Tier-2 & Tier-3 Founders 2025: The Next Wave of Indian Entrepreneurship

Introduction: The Quiet Rise of Bharat’s Startup Founders

For over a decade, India’s startup story was written in just three cities: Bengaluru, Delhi, and Mumbai. If you were a founder in Bhubaneswar or Coimbatore, the odds were stacked against you. Investors, accelerators, media, and even talent pools revolved around the “Tier-1 halo.”

But 2025 looks very different. The momentum of entrepreneurship has spilled into Bharat — Tier-2 and Tier-3 towns that were once considered “peripheral markets.” Startups from Indore, Jaipur, Surat, Nagpur, Bhubaneswar, and Coimbatore are now building products for global markets, securing meaningful funding, and rewriting the founder playbook.

This shift isn’t a small subplot. It is the next chapter of India’s digital economy. And if we’re serious about understanding the future of Indian entrepreneurship, we have to decode why Bharat is emerging as the true growth frontier.

Mapping the Startup Geography of Bharat

Between 2018 and 2025, India’s startup base doubled. But what’s more interesting is where that growth came from. Tier-2 and Tier-3 hubs are showing signs of becoming sustainable innovation ecosystems.

Top Emerging Startup Hubs (2025)

Funding Distribution: Tier-1 vs Tier-2/3

The biggest bottleneck has always been capital. For years, 90% of VC money flowed to Bengaluru, Delhi, and Mumbai. But by 2025, that ratio is shifting.

Table: Share of Startup Funding (2018–2025)

The surge in Tier-2/3 deals is powered by angel syndicates, local family offices, CSR-linked incubators, and the rise of micro-VCs specifically backing Bharat founders.

Bharat Founder Archetypes

The face of the Indian founder is diversifying. In Tier-2/3 hubs, three archetypes stand out:

1. The Grassroots Innovator — solving agricultural inefficiencies, MSME digitization, logistics.
   • Example: Dehaat (Patna) scaling to national AgriTech relevance.
2. The Challenger Brand Builder — launching D2C consumer products rooted in local culture.
   • Example: Jaipur’s DealShare, bringing community-driven commerce to Bharat consumers.
3. The Returnee Founder — talent leaving metros or overseas roles to build in hometowns.
   • Example: A Coimbatore SaaS founder who returned after working in Singapore to build global-ready B2B tools.

Case Studies: Stories from Bharat

1. The Problem-Solver from Bhubaneswar

Milk Mantra, founded in Odisha, started as a dairy brand but became a symbol of how regional entrepreneurs can blend social impact with scale. They disrupted traditional supply chains and are now competing with national dairy majors.

2. The Challenger Brand from Jaipur

DealShare leveraged WhatsApp commerce and vernacular interfaces to scale across Tier-2/3. Investors initially dismissed it as “too small-town.” By 2025, it became a unicorn by understanding Bharat consumers better than metro-centric platforms.

3. The SaaS Exporter from Coimbatore

Forge Accelerator has incubated SaaS products that now serve global clients. A founder returning from Singapore bootstrapped a mid-sized SaaS product for logistics companies — with customers in 20 countries.

4. The Social Entrepreneur in Nagpur

HealthTech startups emerging from Nagpur are building affordable telemedicine solutions. These businesses may not hit unicorn valuations but solve access problems for millions in underserved Bharat districts.

Why Bharat Is India’s True Growth Frontier

Here’s the founder’s lens:

• Consumer Base: Bharat is home to the next 500M digital users. They will define what India buys, and how.
• Cost Advantage: Lower burn rates — office space in Indore is 1/5th of Bengaluru. Talent costs are 30–40% lower.
• Talent Pools: Tier-2/3 cities are loaded with engineering colleges. Digitally skilled graduates don’t always migrate now.
• Resilience: Bharat founders often bootstrap longer, building frugal, sustainable businesses.

This is why Bharat is not “catching up” — it is leapfrogging. If you’re interested in how these founders connect to Bharat’s fast-changing consumer landscape, don’t miss our related deep-dive: India E-commerce Market 2025: Growth, Trends & Projections . It explains how digital retail expansion and smartphone adoption are shaping the demand environment that Tier-2 and Tier-3 entrepreneurs are now building for.

Challenges Holding Back Bharat Founders

• Limited access to mentorship networks.
• Investor perception bias.
• Patchy infrastructure (logistics, broadband).
• Talent retention (many skilled grads still move to metros).

