Ninety percent of businesses in 2023 were from small towns, according to a research by Primus Partners, and they got roughly twenty-two percent of all capital. According to the research, 44% of investors have made investments in companies based in Tier-II and III locations. From Rs.37, 500 crore in 2021 and Rs.75,000 crore in 2022 to Rs.1,12,500 crore in 2023, there has been a surge in funding for small-town companies.

Approximately 171 million people, or 45% of India's urban population, live in Tier-II and Tier-III cities, which also account for roughly 37% of the nation's GDP (gross domestic product). These tiny cities have a wealth of resources and a huge amount of untapped business potential. According to a recent analysis by Primus Partners, Angel investors are becoming more interested in small-town companies as well as the growth of startups in Tier-II and Tier-III cities. According to the research, these tiny towns produced over 90% of the businesses that received funding in 2023, accounting for 22% of total funding.

The number of jobs created by startups in small towns has increased by three times. The report claims that these firms have generated 150 lakh jobs in 2023 as opposed to 50 lakh jobs in 2021 and 100 lakh jobs in 2023. A number of state governments have launched initiatives to assist local startups in order to acknowledge the importance of these businesses in creating jobs, including iStart Rajasthan, Startup Odisha, Startup Haryana, etc.

Speaking on to this, Piyush Soonee, Co-Founder & VC partner at Amara Partners says, “The Tier-II and III stories are not undiscovered anymore. VCs are going out of their way to find the right entrepreneur, bringing a unique perspective or a unique solution to the market”.