[Startup Bharat] These accelerators, mentors, and investors are backing small-town startups

Amidst the unicorn and IPO rush in India, investors and accelerators have another darling -- startups emerging from smaller towns. To tap into these, many accelerators, mentors, and investors have shifted their focus to back these startups.
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Time and again, entrepreneurs based in Tier-II cities have proved that they are no less than their Tier-I peers. Over the years, we have seen the growth of players like CarDekho, Jugnoo, Leap India, and Milk Mantra, among others, from areas beyond India’s metros and Tier-I cities. 

According to data revealed by YourStory Research, the total funding raised by startups in Tier-II cities across India between January 2015 and August 2021 stood at $1.14 billion. While it may be less than 2 percent of the total funding raised, investors added companies from around 70 Tier-II cities to their portfolio. 

In fact, 10 new Tier-II cities were added to the list in 2021 alone. These include Thrissur (Kerala), Silvassa (Dadra and Nagar Haveli), Roorkee (Haridwar, Uttarakhand), Ranchi (Jharkhand), Panchkula (Haryana), Palakkad (Kerala), Mangalore (Karnataka), Ludhiana (Punjab), Jabalpur (Madhya Pradesh), and Raipur (Chhattisgarh).

While we have brought to you stories about startups from smaller towns in our Startup Bharat series, we have now come up with a list of five accelerators, mentors, and investors that are early backers of startups based in Tier-II, Tier-III, and Tier-IV towns.

Marwari Catalysts Ventures

Rajasthan-based accelerator Marwari Catalysts Ventures (MCats) is focussed on creating, building, and nurturing the startup ecosystem and responsible for the economic development of startups from India’s Tier II and Tier III cities. 

Started by Sushil Sharma, Devesh Rakhecha, and Richa Sharma in 2019, MCats, which is highly active across India, wants to become the preferred specialised accelerator in the startup ecosystem. 

MCats founders

Sushil, who grew up in Rajasthan, couldn’t see himself working in crowded cities or tech hubs, and saw that the future lies in small towns as that is where the next billion users in India reside.   Even though he landed himself various opportunities in India as well as abroad, he stayed back in his hometown, Jodhpur, and worked with several startups.

According to MCats founders, the whole world has become location-agnostic, and startups can come up with innovation irrespective of where they are based.

Besides enabling seed and Series A investments, Marwari Catalysts helps startups develop capability, create market access, and leverage its network across the globe such as the UK, Hong Kong, Middle East, Africa, Indonesia, Singapore, and Vietnam, through its partners. It also gives strategic guidance and helps investors get phenomenal returns, in turn bagging successful exits.

“MCats has scaled up despite the pandemic, giving stellar returns as one of its portfolio companies bagged successful exit, with 20x return,” says Sushil.

MCats has backed over 35 startups so far and have invested funds to the tune of $2 million. Some of the other startups in its portfolio include Tinkerly, Yearbook Canvas, The Book Cafe, Startup Chaupal, Sarathi Healthcare, Mentorkart, Toppeq, Valuationary, Hobit, TechieNest, Tyutee, Refier, among others. 

Read the full story here.

9Unicorns

Another investor who is bullish on startups from ‘Bharat’ is Dr Apoorva Ranjan Sharma, who founded Venture Catalysts, an incubator, in 2016, to support and mentor idea-stage startups. He saw an opportunity in small towns of India and decided to launch investment firm 9Unicorns in 2019. 

With Rs 500 crore in total disbursement, the firm has so far invested more than Rs 100 crore in over 60 startups. A good chunk of the investments is made in startups beyond metro cities as Apoorva feels “startups from Tier II, III, and IV cities have sustainable business models and innovative ideas”.

Dr Apoorva Rajan

Giving an example, he says, Silvassa-based food product startup My Fitness was making Rs 5 crore in monthly revenue before 9Unicorns invested in them, while Bengaluru-based Janani created a product that could help in child conception. 

The 9Unicorns team believes that startups in smaller towns are trying to solve pain points specific to India rather than being clones of American or Chinese companies. “Unit economics and business models are much better and at least 10 percent Indian startups are targeting global markets,” he says.

Read the full story here.

Karekeba Ventures

Established in October 2020, Karekeba Ventures (Kare-ke-ba: ‘We must do it’ in Bhojpuri) was founded by Anubha Prasad, Divyanshu Verma, Kshitiz Anand, Avantika Sahay, and Kushagra Aniket to nurture, incubate, seed-fund, and accelerate early-stage startups in ‘Bharat’.

