Most of the start up action in India is in Pune, Banaglore, Delhi and Mumbai. This is where the incubators , accelerators and the angel investor networks are, which is why this is where all the ambitious founders go.
However, I believe that entrepreneurs in tier-two cities actually have an edge as compared to startups in Bangalore or Mumbai.
Now, this may seem counter-intuitive, because they are not as polished or sophisticated as the founders in Mumbai . They have less support, because the startup ecosystem in smaller towns is still immature.
However, this is the reason why there is a much better chance for a patient angel investor to find the big winners in these towns. There are many hidden gems here, far away from the media glare.
The founders in these smaller towns have a far better chance of being able to create products successfully for the Indian consumer because they experience the same pain points she does in their daily lives. The beauty is that with the right help, they can go a long way !
Given the fact that internet access has improved dramatically; the competitive disadvantage which they had as compared to the startups in the Big 4 cities has become much less.
These founders should be playing to their strengths , and they have a lot of them - only they are not very obvious ! They think in local Indian languages, and they should be exploiting this edge, rather than trying to polish their English. Their cost of doing business is much less, which means they are frugal and can fail far more cheaply. Finally, their employees are far more faithful, because there are very few local competitors who can poach them !
Zoho has proven that it's possible to create world-class products such as Zoho Desk in a small Indian village. I am sure other companies will copy this trend.
These towns are the cities of the future, because they are far more livable than the Big 4. I predict that we are going to see lots of success stories from these places, as incubators and accelerators start seeding the entrepreneurial ecosystem in these towns.