Indian startups raised $2.2 billion between July and September, according to Inc42. Bengaluru took more than $1.4 billion of it, about 64%. Funding in Delhi NCR fell 27% and in Mumbai 64%. Early-stage funding across the country fell 18%, and the number of active investors dropped by nearly a quarter.
Some of this concentration is natural. Bengaluru has the engineers, the AI companies and the investors, and this year’s money has gone mostly to AI and cleantech. Investors writing bigger cheques to fewer companies will go where the strongest teams are.
The cost of concentration
But the startups that create jobs in Indore, Jaipur or Kochi rarely start with $100 million rounds. They need small, early cheques from investors who know their markets. When seed and early-stage money shrinks and the rest flows to one city, those companies don’t get started at all.
What would help
State governments that run startup funds should put more of that money through local angel networks and small funds, and the government’s fund of funds could reserve a share of its commitments for managers based outside the big three cities.
Investors will say capital should follow returns, not geography, and they are right that subsidised funds can back weak companies. The aim is not to pick winners but to make sure a good founder outside Bengaluru can find a first cheque.