The narrative of India’s startup ecosystem is undergoing a notable shift, transitioning from bustling metropolises to Tier II and Tier III cities. In these lesser-known corners, a significant surge in startup launches has been observed, with nearly half of all new ventures now originating from these regions.

These cities have less developed infrastructure compared to metros, resulting in significantly lower costs for rent, salaries, and other expenses. This translates to savings of up to 50% on real estate rentals and 25-30% on talent pool costs. The influx of talent attracted by these lower living expenses has been advantageous for startups just starting out, helping them manage their costs effectively.

Numerous startups from these cities have grown multifold. For instance, Jaipur-based autotech firm CarDekho, Patna-based agritech startup DeHaat, and Indore-based B2B procurement platform for grocery retailers ShopKirana have all emerged from humble beginnings to achieve remarkable success and prominence.

Yet, startups in small towns and cities face several challenges, including a lack of access to funding, mentoring, incubation, acceleration and guidance.

“To further bolster the startup ecosystem in Tier II & III cities, a comprehensive roadmap involving local organisations, educational institutions and governments is crucial,” said Charu Malhotra, cofounder and managing director of Primus Partners.

Delhi NCR-based Primus Partners is a management consultancy that aims to navigate through many complex problems of the country with its team of professionals with experience in sectors, such as aerospace and defence, education, emerging technologies, healthcare, housing and real estate and infrastructure and natural resources.

In an interaction with Inc42, Malhotra delved into the rise of startup culture beyond the Tier I startup hubs and the driving factors, trends and challenges surrounding this shift.

Here are the edited excerpts.

Inc42: Do you see any unique opportunities for innovation in Tier II and III, compared to Tier I hubs? How are startups leveraging them to their advantage?

Charu Malhotra: The startup culture is gaining momentum in Tier II and Tier III cities, with half of the recognised startups originating from these areas. Cities like Chandigarh, Surat, Jaipur, Kochi, Indore and Lucknow are emerging as notable hubs in this trend. Despite facing challenges such as inadequate........

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