Published on: 05/13/2025
By Pearl Agarwal
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In the past, if you wanted to build a startup in India, you were told to pack your bags for Bengaluru, Mumbai, or Delhi. But today, that narrative is changing. From Kanpur to Coimbatore, from Surat to Guwahati, Tier 2 founders are shaking up industries, turning local insights into national opportunities and proving that innovation is no longer confined to the metros.
Yet, while ambition has no postcode, access to pre-seed funding in India often feels harder to crack for Tier 2 founders. How can these entrepreneurs break into VC networks, secure capital, and scale their ideas?
Let’s break it down.
Pre-seed funding is the earliest round of external capital that helps startups move from idea to prototype, hire their first few team members, validate assumptions, and enter the market. In India, pre-seed cheque sizes typically range from ₹20 lakh to ₹1 crore, depending on the investor and sector.
Unlike seed or Series A rounds, pre seed funding India is less about revenue or traction and more about the strength of the team, clarity of vision, and the size of the problem being solved.
Tier 2 founders in India are no longer just following the startup wave they’re helping lead it. Here’s why they’re gaining momentum and attention from investors across the country:
Operating a startup from a Tier 2 city means significantly lower overhead costs. Office rentals can be 50–70% cheaper than in Bengaluru or Mumbai, and local salaries are often 30–50% lower for similar roles. But it’s not just about saving money; it’s about efficiency. Founders can hire passionate, homegrown talent without losing them to big tech giants every few months. The lower cost base also allows these startups to test ideas, iterate, and build product-market fit without burning through massive capital. Pre-seed investors in India increasingly see this as a smart way to extend the runway and reduce early-stage risk.
Tier 2 founders live close to the problems they’re solving whether it’s helping farmers access better prices, enabling small businesses to go digital, improving healthcare access in remote areas, or building fintech tools for semi-urban populations. They understand the cultural nuances, language preferences, price sensitivities, and customer behaviors in ways metro-based founders often miss. This proximity helps them design products that are relevant, affordable, and scalable across India’s vast Bharat market, where 800+ million people live outside the metros.
Constraints breed creativity. Tier 2 founders have often grown up in environments where they had to make the most of limited resources whether in family businesses, small towns, or emerging markets. As entrepreneurs, this upbringing translates into sharp prioritization, scrappy problem-solving, and a laser focus on essentials. Instead of fancy office spaces or inflated marketing budgets, they concentrate on building great products, winning customers, and generating early revenues. This frugality appeals to pre-seed investors India who want to back resilient, capital-efficient businesses.
For many Tier 2 founders, entrepreneurship isn’t just about ambition, it’s about transformation. Coming from backgrounds where opportunities are fewer and expectations are lower, they carry a burning desire to prove themselves on a national stage. They face more skepticism, less family support, and fewer local role models, but that often makes them tougher and more determined. This underdog mindset means they are willing to put in the extra hours, take calculated risks, and hustle relentlessly to reach milestones that metro founders may take for granted.
Many Tier 2 founders are deeply rooted in their local communities. They not only want to build businesses but also uplift the people around them by creating local jobs, improving livelihoods, or supporting local causes. This sense of purpose often becomes a competitive advantage, helping them attract loyal customers, talented employees, and even local government or ecosystem support. Investors increasingly recognize that startups with authentic local connections can achieve stronger brand stickiness and social impact.
While Tier 2 founders are increasingly making headlines, their journey is far from easy. The path to building a successful startup, especially at the pre-seed stage comes with several roadblocks that metro founders often don’t face.
One of the biggest challenges is limited investor access. Many of the top pre-seed investors in India are based in Bengaluru, Mumbai, Delhi, and Gurgaon. They naturally tend to invest in founders and startups they can meet in person, often preferring those who are part of their immediate networks. For a founder based in a city like Indore, Bhubaneswar, or Surat, it can be much harder to secure warm introductions, get meetings, or even appear on the radar of prominent investors.
Another key hurdle is the smaller local ecosystem and networks. Unlike metros, Tier 2 cities typically have fewer incubators, accelerators, co-working spaces, or regular startup events. This lack of local support means founders have limited access to experienced mentors, industry connections, and peer communities all of which are crucial in refining business models, avoiding common pitfalls, and accelerating growth. It often leaves Tier 2 founders feeling isolated and forces them to build networks from scratch.
Perception bias is another tough barrier to overcome. Investors especially those unfamiliar with non-metro markets may harbor doubts about whether a Tier 2 founder can scale their product or business beyond the local or regional level. They may question whether the founder has enough exposure to national or global markets, or whether they can attract top-tier talent as they grow. This bias can sometimes result in Tier 2 founders needing to “prove themselves” more forcefully compared to their metro counterparts.
Finally, there’s a clear information gap. Founders in Tier 2 cities often have limited exposure to the playbooks that metro founders take for granted from how to craft a compelling pitch deck and design a strong go-to-market strategy, to understanding term sheets, valuations, or cap tables. Legal, financial, and compliance knowledge is often hard to access, increasing the risk of costly mistakes in early-stage fundraising or operations.
Despite these challenges, many Tier 2 founders are overcoming the odds but it’s important to acknowledge the extra lift they need to get noticed, funded, and scaled. Addressing these gaps with better ecosystem support, remote investor engagement, and founder education could unlock even more innovation from India’s smaller cities.
Here’s your playbook to navigate the pre-seed funding journey as a Tier 2 founder in India, and secure pre seed funding for startups in India:
Before chasing funding, prove your idea works in your home market. Focus on building a minimum viable product (MVP) that solves a clear local pain point and test it with real customers or businesses. Show traction through paying users, pilots, partnerships, or even just strong engagement metrics. Investors want to see that you’ve moved beyond theory and that your idea has legs even if it’s just within your city or state to start.
