TLDR:
- Smaller cities in India, known as Tier-II and Tier-III, are playing a crucial role in the country’s startup boom.
- These cities make up 45% of the urban population and contribute 37% to the country’s GDP.
- Government programs like Startup India and the National Entrepreneurship Policy have helped investors connect with founders in smaller cities.
Smaller cities in India, referred to as Tier-II and Tier-III, are leading the startup revolution in the country. These cities, which are home to around 171 million people, are making significant contributions to the urban life and economy. According to a report by Primus Partners, smaller cities account for 45% of the urban population and contribute 37% to India’s Gross Domestic Product (GDP).
The report highlights that smaller cities have seen a surge in new businesses, with 90% of startups launched in 2023 originating from these areas. Furthermore, smaller cities received approximately 22% of the total funding available, attracting a growing number of investors. Around 44% of investors are choosing to invest in startups from smaller cities, recognizing their potential for growth.
The rising interest in startups from smaller cities is attributed to government initiatives such as Startup India and the National Entrepreneurship Policy, along with the increased use of digital technology. These programs have facilitated connections between investors and founders, with over 66% of investors now connecting through government networking platforms.
The report also highlights the impact of technology-driven startups from small towns, which have garnered significant attention from venture capitalists. Approximately 64% of VC investments are directed towards these ventures, indicating the democratization of knowledge and resources accessible to startups in smaller cities.
Entrepreneurs in smaller cities are leveraging technology to address various challenges, particularly in sectors like healthcare. Ayush Atul Mishra, CEO and co-founder of Tattvan E-Clinics, emphasizes the importance of technology in addressing healthcare issues in small towns.
In addition to driving economic growth and innovation, startups in smaller cities also contribute to job creation. Recognizing this potential, several state governments have initiated programs to support local ventures, such as iStart Rajasthan, Startup Odisha, and Startup Haryana.
In conclusion, smaller cities in India are playing a pivotal role in the startup revolution, contributing significantly to the country’s economy and driving job creation. Government initiatives and increasing investor interest have provided support and resources to startups in these areas, further fueling their growth and success.