For a long time, big cities like Bangalore, Mumbai, and Delhi have been India’s main startup hubs, with lots of talent, money, and resources. But in 2025, smaller cities like Jaipur and Kochi are stepping up as exciting new places for startups. These “Tier-2” cities are growing fast because they’re affordable, have skilled people, supportive governments, and better internet access. This article explains, in simple words, why cities like Jaipur and Kochi are becoming India’s new startup stars and how they’re changing the game.
Why Smaller Cities Are Becoming Startup Hubs
India has over 140,000 startups in 2024, making it one of the world’s biggest startup scenes. While big cities still have most startups, almost half—about 56,000—are now in smaller cities like Jaipur, Kochi, Chandigarh, and Indore. Why? Big cities are getting expensive, with high rents and living costs. Smaller cities are cheaper, and thanks to better internet (India will have 900 million internet users by 2025), startups there can reach customers worldwide. Plus, since the pandemic, many founders are starting businesses in their hometowns, where it’s easier to save money.
These Tier-2 cities raised INR 1.13 trillion (about $13.5 billion) in 2023, way more than INR 375 billion in 2021. They offer low costs, like affordable offices, and a good quality of life, making them great for new businesses.
Jaipur: The Pink City’s Startup Boom
Jaipur, famous for its palaces and culture, is now a hotspot for startups. It has over 200 startups and raised $1.4 billion from 2014 to 2024. Big names like CarDekho, which helps people buy and sell cars online, and Razorpay, which makes online payments easy, started in Jaipur.
Why Jaipur Is Great for Startups
- Low Costs: Jaipur is much cheaper than big cities. For example, Minimalist, a skincare brand from Jaipur, was bought for INR 3,000 crore by a big company because it kept costs low using local suppliers.
- Skilled People: Jaipur has good colleges like Malaviya National Institute of Technology (MNIT), which trains engineers. Many of India’s tech workers—11%—live in cities like Jaipur, so startups can find talented people easily.
- Government Help: The Rajasthan government supports startups with the Rajasthan Startup Policy, giving tax breaks and money. Jaipur’s tech parks also exported INR 3,217 crore worth of software in 2024, showing a strong tech scene.
- Nice Place to Live: Jaipur has less traffic and shorter commutes (about 25 minutes from the airport to the city), making it a pleasant place for entrepreneurs and workers.
Success Stories
CarDekho, started by brothers Amit and Anurag Jain, stayed in Jaipur and raised $327.5 million. It shows startups can grow big without moving to a big city. Minimalist, another Jaipur success, built a popular skincare brand by keeping things affordable and smart.
Kochi: Kerala’s Coastal Startup Star
Kochi, a beautiful port city in Kerala, is another rising startup hub with over 200 startups. It’s strong in IT, healthtech, and seafood businesses, exporting INR 988 crore in software in 2024. The Kerala Startup Mission (KSUM) helps startups grow with money and advice.
Why Kochi Is Great for Startups
- Good Infrastructure: Kochi has modern IT parks like Infopark, with fast internet thanks to the Kerala Fiber Optic Network. This helps startups work smoothly.
- Skilled Workers: Kerala has high literacy, and colleges like Cochin University of Science and Technology (CUSAT) produce talented graduates. Kochi’s startups work in unique areas like aquaculture (seafood farming) and hardware.
- Government Support: KSUM offers funding and spaces for startups to grow. Kerala also encourages students to start businesses, boosting new ideas.
- Special Opportunities: Kochi’s location by the sea makes it perfect for startups in seafood or shipping. For example, AgroHub uses tech to help farmers grow better crops.
Success Stories
PhiCommerce, a Kochi startup, created PayPhi, a platform for easy digital payments. Other startups in clean energy and healthtech are also getting attention, with many receiving early funding in 2024.
Challenges and How They’re Being Fixed
Starting a business in smaller cities isn’t always easy. Only 12% of Tier-2 startups get early funding, and just 2% get bigger investments. Some investors push startups to move to big cities for better connections. Also, issues like unreliable electricity or slower internet in some areas can cause problems.
But things are improving. The Indian government’s Startup India program has helped create more startups, especially in smaller cities, with funds like INR 500 crore from SIDBI. Rajasthan and Kerala are building tech parks and startup centers. Local investors in cities like Jaipur are also stepping up to support new businesses. Co-working spaces and tech zones are making these cities more startup-friendly.
Government and Community Support
Government programs are key to this growth. Startup India, started in 2015, has led to a 400% rise in startups, many in Tier-2 cities. Programs like Stand-Up India help women and others start businesses. In Jaipur, the iStart program gives grants and support, while in Kochi, KSUM has helped over 2,000 startups.
Communities are also important. For example, startups in cities like Gwalior run podcasts on mental health to connect with people. In Kochi, events like the Kerala Startup Summit bring entrepreneurs and investors together, building a strong startup community.
Last Updated on Tuesday, July 15, 2025 4:41 am by Chandini Naidu
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