Don’t underestimate the power of structured programs. Many IIMs, IITs, NITs, and regional startup hubs run incubation and acceleration programs that offer pre-seed grants, small equity investments, mentorship, free office space, and access to investor networks. Programs like CIIE at IIM Ahmedabad, NSRCEL at IIM Bangalore, and T-Hub in Hyderabad are excellent springboards. These programs can help you refine your pitch, strengthen your business model, and get warm intros to pre-seed investors in India.
India’s government has launched several schemes to promote entrepreneurship beyond metros. Startup India, Atal Innovation Mission, state-run startup missions, and SIDBI’s Fund of Funds for Startups (FFS) are great resources for early-stage capital and support. Many states like Kerala, Gujarat, and Maharashtra also run their own innovation challenges, offering grants, subsidies, and ecosystem support. Explore these options; they can provide crucial early runway without diluting equity.
You don’t have to physically be in Bengaluru or Mumbai to get noticed. Attend virtual demo days, startup competitions, and pitching events across India. Platforms like LetsVenture, AngelList India, and Venture Catalysts enable connecting with pre-seed investors remotely. Many angel networks now operate pan-India and are keen to back promising founders, regardless of location. Keep an eye on accelerators’ online cohorts, pitch events, and even international startup programs that accept Indian startups.
Your Tier 2 roots are not a disadvantage, they’re a differentiator. Make sure your pitch clearly communicates why your local insight gives you an edge. Highlight your deep understanding of customer needs, your ability to scale in Bharat markets, and your cost-efficient execution. Share personal stories, customer testimonials, and market data to bring your narrative to life. Investors are looking for authentic founders solving real problems, not just polished decks.
Relationships matter as much as product. Use LinkedIn to reach out to other founders, investors, and ecosystem enablers. Join startup-focused WhatsApp groups, X (formerly Twitter) communities, and online forums. Attend regional meetups and industry conferences when possible. Don’t shy away from cold DMs or emails; a well-crafted, thoughtful message can open doors. Many Tier 2 founders have built powerful networks just by being proactive and consistently showing up.
Not every VC or angel will be a fit. Focus on micro-VCs, angel syndicates, family offices, and seed funds that specialize in pre-seed funding for startups in India. Look into players like Eximius Ventures, Indian Angel Network, Venture Catalysts, Inflection Point Ventures, and AngelList India. Research their portfolios, understand their thesis, and tailor your approach accordingly. Remember, finding aligned investors is about quality, not just quantity you want backers who believe in your vision and understand your market.
India’s startup success stories aren’t limited to Koramangala or BKC. Several breakout companies from Tier 2 cities have shown how local insights, smart execution, and grit can win over both customers and investors.
Meesho, though headquartered in Bengaluru, made its mark by unlocking the true potential of Tier 2, 3, and even Tier 4 India. Instead of targeting the usual urban online shoppers, Meesho focused on empowering small resellers, especially women and homemakers in smaller towns to sell products through WhatsApp, Facebook, and Instagram. By offering zero upfront investment, easy product sourcing, and logistics support, Meesho enabled thousands of first-time entrepreneurs to generate income from home. Their growth wasn’t just about an app; it was about creating a new economic movement in Bharat. The big lesson from Meesho is that if you can build for the masses with simplicity and affordability, Tier 2 and beyond can fuel hyper-growth.
PhonePe’s rise wasn’t just a product of good timing with India’s UPI wave, it was also about deeply understanding how to win trust in semi-urban and rural India. While urban customers had plenty of payment options, PhonePe aggressively partnered with small merchants, kirana stores, fuel stations, and local vendors across smaller cities and towns, making digital payments accessible and frictionless. Their success hinged on solving Bharat-specific challenges: offering regional language options, simple onboarding, fast settlements, and dependable customer support. The takeaway? Bharat is not a diluted version of metro India it has its own rules. Founders who meet these unique needs can build enduring, high-impact businesses.
Minimalist, a Jaipur-based skincare startup, defied the idea that premium, science-backed brands could only emerge from big cities. By focusing on transparency (clear ingredient lists, no exaggerated claims) and pricing that made high-quality skincare affordable to the Indian middle class, Minimalist found loyal customers not just in Delhi or Mumbai, but across India’s heartland. They combined strong digital marketing with deep consumer education, helping people in Tier 2 and 3 cities shift from legacy brands to modern, effective products. Minimalist’s journey shows that world-class D2C brands can be built from anywhere and often, a non-metro origin helps a brand stay closer to the real consumer pulse.
India’s startup story is no longer just about big cities. Tier 2 founders are showing that ambition, talent, and hard work can succeed anywhere from chai stalls to VC halls.
From Jaipur to Indore, Surat to Coimbatore, these founders are building amazing companies, creating jobs, and shaping the future of Bharat.
So if you’re a Tier 2 founder with big dreams, remember this: the capital is out there.
Learn as much as you can, build a strong foundation, hustle with purpose, and walk into that pitch meeting with confidence. Find the right people, stay curious, and trust that your local insights are your superpower.
Your journey is just beginning and the startup world is waiting for you.
Build a strong local MVP to show real progress, connect with incubators and accelerators for guidance, and tell a story that shows how well you understand your local market. Investors like founders who can prove their ability to succeed in smaller markets first.
You can find pre-seed investors on platforms like AngelList India and LetsVenture. Look for startup accelerators, incubators, and angel networks. Networking on LinkedIn and attending online pitch events can also help connect you with the right investors.
The government offers programs like Startup India and SIDBI’s Fund of Funds that give grants and funding to early-stage startups. These programs are especially helpful for Tier 2 founders who may struggle to find funding from traditional sources. Take advantage of these opportunities to get started.
