Venture Capital

Funding frontiers: Decoding the startup landscape beyond Tier-1 India

Vidhya Sivaramakrishnan

November 21, 2023 | 6 Min Read

Key Takeaways

Venture funding is still largely a function of geographical location--most funding flows towards startups based in tier-1 regions
The noticeable spike in tier-2 funding in 2022 and 2023 is largely due to a technicality—insurtech firm InsuranceDekho has its registered office in Jaipur with its corporate office in Gurugram
Investors The CapTable spoke to suggest it will be a while before we see a significant chunk of funding flow towards tier-2 and tier-3-based startups
Large tier-1-based startups making inroads into the smaller markets is a reality; founders solving problems relating to smaller towns are likely to emerge from there

Reams have been written about the potential of startups emerging from beyond India’s large metros. But is this potential actually being realised? The numbers don’t quite bear this out.

The CapTable dug through data provided by startup intelligence platform Tracxn to figure out how this trend has played out in recent years. The total dataset encompasses 17 tier-1 cities or regions (for instance, the National Capital Region and Mumbai Metropolitan Region have been considered as tier-1), 102 tier-2 cities, and 721 tier-3 towns.

Startup funding across tier-1, tier-2 and tier-3 regions in India — *Infographics by Sharath Ravishankar*

While there are few surprises to be had, there are nuances that emerge which could be the early sketches of what will emerge as the Indian startup painting next decade or so.

Corporate

Access unlimited content at a special discounted rate. Trusted by top VC’s and leading organizations, we provide bulk subscriptions for groups of 30+. Contact us for more details

Campus

Top educational institutions have collaborated with us for campus-wide subscriptions. For bulk campus-wide access, please get in touch.

Join our community of 100,000+ top executives, VCs, entrepreneurs, and brightest student minds

Trusted by the best

Karthik Reddy

Blume Ventures

The CapTable brings a refreshing set of insights for us at the Blume team, highlighting stories that bring together the underlying business and founders with that of investors' journeys with these startups. It's an important perspective that very few bring to startup ecosystem enthusiasts.

Latest Articles

Sangeet Paul Choudary on why AI's real power lies in reimagining systems, not replacing tasks

Best-selling author and business advisor Sangeet Paul Choudary argues that businesses are missing AI's real impact by focusing on intelligence benchmarks rather than system transformation.

Team Captable

India's ethanol transition explained: The science, the concerns, and the road ahead

As India moves from E10 to E20 ethanol-blended petrol, consumers and automakers weigh cost savings, environmental gains, and the engineering trade-offs

Muralidhar Swaminathan

IRCTC boards the fintech express, eyeing a bigger retail and e-commerce play

IRCTC has hopped onto the fintech train as it awaits a payment aggregator licence from the RBI. Payments will only be a slice of its expanding non-ticketing revenue pie, which already makes up 70% of the business. But can a PSU rooted in legacy systems thrive in a fast, innovation-led fintech arena?

Sohini Mitter

The IPO domino effect big money is quietly betting on

Private markets are frozen, public markets are ruthless, and investors have run out of patience — or exits. With no breakout tech, no AI glory, and flatlining valuations, India’s startups are lining up for IPOs, hoping Dalal Street will do what VCs won’t.

Nikhil Patwardhan

When the music pauses: What’s the way forward for Agritech startup Gramophone

Agritech startup Gramophone battles shutdown rumours and a deep fall in valuation, but CEO Tauseef Khan insists the company has in recent months turned profitable and is growing

Parvathi Benu

Convinced that The Captable stories and insights
will give you the edge?

Convinced that The Captable stories
and insights will give you the edge?

Subscribe Now

Stories

Explore