22% of funding for start-ups went to those in Tier-II, -III cities in 2022

According to data from Tracxn, about 22 per cent of the $27 billion in funding received by Indian start-ups in 2022 went to firms in Tier-II and -III cities, owing to government support through initiatives such as the Pradhan Mantri Mudra Yojana and Startup India initiative, and lower living and operational costs in smaller cities, which makes them more economical when running a business. Funding in Tier-I cities is dominated by big players, while smaller cities have less competition — an attractive prospect for smaller investors.

With growing infrastructure and rising internet penetration in Tier-II and -III cities, notes Neha Singh, co-founder of Tracxn, smaller cities will see increased investor interest in the years ahead.