Start-up activity and angel investor-interest is rapidly picking up in tier-2 and tier-3 cities, as was evident from the turnouts at recent pitching and networking sessions held in small cities by investor network platforms such as LetsVenture and Venture Catalysts.
LetsVenture kicked off its first roadshow a few days back, organising networking sessions in small cities to evaluate the start-up ecosystem there and connect local investors and founders. It held one session in Kanpur and will host similar events at Jaipur and Chandigarh.
“We are seeing a lot of angel networks coming up in these smaller cities“, said Shanti Mohan, Founder of Bengaluru-based LetsVenture.
“We want to become more relevant as a platform by connecting to all of them. These investors are investing in local startups as well as in other start-ups through our platform.“
In a recent report, LetsVenture said it noticed growth in its investor base from Guwahati, Kanpur, Pune, Raipur, Visakhapatnam, Agra, Jaipur and Chandigarh. About 13% of the investors on the deal-finding platform are from tier-2 and tier-3 cities, Mohan said.
Mumbai-based Venture Catalysts has expanded into cities such as Surat and Raipur, and held several pitching sessions in the tier-2 and -3 cities there recently.
“There are hundreds of investors in these cities and there is a lot of interest among traditional businessmen and industrialists to invest in start-ups“, said Apoorv Ranjan Sharma, Founder, Venture Catalysts.
“The cost of building a company is lower in these cities, and several towns like Ahmedabad and Kanpur that house IITs and IIMs also have the right ingredients for start-ups, which is why we want to develop the ecosystem in these cities“, he said.
But the main problem in small cities is the ‘chicken-or-egg’ dilemma, says Surat-based investor Gaurav Singhvi, Founder of Surat Angels.
“Entrepreneurs will be encouraged to establish startups only when there is funding, while funding will come in when startups come up“, said Singhvi, who owns an accounting consultancy and recently invested in an Ahmedabad-based SaaS start-up, Don’t Scratch Your Head, through one of the pitching sessions held in Surat by Venture Catalysts.
“Surat has a thriving business-centric community but even then, many are not aware about angel funding and investing in start-ups“, he said.
“But in recent pitches that we had, about 200 angel investors from the city showed up. We are creating awareness among the business community here.“
Source: The Economic Times