The Patna-based venture focusses on grass-root level startups that have scalable product and service ideas to create investment-ready and employment-generating enterprises.

It works as an enabler across three verticals — incubation, acceleration, and investment — to empower homegrown enterprises in smaller towns, and also applies the lens of impact while curating them.

“We are trying to solve the twin problems of lack of entrepreneurial ecosystem, handholding mechanism, and investment platforms in ‘Bharat’ for startups, and lack of impact investment opportunities on the part of the investors,” says 52-year-old Anubha, who moved from Delhi to give back to her home state.

The founders claim that Karekeba is a first-of-its-kind incubator-cum-angel investment platform in Bihar.

Karekeba is also working on devising a collaboration model with the Bihar government to take the startup ecosystem in the state to the next level and has a knowledge partnership with E-Cell, IIT Patna, and several other institutions. 

It has so far backed 30-35 startups, which includes Hanuman, Repair my mobile, Cymatic, Doot Cabs, Lyfd, StylePure, Robo Bionics, and E-Panipuri Kartz, to name a few.

Karekeba is looking to add more startups from Bharat in its cohort and is engaging with the premium institutes of Bihar, Jharkhand, and Uttar Pradesh to get high potential and innovative startups to build its pipeline.

Read the full story here.

Manush Labs

Manush Labs focusses on social impact startups and wants to foster an inclusive entrepreneurial ecosystem by empowering India’s innovators and entrepreneurs from Tier II cities and beyond. It aims to build sustainable businesses and scalable solutions through access to funding, mentoring, and network building within the innovation ecosystem. 

Founded by Piyush Verma, a Tata Fellow and graduate from Massachusetts Institute of Technology (MIT), USA, Manush Labs is on a mission to bridge the gap between international entrepreneurs and investor community and Indian entrepreneurs. It aims to do this by exposing innovators and entrepreneurs from across the country to global experts through a series of programmes and services designed to foster an inclusive entrepreneurship culture pan-India.

Piyush Verma, Founder of Manush Labs

Driving forward this momentum is a team of Harvard University and MIT alumni, social entrepreneurs, and volunteers, who work remotely from the US and India. They are supported by several national and international programmes, including MIT Sandbox and Harvard I Labs, and powered by the MIT Innovation Initiative, MIT Venture Mentoring Service, Social Alpha, and The Nudge Foundation, among others.

For its first programme, Sustainability Accelerator 2020, Manush Labs onboarded more than 60 mentors from 11 countries from organisations like Google, Facebook, MIT, Harvard, and more, while partnering with leading organisations such as Gates Foundation, Social Alpha, Kaplan Foundation, and Acumen, among others.

Earlier this year, Piyush and his team concluded Manush Labs’ first accelerator programme for 25 startups from across India, which included entrepreneurs from more than 30 towns and cities across the country. They were mentored on how to raise funds, get market access, practice user research, and strengthen their go-to-market strategies.

Its first cohort includes startups like Bariflo Labs that provides AI-IoT-driven smart tech solutions for aquafarmers; Kisan India, India’s first online agriculture marketplace; and SAAF Energy, a next-gen decentralised cleantech company. 

While speaking to YourStory earlier, 29-year-old Piyush said that in the coming years, Manush’s goal is to create a vibrant and inclusive community of entrepreneurs in India. 

“We are on a mission to support individuals who are trying to combat humanity's most pressing challenges and create sustainable social impact,” he added.

Read the full story here

Maytree School of Entrepreneurship

Maytree School of Entrepreneurship was started by 18-year-old Rohit Kashyap in 2020. The mentorship programme, which focusses on helping founders at grassroots level, is already profitable and has mentored several aspiring entrepreneurs and ventures in rural and semi-urban areas.

According to Rohit, 92 percent of SMB owners agree mentors have a direct impact on the growth and survival of their ventures. However, 90 percent of startups shutdown within five years of their launch due to a lack of mentorship and planning.

“This is the problem we are trying to solve by providing quality mentorship from founders and top executives in the ecosystem,” says Rohit.

Maytree is actively working with Startup India and other government departments to help its mentees. Rohit says Patna was a natural choice as he was based there as an entrepreneur for five years and is aware of the problems faced by startups in Tier II and III towns.

Since its inception, Maytree has mentored more than 1800 first time entrepreneurs, 73 startups including 13 funded startups. Some of its mentee startups are MagTapp, AryaGoCab, and Bhavesh Pharmaceutical, , Ballotnow, Flyseas to naGymtainnersme a few. Maytree is also planning to collaborate with the government to teach entrepreneurship at the panchayat level.

Read the full story here.


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Edited by Megha Reddy