How Indian investors are supporting startups in Tier 2,3 cities

Jan 25, 2024 Abhishek Yadav

A survey of startups, academic institutions and investors in Tier 2 and Tier 3 cities on Wednesday said about 44% of surveyed investors have actively participated in supporting startups within Tier 2 & 3 cities, indicating a keen interest in the untapped potential of emerging markets.

[{"selector":"#anim-433344ce-3e43-4b82-89b5-7641ffa34e27 [data-leaf-element=\"true\"]","keyframes":{"transform":["translate3d(-31.367187386936816%, 0, 0)","translate3d(0%, 0, 0)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}]

The survey by management consulting firm Primus Partners focusing on innovation and entrepreneurship in small cities added that 64% have directed their investments towards technology-based startups, signalling a substantial appetite for tech-driven innovation.

[{"selector":"#anim-c8cca719-b211-4264-bdfa-0254ad973a41 [data-leaf-element=\"true\"]","keyframes":{"transform":["translate3d(-31.257324105020174%, 0, 0) translate(-25%, 0%) scale(1.5)","translate3d(0%, 0, 0) translate(0%, 0%) scale(1)"]},"delay":0,"duration":2000,"fill":"forwards"}]

23% of investors have opted to support non-tech startups, showcasing a diversified investment portfolio beyond technology.

[{"selector":"#anim-a87aa1ce-1de6-49ba-98ab-167368e77e5b [data-leaf-element=\"true\"]","keyframes":{"transform":["translate3d(40.61767572431842%, 0, 0)","translate3d(0%, 0, 0)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}]

13 per cent of investors have specifically backed startups with a social impact focus.

[{"selector":"#anim-35f34bd8-2a03-4c62-922a-77b7370c9b8b [data-leaf-element=\"true\"]","keyframes":{"transform":["translate3d(31.257324105020174%, 0, 0)","translate3d(0%, 0, 0)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}]

An additional 24% said they have benefited from networking support, underscoring the significance of connections.

[{"selector":"#anim-6449a4dd-9f30-49cc-a1fb-3e87042cb992 [data-leaf-element=\"true\"]","keyframes":{"transform":["translate(0%, 0%) scale(1.5)","translate(0%, 0%) scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}]

41% are affiliated with Alternative Investment Funds (AIF) or Fund of Funds (FoF) syndicates.

[{"selector":"#anim-10e4c9a6-1b75-4972-acb3-a29a2b2d8ac0 [data-leaf-element=\"true\"]","keyframes":{"transform":["translate3d(31.257324105020174%, 0, 0)","translate3d(0%, 0, 0)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}]

[{"selector":"#anim-443dc89f-e3a9-4d3c-a516-f20bdacfa311 [data-leaf-element=\"true\"]","keyframes":{"transform":["translate3d(-31.257324105020174%, 0, 0) translate(-25%, 0%) scale(1.5)","translate3d(0%, 0, 0) translate(0%, 0%) scale(1)"]},"delay":0,"duration":2000,"fill":"forwards"}] The survey also noted the challenges faced by startups from emerging cities, with over 40 per cent citing funding as a major growth issue. The survey also noted the challenges faced by startups from emerging cities, with over 40 per cent citing funding as a major growth issue.

On the other hand, only 12% received pre-seed funding and those securing Series A funding were a mere 2 per cent.

[{"selector":"#anim-18555cbf-84f8-44cf-bab4-7bc66415d343 [data-leaf-element=\"true\"]","keyframes":{"transform":["translate(0%, 0%) scale(1.5)","translate(0%, 0%) scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}]

Apart from funding, other key challenges were talent scarcity, networking limitations and lack of accessible mentorship.

[{"selector":"#anim-2e6d85e6-2282-48cb-b8a0-4900cee36c23 [data-leaf-element=\"true\"]","keyframes":{"transform":["translate3d(-31.257324105020174%, 0, 0)","translate3d(0%, 0, 0)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}]

[{"selector":"#anim-b341087a-9313-4a82-8072-b8d871715f7b [data-leaf-element=\"true\"]","keyframes":{"transform":["translate3d(-31.257324105020174%, 0, 0) translate(-25%, 0%) scale(1.5)","translate3d(0%, 0, 0) translate(0%, 0%) scale(1)"]},"delay":0,"duration":2000,"fill":"forwards"}] The survey called for dedicated funds and partnerships, strengthening entrepreneurial education with a focus on innovation-centric curriculum integration and workshops, expanding mentorship and incubation networks, and maintaining supportive government initiatives. The survey called for dedicated funds and partnerships, strengthening entrepreneurial education with a focus on innovation-centric curriculum integration and workshops, expanding mentorship and incubation networks, and maintaini ng supportive government initiatives. Image source : Pixabay Image source : Pixabay