These challenges are real but solvable. Each year, ecosystem density improvesThe Role of Policy, Ecosystem, and ONDC

The Role of Policy, Ecosystem, and ONDC

• Startup India Mission seeded many state-level innovation funds.
• ONDC is democratizing access to digital marketplaces — a boon for small-town D2C and kirana tech.
• University Incubators like Forge (Coimbatore), TiE Indore, and KIIT-TBI (Bhubaneswar) are anchors for local ecosystems.

The Bharat Founder Playbook: Looking Ahead

Actionable insights:

• For Founders: Leverage cost arbitrage, but think global from day one. Tap into ONDC, local incubators, and sector-specific micro-VCs.
• For Investors: Don’t wait for a Bharat founder to “shift to Bengaluru.” The future unicorn may never leave Indore.
• For Policymakers: Focus on infra (logistics + digital), ease of doing business in small towns, and local mentor pools.

By 2030, 30–40% of India’s unicorns could emerge from outside the top three metros.

Sectoral View: Where Bharat Startups Are Playing

Conclusion: The Next Wave

The India startup story is incomplete without Bharat. From dairy supply chains in Odisha to SaaS products in Coimbatore, Bharat founders are proving they can solve, scale, and compete.

As a founder myself, I see this shift not just as data but as lived reality. The energy, grit, and inventiveness of Tier-2/3 founders will define the digital future of India.

The next big thing is not in Bengaluru. It is in Bhubaneswar, Indore, and Surat.

FAQs: Tier-2 & Tier-3 Founders in India (2025)

What qualifies a city as Tier-2 or Tier-3 for startups in India?

Tier-2/3 hubs are high-growth cities outside Bengaluru, Delhi, and Mumbai. They typically have growing startup density, incubators, and rising venture activity.

Which Tier-2/3 cities are emerging fastest in 2025?

Indore, Jaipur, Coimbatore, Surat, Bhubaneswar, Nagpur, and Chandigarh stand out in 2025 for founder activity and ecosystem support.

How is startup funding shifting between Tier-1 and Tier-2/3?

While Tier-1 metros still dominate, Tier-2/3 cities have increased their funding share from ~10% in 2018 to nearly 24% in 2025.

Why should founders consider building from Tier-2/3 cities?

Lower operating costs, access to native demand, and improving talent retention create a cost-to-value advantage, especially for D2C, SaaS, and MSME solutions.

What are the most promising sectors for Bharat founders in 2025?

AgriTech, D2C & retail, SME-focused SaaS, HealthTech, and local-commerce infrastructure are leading the growth in Tier-2/3 hubs.

How does ONDC help Tier-2/3 startups?

ONDC reduces distribution and discovery barriers by creating open digital rails for cataloguing, logistics, and payments—helping small-town brands scale nationally.

How was the dataset for this report built?

We triangulated public sources (RBI, DPIIT, TRAI, NPCI), investor reports (Bain, IVCA, RedSeer), and ecosystem trackers (Tracxn, Inc42, YourStory).

Methodology & Sources

This report triangulates public datasets (government + industry), investor reports, and ecosystem studies. Our charts and tables combine directional estimates with reported figures to illustrate structural shifts (city distribution, sectoral mix, and funding share). Where official time series were incomplete, we used conservative interpolation across adjacent years and cross-checked against multiple sources listed below.

How to read our charts

• Funding split (Tier-1 vs Tier-2/3): Directional series compiled from annual VC outlooks and ecosystem summaries, benchmarked against reported deal share ranges in industry reports [3][4][5][6].
• Emerging hubs table: Counts and exemplars cross-checked against state startup portals, incubator pages, and ecosystem media [2][7][8][10][12].
• Sectoral split: Basketed shares inferred from sector deal volumes and company counts in Bharat-heavy verticals (AgriTech, D2C, MSME digitisation, SaaS) [3][4][5][6][8].

Primary references

1. Reserve Bank of India (RBI) – Payments & fintech circulars, annual reports
2. DPIIT – Startup India data & state startup policies
3. IVCA – India Private Capital trends & yearbooks
4. Bain & Company – India Private Equity/Venture Capital Reports
5. RedSeer – India digital economy & commerce insights
6. NASSCOM – Indian startup ecosystem reports
7. MeitY – Digital India, public digital infrastructure updates
8. Tracxn – Sector & city snapshots
9. TRAI – Telecom subscriptions & internet penetration
10. ONDC – Network updates, seller onboarding data
11. NPCI – UPI monthly statistics
12. YourStory – Founder case studies & Bharat ecosystem coverage
13. Inc42 – State of Indian Startup Ecosystem reports

Citation tip: Add inline references like [3] or [11] after sentences that rely on specific figures or claims.