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India’s startup ecosystem is witnessing a quiet but powerful shift as entrepreneurs increasingly replicate DMart’s hyperlocal retail model in Tier-II and Tier-III cities. With investors now eyeing small-town ventures as the next big frontier, startups like Frendy, SuperK, Apna Mart, and Kirana King are reimagining the shopping experience for rural and semi-urban consumers—bringing tech-enabled convenience, affordability, and scale to places long overlooked by mainstream retail.
Key highlights from the emerging trend
1. DMart-inspired retail strategy
- Startups are adopting DMart’s low-cost, high-efficiency model by focusing on spacious stores, value pricing, and local sourcing
- Frendy, founded in 2019, operates 25 mini marts across small towns in Gujarat and plans to expand to 20,000 villages nationwide
- These ventures prioritize essential goods, bulk buying, and minimal frills—mirroring DMart’s formula for profitability and customer loyalty
2. Investor interest surges in small-town startups
- In 2023, 90 percent of new startups emerged from Tier-II and Tier-III cities, receiving 22 percent of total venture funding
- Over 44 percent of investors have made bets on small-town ventures, drawn by untapped markets, cost efficiency, and local talent pools
- Tech-based startups in these regions attracted 64 percent of VC investments, with a strong tilt toward retail, agri-tech, and micro-finance models
3. Technology as a game-changer
- Improved internet connectivity and mobile penetration have enabled startups to build digital-first retail platforms even in remote areas
- Frendy and similar players use mobile apps to manage inventory, customer engagement, and loyalty programs
- Social media and business reality shows like Shark Tank have helped normalize entrepreneurship in smaller towns, inspiring a new generation of founders
4. Local roots, national dreams
- Startups like DeHaat (Patna), Kovai.co (Coimbatore), and CarDekho (Jaipur) have proven that scalable businesses can thrive outside metro hubs
- These ventures leverage deep local insights to craft solutions tailored to regional needs—whether in agriculture, healthcare, or retail
- The hometown advantage also appeals to investors who understand the cultural and economic nuances of these geographies
5. Government support and policy tailwinds
- Initiatives like Startup India, iStart Rajasthan, Startup Odisha, and One District One Product (ODOP) are fueling rural innovation
- State governments offer incubation, funding, and market access to help small-town startups scale
- Over 66 percent of investors now connect with founders via government networking platforms, bridging the gap between capital and grassroots ideas
6. Challenges and the road ahead
- Despite growing momentum, small-town startups face hurdles in infrastructure, talent acquisition, and Series A funding access
- Only 2 percent of these ventures secured Series A rounds, highlighting the need for patient capital and ecosystem support
- Yet, with rising success stories and investor confidence, these barriers are gradually being dismantled
What this means for India’s retail future
The replication of DMart’s playbook in small-town India is more than a business strategy—it’s a socio-economic shift. These startups are not just selling groceries; they’re creating jobs, reducing urban migration, and building resilient local economies. As they scale, they’re redefining what retail looks like in Bharat—tech-savvy, community-rooted, and investor-backed.
Sources: LiveMint, YourStory, Inc42, CEOs of Bharat, TICE News, Financial Express, Primus Partners Report, Startup Mahakumbh 2025 coverage
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