Stride For Inclusive Development: VCs To Focus On Startups In Smaller CitiesThe Indian Prime Minister, Narendra Modi. 

With an aim to tap talent in smaller cities venture capitalists are now planning to fund startups outside metropolises, Mint has reported. The strategy of VCs is based on the fact that untapped talent in smaller cities like Jaipur and Kochi might be better aware of local needs and preferences while running their business.

One example is ShareChat which provides content and social networking app that offers interaction in local languages. The app was developed by entrepreneurs who were brought up in smaller towns. Currently, India has 300-350 million internet users. The number is expected to go up to 500 million by 2021. The diversity of new users can’t be catered to by urban-bred entrepreneurs alone according to some entrepreneurs.

“The number of reachable consumers has gone up by another 300 million and now suddenly you need to create products and services for these consumers. You can’t expect urban-bred entrepreneurs to cater to this market,” Rehan Yar Khan, founder of VC firm, Orios Venture told Mint.

Orios has launched an initiative called ‘Finding Misfits’ to help entrepreneurs based in smaller cities. It chose 20 out of 400 applications that it received under the program. However, some other VCs have their reservations about startups from smaller cities because of the lack of a mature ecosystem for their success.

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