but scaled up only after launching over 200 fitness studios that combine their tech ecosystem with real-world engagement.

These examples show a consistent trend: India’s most successful digital-first brands are embracing the physical world to win trust, unlock new revenue streams, and drive deeper impact.

🧠 Hard-Won Insight: What I’ve Learned After 12 Years of Building Startups

Over the last 12 years, I’ve built multiple startups — some fully digital, some blended, and many shaped by India’s complex realities. I’ve worked closely with brilliant digital-first founders, and even bet on the idea that software alone could scale education, healthcare, and more.

But here’s the honest truth I’ve learned the hard way:

We used to believe “offline is capital inefficient.” Now I know — “offline is capital creative.”

Here’s why:

The real Total Addressable Market (TAM) in India lives in the physical — in towns, streets, schools, clinics, and homes.
Customer acquisition costs (CAC) are often lower when there’s something physical nearby — people trust what they can touch, visit, and refer.
Retention improves drastically when users know there’s a real center or clinic they can walk into.
And most importantly, margins are better when you can upsell high-value physical services — diagnostics, coaching, personalized care.

The insight that changed everything for me:

It’s not digital versus physical. It’s the fusion of both that creates long-term value, trust, and scale.

And the startups that master that blend? They don’t just survive — they dominate.🧵Digital-first is sexy. But in India, scale = physical.

EdTech? You need classrooms.
HealthTech? You need clinics.
Trust? It’s offline.

The insight is humbling. The shift is happening. Here’s why every digital-first founder is now going phygital. 👇

🛠️ What This Means for Founders

If you’re digital-first, start testing physical pilots.
If you’re scaling offline, layer in software to reduce cost and increase efficiency.
Your moat is in blending both — and owning the full stack.

“Software is eating the world — but in India, it still needs a plate.” — A founder in our portfolio

The digital story is not wrong. It’s just incomplete without the physical layer. The two aren’t opposites. They’re partners.

And the startups that master both?

They won’t just scale. They’ll dominate.