Beyond the metros: Why small-town incubators are struggling

Ananya Sharma (name changed), a first-time founder in Raipur, spends her days juggling between her AI-powered agritech startup and pleading for support from her state-run incubator. “I have a product, customers, even revenue—but no investor wants to come here,” she says. “The incubator gets government funds, but where does it go? We get no mentors, no market access, nothing.”

Ananya’s struggle isn’t unique. Across India, thousands of startups in smaller cities are hitting the same wall: a broken incubator ecosystem where funding, mentorship, and industry linkages flow only to a privileged few in metros.

Talking to Business Today, Suresh Narasimha from CoCreate Ventures, which incubate category-creating startups, its microfunds operate in partnership with universities like PESU, SVyasa & industry forums like REAL; says that India boasts the world’s largest public incubator network—over 1,200 government-funded hubs and 10,000 Industry Innovation Councils in colleges, could be churning out 3 lakh ideas annually. Yet, most are struggling or outright failing.

The reason? A cocktail of mismanagement and private sector apathy.

Narasimha highlights that while the Centre has pumped Rs 10,000 crore into incubators via funds like Startup India, the money is lopsidedly distributed. Top-tier hubs like IITs and IIMs attract corporate partnerships, while cities deeper in the country like Raipur, Koppal, or Dharwad languish.

“Private players only want to associate with big brands like IIMs,” he says and working along with Startup Mahakumbh 2025, a national initiative, they are trying to somehow fix the system. 

For every success, hundreds of founders like Ananya fight a system stacked against them.

Through Startup Mahakumbh, Narasimha says they are attempting to bridge this gap and plans to fix incubator quality by training managers in smaller hubs to attract grants, build mentor networks, and align with industries, pushing corporates to adopt tier-2/3 incubators instead of dumping money into elite institutes, and connecting investors with startups from smaller towns.

“If we bring incubators to a minimum viable standard, India could unlock 10x more startups,” he adds.

For India to become a true global startup powerhouse, it might need a robust and well-funded incubator ecosystem that nurtures high-potential ventures across the country and not just the big cities.