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If you are starting out in a startup always try to target India 1 as it's very difficult to extract money from India 2 and India 3, wait until you become a seasoned entrepreneur.

India 2 and 3 might be harder to crack, but they’re also a massive untapped market. Sure, margins may be thinner, but the volume potential is huge. A lot of successful startups found their scale by serving India 2 and 3.