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In 2016, when Flipkart launched “Flipkart Assured,” its biggest market was Bengaluru. In 2025, Flipkart’s biggest market is Nagpur.
As India completes a decade since the peak of its startup boom, a new geography has begun defining success. Not the urban elite of NCR or Mumbai, but the rising consumers, entrepreneurs, and youth of Tier-2 and Tier-3 cities.
No longer just users or customers, Bharat — as non-metro India is often called — has become the engine room of India's startup growth.
But is this shift just about expanding user base? Or is India truly witnessing the rise of a new innovation economy rooted in its smaller cities?
The Bharat Boom in Numbers
A 2024 report by NASSCOM and RedSeer reveals that nearly 58% of all new users for consumer internet startups came from non-metros.
Data Snapshot: Internet User Distribution by Region
| Region | Users (in Millions) | % of Total Internet Base (2024) | Growth YoY |
|---|---|---|---|
| Tier-1 Cities | 270 | 28% | 4.5% |
| Tier-2 Cities | 340 | 35% | 11.2% |
| Tier-3 + Rural | 364 | 37% | 13.8% |
| Total | 974 Million | 100% | — |
Insight: The combined Tier-2, Tier-3, and rural base now contributes 72% of India’s internet population.
Top Cities Powering the Bharat Startup Wave
While unicorns still register in metros, the next wave of disruption is being built in cities like Indore, Surat, Coimbatore, Lucknow, and Bhubaneswar.
Top Emerging Startup Hubs in 2025
| City | Key Sectors | Notable Startups |
|---|---|---|
| Indore | EdTech, Logistics | Classplus, Porter |
| Surat | D2C, Fintech | Zouk, KreditBee |
| Coimbatore | SaaS, AgriTech | WayCool, Kovai.co |
| Bhubaneswar | Healthtech, Mobility | MedTel, EMotorad |
| Patna | Skilling, AgriTech | AgroWave, JobHai |
🔍 What’s Fueling the Growth?
1. Digital Infrastructure + UPI + Jio Effect
Thanks to BharatNet, 4G proliferation, and cheaper smartphones, mobile-first consumption has exploded. Even Tier-3 towns boast UPI adoption rates over 75%, per NPCI data.
2. Cost-Efficient Operations for Startups
Startups are discovering that customer acquisition costs (CAC) and employee costs in Bharat are 30-50% lower than in metros.
3. Untapped Markets + Mass Demand
From healthcare diagnostics to affordable e-commerce, there's an underserved market in non-metros — not for premium, but for value innovation.
Sector-Wise Disruption Led by Bharat
AgriTech, EdTech (skilling), Healthtech, and D2C are seeing the biggest gains from a Bharat-first approach.
| Sector | Bharat-Focused Startup Examples | Impact in Tier-2/3 Markets |
|---|---|---|
| AgriTech | DeHaat, Gramophone | Increased crop yield & market linkage in Bihar, UP |
| Skilling/EdTech | PhysicsWallah, Apna | Job placement from small towns to metros |
| HealthTech | Redcliffe Labs, 5C Network | Affordable pathology & telemedicine in Tier-3 |
| D2C | WOW Skin Science, Mamaearth | Rising beauty & personal care consumption |
| FinTech | KreditBee, Fibe | Small-ticket loans, BNPL in underbanked regions |
Bharat-Focused VC Funding: Slower but Steady
While 2023 and 2024 saw a dip in overall startup funding, Bharat-focused startups continued to attract interest due to long-term potential.
| Year | Bharat-Focused Startup Funding (USD Billion) | YoY Growth | Number of Deals |
|---|---|---|---|
| 2021 | 3.9 | — | 237 |
| 2022 | 4.4 | +12.8% | 280 |
| 2023 | 2.8 | -36.4% | 198 |
| 2024 | 2.2 | -21.4% | 163 |
| 2025 | 2.6 (estimated) | +18% | Reviving |
“We’re moving from GMV-led growth to unit economics and sustainable scale — Bharat fits perfectly into that narrative.”
— Rajesh Sehgal, Equanimity Investments
Founder Stories: What They’ve Learned in Bharat
Sneha Jha, Founder of SkillSetGo
“We launched in metros but found our actual PMF in Tier-2. Students were hungry to learn, but needed vernacular support. We saw our LTV double after building localised curriculums.”
Harsh Raj, Co-founder, LocalBasket
“In Bharat, ads don’t sell — trust does. Our best campaigns came from micro-influencers in Jhansi and Muzaffarpur, not Instagram celebs.”
Government’s Push to Empower Non-Metro Innovation
The Indian government has laid down infrastructure, policy, and financial groundwork to enable the Bharat startup wave:
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BharatNet Phase-II: High-speed internet to 2.5L+ panchayats
-
ONDC Expansion: 30%+ sellers from Tier-2/3 towns
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Startup India Rural Innovation Scheme: ₹1,200 Cr corpus for rural-first startups
-
Udyam Portal Data (2024): 58% of new MSMEs from non-metro cities
But There Are Challenges…
Even with the opportunity, building in Bharat comes with hurdles:
-
Low ARPU (Average Revenue per User)
Products must be affordable; monetisation remains tricky. -
Last-Mile Logistics
Reverse logistics, returns, and delivery timeframes are still problematic in remote zones. -
Language & UX Gaps
Few platforms are truly vernacular-first or accessible to low-literacy users. -
Trust Gap in Financial Products
Lending and credit startups face adoption resistance.
Bharat Will Build the Next 100 Unicorns
The next billion-dollar ideas in India might not come from a Koramangala café — but from a Raipur co-working hub or a student in Ranchi.
To succeed in Bharat, startups must go beyond market capture — they must solve for Bharat, build for Bharat, and belong to Bharat.
As we head into 2026, the Indian startup ecosystem has a clear fork in the road:
Double down on the overserved metro bubble, or build for the under-tapped, ambitious, and increasingly digital Bharat.
Only one leads to scale. And legacy.