India’s startup ecosystem has achieved remarkable scale over the past decade. Today, it houses more than 100,000 active startups and ranks third globally in terms of startup population, behind only the United States and China. However, this ecosystem remains uneven in its growth. A stark geographical divide continues to limit startups in Tier II and III cities. While Bengaluru, Delhi-NCR, and Mumbai dominate the innovation landscape, smaller cities often struggle to access capital, mentorship, and infrastructure. Swishin Ventures has now stepped into this gap with a decisive strategy.
On June 9, 2025, Swishin Ventures received SEBI’s regulatory approval to launch a $20 million venture capital fund, with an additional $5 million greenshoe option, dedicated exclusively to early-stage startups from Tier II and III cities in India. This bold move reflects both confidence in untapped regional innovation and a vision to democratize access to venture capital across the country.
Why This Move Matters
Swishin Ventures chose to address a critical funding gap. According to recent data from Startup India and Nasscom, over 51% of new startups now originate from non-metro cities, including Bhopal, Bhubaneswar, Kochi, Indore, and Surat. However, these startups attract less than 4% of total VC investments annually. Most investors continue to gravitate toward metro hubs, leaving high-potential founders outside these cities underfunded.
Rather than follow that trend, Swishin Ventures has designed its new fund to shift the narrative. The firm aims to back 40 to 50 startups in their earliest stages—pre-seed and seed rounds—providing them with both capital and hands-on mentorship. It will invest ticket sizes ranging from $100,000 to $500,000 per startup. The fund also includes a capacity-building layer, offering startups access to expert networks, strategic partners, accelerator programs, and global markets.
Fund Strategy and Vision
Swishin Ventures has created a three-pronged investment thesis for the fund:
- Regional Innovation Focus
Swishin Ventures will scout and fund startups specifically from Tier II and III regions. The firm plans to partner with local incubators, universities, and innovation hubs to identify promising ventures. It has already established preliminary partnerships with institutions in Jaipur, Nagpur, Kochi, and Raipur. - Problem-Solving Startups Over Vanity Metrics
Instead of chasing user numbers or market buzz, the fund will prioritize startups solving real, context-specific problems—be it in agritech, fintech, healthtech, vernacular SaaS, or rural edtech. Swishin believes that solutions emerging from smaller cities often reflect deeper market insight and ground-level need. - Operator-First Support Model
The fund’s partners include former founders and operators with deep execution experience. Their model involves a co-building approach—from refining business models to recruiting talent and structuring governance. Swishin intends to stay engaged beyond capital, creating a success engine for founders unfamiliar with the venture game.
Backing India’s Next 1,000 Founders
The announcement marks a significant shift in how venture capitalists view India’s innovation geography. Swishin’s Managing Partner, Radhika Menon, stated during the launch:
“We want to find the next thousand founders from India’s heartlands—people building for their own communities, not just for global VC portfolios. This fund gives them a real shot at scaling.”
Swishin Ventures doesn’t see Tier II/III startups as underdogs. Instead, they describe them as “underestimated”. Radhika added:
“Innovation in India is not limited to ring roads of metro cities. Whether it’s a farmer in Nashik using AI to predict crop yield or a healthcare worker in Ranchi building a rural diagnostic network, these stories deserve backing.”
This framing reflects a deeper cultural insight: smaller-city founders often possess a frugal, resilience-driven mindset. They build with fewer resources, validate business models early, and remain focused on unit economics—attributes that traditional startups sometimes overlook.
Ground Realities: Why Capital Alone Isn’t Enough
Despite the growing presence of startups in smaller towns, the ecosystem lacks enabling infrastructure. Local entrepreneurs often struggle to access:
- Quality legal and financial advisory services
- Accelerators or mentors with startup scaling experience
- Networking platforms for industry connects or global exposure
Swishin Ventures plans to deploy part of its fund toward creating startup readiness programs. These programs will operate as on-ground bootcamps, short-format accelerators, and virtual demo days. Swishin will partner with state governments, industry bodies like FICCI, and global institutions to amplify their efforts.
In the long run, the firm aims to catalyze localized startup hubs in cities like Lucknow, Coimbatore, and Guwahati, complete with co-working spaces, local angel syndicates, and advisory networks.
Response from the Ecosystem
Swishin’s announcement has earned praise from multiple stakeholders. Sanjeev Bikhchandani, founder of Info Edge, said:
“India’s real entrepreneurial depth lies in its non-metros. We need more such targeted funds that actively enable founders from beyond the usual suspects.”
Early-stage founder Kavita Mishra from Raipur, building an AI-based credit scoring platform for rural banks, noted:
“Most VCs never look our way. We pitch, and they ask why we’re not based in Bangalore. Swishin’s approach is refreshing. They actually came to our college and mentored us before we raised a rupee.”
The Greenshoe Strategy and Beyond
With a greenshoe option of $5 million, Swishin is keeping room for expansion. If early traction proves successful, they plan to extend the fund to $25 million and onboard global LPs, including impact investors and development finance institutions (DFIs).
Swishin’s long-term roadmap includes launching a follow-on fund in 2027 that would write Series A checks to graduates from this early-stage fund. This continuity ensures that successful startups don’t face a “funding cliff” after initial seed rounds.
A New Playbook for Indian VC
Swishin Ventures isn’t just launching another fund; it’s trying to redefine the Indian VC playbook. By decentralizing capital, focusing on context-driven innovation, and investing in people—not just products—they aim to build a more inclusive and resilient startup economy.
If successful, this model could inspire other firms to replicate or co-invest, eventually shifting India’s innovation map from metro-centric to nationwide. In a country where aspiration runs deeper than infrastructure, efforts like this don’t just back startups—they build ecosystems.