Karnataka Startup Policy Bets Big on Innovation: Aims to Build 25,000 Startups in the Next Five Years

Karnataka — often hailed as the startup capital of India — is now looking to go beyond Bengaluru. In an ambitious move to democratize entrepreneurship and innovation across the state, the Karnataka government has unveiled its Startup Policy 2025–2030, a five-year roadmap that envisions creating 25,000 startups, with 10,000 of them rooted outside Bengaluru’s tech corridors.

Approved by the state cabinet this week, the policy carries a substantial outlay of ₹518.27 crore, signaling a renewed and expanded focus on nurturing entrepreneurship, enabling funding, and building innovation hubs across tier-2 and tier-3 cities.

Karnataka Startup Policy

For years, Bengaluru has stood as India’s startup epicenter — home to unicorns, tech giants, and a thriving innovation culture. But as the city grows denser and more competitive, the state wants to ensure that innovation doesn’t stay confined within Bengaluru’s boundaries.

The Karnataka Startup Policy 2025–2030 is designed precisely for that shift — from a Silicon City to a Startup State. The policy proposes a set of fresh initiatives to deepen the state’s innovation ecosystem, empower entrepreneurs from diverse sectors, and create jobs across new-age industries.

Among its most ambitious goals is the establishment of 10,000 startups outside Bengaluru, across new regional clusters that will soon become the next startup hotspots of Karnataka.

DeepTech, AI, Climate, Space: The New Frontiers

The state’s flagship new program, Elevate NxT, takes a forward-looking approach by zeroing in on DeepTech sectors — including Artificial Intelligence, Biotechnology, Quantum Computing, ClimateTech, and SpaceTech.

Through Elevate NxT, the government plans to identify, support, and scale startups that are building advanced technologies with global potential. It’s a clear nod to the emerging generation of founders who are moving beyond software apps and marketplaces into frontier technologies that demand both research depth and patient capital.

New Avenues for Funding: The ‘Alternate Investment Bridge’

One of the most pressing challenges for early-stage founders, especially outside major metros, is access to capital. To address this, the policy introduces a novel framework called the Alternate Investment Bridge — an initiative designed to “diversify the funding landscape” for startups.

This bridge will explore innovative financing schemes that link startups with industry partners, investors, and mentors, thereby boosting both market credibility and investor confidence. By doing so, Karnataka hopes to create a self-sustaining cycle of funding, product development, and market exposure — crucial ingredients for a vibrant startup ecosystem.

Incentives That Matter: From Incubation to Employment

The policy also promises tangible support for infrastructure and employment generation. Private entities setting up new incubation centers will receive a one-time capital grant covering 50% of fixed cost investments or up to ₹50 lakh, whichever is lower. (This excludes land and building costs.)

Furthermore, to encourage job creation in startups, the government will reimburse PF/ESI contributions up to ₹3,000 per employee per month for the first two years — capped at ₹12 lakh per company. This could prove especially significant for small and growing startups that struggle with early-stage operational costs.

Additional incentives include subsidies for cloud storage, grants for R&D, and other enablers that collectively aim to make Karnataka an even more attractive base for entrepreneurs.

Growth Labs: Taking Innovation Beyond Bengaluru

To ensure that innovation radiates across the state, the policy envisions the creation of Growth Labs — collaborative innovation hubs in six key cities, divided into two regional clusters. Each cluster will have one Growth Lab designed to act as a nerve center for regional startups, connecting them to mentors, investors, and industry linkages.

These labs will not only incubate ideas but also act as local accelerators — ensuring that startups from cities like Mysuru, Hubballi, Mangaluru, Belagavi, Shivamogga, and Kalaburagi get equal access to the same opportunities as those in Bengaluru.

The Bigger Picture: Karnataka’s Startup Evolution

Karnataka’s startup journey isn’t new — the state was among the first in India to launch a dedicated startup policy back in 2015. Since then, it has cultivated over 15,000 startups, attracted global tech players, and built deep linkages between academia, industry, and government.

But with the 2025–2030 policy, the vision expands. This is not just about building more startups; it’s about building a wider innovation economy that’s inclusive, resilient, and regionally distributed.

By placing a strong focus on DeepTech, funding diversity, and regional inclusion, Karnataka is betting on the future of India’s innovation — one that isn’t limited by geography but driven by talent and ideas from every corner of the state.

With ₹518 crore allocated and a clear five-year roadmap, the new startup policy could redefine Karnataka’s position in India’s entrepreneurial landscape.

If executed effectively, it could become a model for other states — demonstrating how government-backed ecosystems can empower not just founders, but entire regional economies.

As the policy rolls out, all eyes will be on how these initiatives translate from paper to practice — and whether Karnataka can truly transform from the “Startup Capital” of India to the Startup State of India.