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Over the years, India has seen an emergence of startups from Tier-II cities that are looking to solve local issues. Be it challenges across lower internet bandwidth, lack of resources, or lack of vernacular platforms, Tier-II startups today are building interesting business models and are also successfully attracting investor attention.

According to YourStory Research, the total funding raised by startups in Tier-II cities across India between January 2015 and August 2021 stood at $1.14 billion.

Expanding their reach from metros and Tier-I cities, investors today are funding companies from around 70 Tier-II cities. In fact, 10 new Tier-II cities were added to the list in 2021 alone. 

Over the years, small-ticket investments have poured into leading Tier-II cities such as Jaipur, Indore, Chandigarh, Kochi, Goa, Vadodara, Bhubaneswar, Coimbatore, Lucknow, Patna, and Surat — even amid the pandemic.

One of the reasons behind the trend is the growing digital adoption. According to a February 2021 report by UBS Securities Asia, the COVID-19 pandemic has largely accelerated internet adoption in Tier-II cities.

“With the pandemic and lockdown, remote working helped to access customers and talent from these cities, and create many more innovative startups — building from Tier-II cities, for the Tier-II city problems/needs,” Padmaja Ruparel, Co-founder of Indian Angel Network and Founding Partner, IAN Fund said.

The Interview

To ensure uninterrupted manufacturing and a smooth supply of goods amidst the pandemic, FMCG major, Marico, which has popular brands such as Saffola and Parachute, took a slew of measures for its employees across its factories and corporate offices.

In this interview, Harsh Mariwala, Founder and Chairman, Marico talks about emotionally connecting with employees, taking care of their stress and anxieties, prioritising their health over performance, driving growth with the culture of trust, and much more.

Editor’s Pick: The Turning Point

When Nitish Mittersain started gaming and sports media platform Nazara Technologies in 1999-2000 while still in college, he did not know it would go on to become a global gaming company that will go public after 21 years.

Today, it is known for its games on World Cricket Championship, Chhota Bheem, and Motu Patlu series, and is the only listed online gaming company in India. Read more.

Startup Spotlight

Helping local businesses become competitive

Growing up in Chaibasa, a town 50 kilometres away from Jamshedpur, Jharkhand, Satyajeet Patnayak was acutely aware of the lack of shopping experience in smaller towns. Also, local businesses often had to compete with large and well-funded online companies. 

With an aim to solve both problems, he and his father launched Lfyd (Let’s Find You Deals) in October 2020. LFYD is a digital platform that informs people about nearby offers, focusing on areas underserved by ecommerce players and big brands, and helps small and medium businesses to grow without going online. Read more.

News & Updates

Before you go, stay inspired with… 

“The fact that most VCs are now very comfortable making investments over Zoom, leads us to believe that the startup ecosystem in Tier-II cities in India is set to grow highly exponentially in the next few years.”

— Anurag Ramdasan, Principal – Investments, 3one4 Capital

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