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Local investors warm up to next-door businesses hungry for capital

Economic Times · 3m

Small cities and towns in India are emerging as new hubs for startup investments as wealthy individuals from these regions show a willingness to support and invest in local startups. Cities like Kota and Shivamogga have seen an increase in angel investments and equity funding for startups addressing hyperlocal problems. This trend reflects a shift in the startup ecosystem beyond tier-I cities and the success of early angel investments, attracting more individuals to invest in startups. Old money is being reinvested in new-age businesses, with investors seeing significant returns. Tier-II cities raised $930.7 million in funding rounds in 2024, with sectors like consumer and retail attracting the largest share. This growing confidence among investors from non-metro cities is driving investments in startups, with traditional investors seeking both wealth creation and innovative solutions.