Challenges Faced by Startups in Tier 2, 3 and Beyond: 5 Key Factors to Consider for Success

Startups from Tier 2, 3, and beyond are facing several challenges despite capturing the market for consumer activities in the digital space. The lack of access to the right talent and weak communication skills are the two significant challenges. Although access to talent has improved to some extent, cities like Bengaluru, Mumbai, Pune, Chennai, and Hyderabad still have a concentration of unicorns due to the migration of students for better education. The lack of an ecosystem also hampers the growth of budding entrepreneurs who miss out on events and meetings with investors and mentors held on weekends in larger cities. Additionally, founders from Tier 2 and beyond often face communication skill gaps, which can be addressed through frequent mock sessions and interactions. The lack of access to funds is another critical challenge as most investors operate out of urban cities. The high logistical cost, power shortages, and the absence of warehousing facilities add further obstacles. Overcoming these initial challenges is essential for businesses to thrive and attract institutional investors later on. Startups based out of Tier 2, 3, and beyond have a competitive edge, but they require ready access to growth capital and a favorable ecosystem for even growth.