India’s startup ecosystem is no longer defined solely by Bengaluru, Mumbai, or Delhi. In 2025, India’s Tier-2 cities are becoming startup hubs in their own right, contributing significantly to innovation, job creation, and digital inclusion. As talent decentralizes and infrastructure matures, cities like Jaipur, Surat, Indore, and Coimbatore are transforming into entrepreneurial powerhouses, and Keev Capital is leaning in early.
According to a report by Nasscom and Zinnov, Tier-2 and Tier-3 cities contributed nearly 50% of new startup registrations in India in 2023. With internet penetration at 67%, government-led digitization schemes like Startup India, and affordable digital infrastructure, these cities are creating fertile ground for high-growth ventures.
Keev Capital is positioning ahead of the curve by backing founders and models that are built for Bharat, yet capable of global scale. Our approach spans verticals—from vertical AI to consumer goods—and targets value creation at the intersection of aspiration, access, and efficiency.
Why Tier-2 Cities Are Leading the Next Wave
There are several reasons India’s Tier-2 cities are now startup hubs:
- Cost efficiency: Operating costs are up to 40% lower than in metros.
- Talent retention: Local founders prefer to build in their home cities, reducing brain drain.
- Policy support: State-specific incubator schemes like Kerala Startup Mission and Startup Odisha are offering capital, tax benefits, and mentor networks.
- Digital fluency: From telemedicine to vernacular edtech, digital-native services are thriving outside Tier-1 markets.
Keev’s thesis aligns with this shift, particularly in education innovation and healthcare delivery models that cater to semi-urban and rural users.
Sectors Seeing Maximum Traction in Tier-2 Hubs
Vernacular Fintech and Rural Credit Platforms
Fintech innovation is booming in Tier-2 cities, especially in digital lending, UPI-based credit, and microinsurance tailored for underserved regions. Platforms that combine trust with tech—offering vernacular interfaces, assisted onboarding, and local agent networks—are scaling faster than metro-only models.
At Keev, our fintech investment strategy prioritizes startups solving for inclusivity while ensuring regulatory alignment and strong unit economics.
D2C Brands for Bharat
Tier-2 users are driving the next wave of consumer spending. Affordable yet aspirational D2C brands in beauty, apparel, health snacks, and electronics are winning loyalty in these markets. Founders building from within Tier-2 cities often bring deeper cultural resonance and community-based distribution strategies.
Keev Capital actively supports new-age consumer goods brands designed for India’s 400 million middle-income earners outside metro zones.
Clean-Tech for Localized Infrastructure
Decentralized environmental tech, like solar microgrids, water purification startups, and waste management platforms, is seeing early adoption in Tier-2 cities with unreliable civic infrastructure. Solutions that balance impact with profitability align with Keev’s interest in climate innovation.
These models are also excellent testbeds for climate tech scaling across South Asia and Sub-Saharan Africa.
Vertical AI for Tier-2 Use Cases
India’s emerging cities present unique datasets, from agro-patterns to regional dialects, that are ideal for domain-specific AI applications. Startups using AI to automate agriculture, logistics, or regional healthcare workflows are finding willing users and sticky retention in Tier-2 markets.
To understand how we support such solutions, explore our insights on vertical AI investments.
How Keev Capital Is Investing Ahead of the Curve
Keev’s early-stage strategy is shaped by three convictions:
- Founders don’t need to leave home to build category leaders
- Digital infrastructure outside metros is investment-grade
- Bharat-scale models create defensibility through localization
We focus on backing companies that are solving for India’s 500 million underserved users, leveraging digital rails, vernacular UX, and offline+online hybrids.
Our portfolio founders in Tier-2 cities are innovating across fintech, edtech, healthtech, and climate tech with speed and capital efficiency. We support them with deep sector knowledge, capital structuring, and scaling playbooks tailored to emerging markets.
Conclusion
The future of Indian innovation is being written beyond the metro skylines. India’s Tier-2 cities are startup hubs with deep entrepreneurial talent, cost advantages, and culturally attuned problem-solving. Keev Capital is investing ahead of the curve, supporting companies built from the grassroots up, companies that don’t just serve Bharat, but lead it.
To explore collaboration, investment alignment, or our founder support network in Tier-2 India, connect with Keev Capital here. We are actively sourcing startups and partners who believe the next unicorns will rise from India’s most underestimated cities.