Jun 30, 2025

But things are changing fast. Today, Tier-2 and Tier-3 cities are becoming the new hubs for startups . Cities like Jaipur, Indore, Kochi, Bhubaneswar, Surat, and Coimbatore now host hundreds of young companies with fresh ideas. Startups no longer depend only on metros. Founders find great support in smaller cities, from local talent to government schemes. The cost of running a business is also much lower. These factors push many entrepreneurs to set up startups in places outside big cities. Running a business in a Tier-1 city is expensive. Office rent, salaries, and daily expenses cost a lot more in metros. In contrast, Tier-2 and Tier-3 cities offer affordable infrastructure. Startups save money and still get access to good facilities. Smaller cities produce many skilled students every year. Engineering, management, and design colleges in cities like Indore, Bhopal, Coimbatore, and Bhubaneswar train thousands of bright students. Startups can hire fresh minds at lower costs and train them. Internet access has improved greatly across India. Thanks to cheaper smartphones and data plans, people in smaller towns now use apps, shop online, and engage on social media. This digital shift creates new business opportunities for startups in areas like e-commerce, fintech, edtech, and health tech. The Indian government launched several schemes to promote startups in small cities. The Startup India program Atal Innovation Mission , and Startup Yatra encourage youth from smaller cities to start their own businesses. State governments also set up incubation centers in towns and offer financial help. Jaipur in Rajasthan has become a hotspot for tech startups. Startups like CarDekho, DealShare, and Razorpay started their early journeys in Jaipur. The city offers a mix of good infrastructure, startup-friendly spaces, and skilled engineers. The Rajasthan government also set up iStart , a platform that helps local startups with funding, mentoring, and networking. Indore is one of India's cleanest cities and is fast becoming a business hub. The Indore Smart Seed Incubation Centre , supported by the government, helps early-stage startups grow. Many startups in e-commerce, SaaS (software as a service), and agritech sectors have launched from Indore. Local colleges like IIM Indore also support student entrepreneurs. Coimbatore, known for its textile industry, now sees a new wave of startups. Founders are working in areas like renewable energy, electric vehicles, logistics, and manufacturing tech. Coimbatore has good roads, strong internet, and industrial experience, which support startup growth. Kochi in Kerala focuses on IT, tourism, and marine tech. Kerala Startup Mission (KSUM) provides coworking spaces, seed funds, and expert mentors. Startups like Genrobotics and Sastra Robotics have grown from Kochi. The city also has India's first underwater drone startup. Bhubaneswar is rising as an education and innovation hub. Odisha's government promotes startups through O-Hub , a center for incubation and innovation. The state supports tech startups, social enterprises, and businesses that solve rural problems. Startups in Tier-2 and Tier-3 cities understand the local market well. They solve real problems for people in those regions. For example: These startups mix technology with local needs. They create jobs and boost the economy from the ground up. The startup ecosystem in smaller cities now includes: People in small cities now see startups as real career options. They don't feel they need to move to Bengaluru or Mumbai to chase success. While growth looks promising, some challenges remain: Most venture capital firms still operate from metros. Startups in small cities often struggle to connect with investors. They depend on pitch competitions or online platforms to raise money. Founders in Tier-1 cities meet experienced mentors easily. But in smaller towns, startup leaders often miss expert guidance. Mentorship networks are growing, but they need more reach. Startups in big cities get quicker media attention and customer traction. For small-town startups, building a brand takes longer. They must work harder to gain visibility at the national level. Despite the above challenges, several factors are helping smaller cities become stronger: Large firms also now explore partnerships with startups in small cities. This builds trust and brings new business for emerging companies. Tier-2 and Tier-3 cities have shown that innovation doesn't need a metro address. From solving hyperlocal problems to scaling national businesses, startups in these cities play a vital role in India's economy. The next big tech, health, or education company may not come from a Silicon Valley-style office. It could come from a small two-room office in a city like Jabalpur, Ludhiana, or Trichy. India's startup story is no longer about just the big cities. Small towns now write their own success stories. As digital tools, government support, and youthful ambition come together, Tier-2 and Tier-3 cities are leading a quiet revolution. More founders now stay in their hometowns to build businesses that matter. They create local jobs, solve real issues, and put their cities on the innovation map. The journey is just beginning—but the signs are clear: India's next startup wave will rise from its smaller cities. Also Read – Top Startup Accelerators & Incubators in 2025