The Missing Middle in Startup India: Why Youth Without Access Remain Invisible
- Jayaraman Pillai
- Jul 13
- 4 min read
Updated: Jul 19
India’s startup ecosystem is often hailed as one of the most vibrant in the world over 110 unicorns, lakhs of registered startups, and a wave of innovation that has touched almost every sector. But beneath the surface lies a structural gap that few talk about: the Missing Middle.
Between the metro-based founders receiving venture capital and the policy-focused incubation beneficiaries lies a vast, underserved population of youth innovators without access to funding, mentorship, or institutional support.
They are not part of elite networks, nor are they registered under government-recognized incubators. Most of them are building quietly in small towns, rural clusters, tier-2 colleges, ITIs, and polytechnic institutes. And yet, they remain invisible to the system designed to support innovation.
This blog is a wake-up call to address this blind spot and a policy blueprint to fix it.
The Startup India Dream And Who’s Left Out
Since its launch in 2016, Startup India has created a formal structure to support entrepreneurs across the country:
Registration portals
Incubator networks
Tax incentives
Startup India Seed Fund (SISFS)
Access to state-level Startup Cells
But in reality, the benefits of these initiatives remain highly concentrated. According to official data:
Over 70% of recognized startups are from just 5 states
Incubator access is limited to elite institutions and metro cities
Vast swathes of youth especially from rural or non-English-speaking backgrounds don’t even know these schemes exist
This means that the average young innovator in a taluk-level college or a rural ITI is structurally excluded from the startup ecosystem, not by intent but by design.
Who Are the “Missing Middle”?
The Missing Middle refers to those who:
Have viable startup ideas or working prototypes
Lack formal registration, incubation, or institutional endorsement
Are outside VC radar and don’t qualify for most government funding
Are from underserved regions, marginalized backgrounds, or non-metro colleges
Have entrepreneurial intent, but no network, pitch decks, or access to accelerators
They are the youth in Davangere, Barmer, Bhagalpur, or Kokrajhar developing agricultural solutions, low-cost EV systems, digital skilling tools, or rural fintech platforms with no access to capital, guidance, or validation.
They are not underperformers. They are under-recognized.
The Structural Flaws That Keep Them Out
Over-reliance on Incubators
Most schemes from SISFS to state grants require startups to be incubated. But over 90% of Indian unicorns in the last decade were not incubated. This shows that innovation can happen without incubation and sometimes, despite it.
Formalization First, Funding Later
Schemes often require startups to be formally registered, have a website, a business model, and even revenue projections—before they get any seed support. For a college student or rural innovator, this is an impossible ask.
English-First, Tech-Heavy Bias
Government portals, pitch events, and forms are largely English-centric and assume a certain urban, tech-oriented, pitch-savvy audience. This automatically excludes lakhs of capable youth from semi-urban or regional-language contexts.
Lack of Local Mentorship & Evaluation Mechanisms
There are no evaluation frameworks tailored for grassroots, early-stage, or frugal innovation. As a result, youth ideas are either ignored or prematurely judged by elite standards.
What This Gap Costs India
This is not just an inclusion issue. It’s an economic loss. Ignoring the Missing Middle means:
Thousands of viable startups never see the light of day
Youth lose faith in public support structures
India’s innovation map remains urban and unequal
Global leadership in inclusive, affordable, rural-first innovation is weakened
We are not failing due to lack of ideas. We are failing due to lack of visibility, validation, and velocity for the youth without access.
How VBA is Bridging the Gap
The Viksit Bharat Aatmanirbhar (VBA) campaign was designed precisely to fix this structural gap.
It introduces a radically inclusive model that reimagines how we identify, evaluate, and support startups especially from underserved geographies.
Direct-to-Youth Grant Model
No incubator gatekeeping. No elite filters. Young founders can apply directly, submit ideas in any language, and be considered for state-level funding through the campaign.
aiVBA Evaluation Engine
A first-of-its-kind indigenous AI tool that scores startups across 15 core parameters technology, viability, impact, risk without bias. This makes it possible to evaluate thousands of grassroots ideas quickly and fairly.
Top 100 Startups Per State
Every state will shortlist 100 youth-led startups through a standardized, AI-augmented, human-reviewed process. This ensures equity across districts, not just top cities.
Public Social Responsibility (PSR) Funds
Instead of waiting for only government money, VBA enables funding from students, NRIs, companies, and citizens creating decentralized, participatory capital pools to fund local youth ideas.
A Policy Blueprint for Inclusion
To truly address the Missing Middle, we propose the following 5-point policy agenda:
1. Launch a National “Direct-to-Youth Grant” Scheme
Create a centrally sponsored scheme that gives micro-grants of ₹1–5 lakh to young entrepreneurs without requiring formal incubation or DPIIT status.
2. Adopt AI-Based Evaluation Platforms Like aiVBA
Integrate transparent, auditable, AI-driven tools to fairly evaluate early-stage ideas from diverse geographies and domains.
3.Recognise Informal Startups
Accept informal or early-stage prototypes as legitimate applicants for public support. Validation should precede formalization not the other way around.
4.Empower Local Institutions to Nominate Youth
Allow taluk-level colleges, ITIs, NSS units, or PSR Campus Hubs to nominate youth for startup grants expanding the pipeline beyond incubators.
5.Set State-Level Inclusion Mandates
Ensure that at least 50% of any state’s public startup grants go to youth from tier-2/3 cities, regional colleges, and underrepresented communities.
Conclusion: India Must Find Its Invisible Builders
We celebrate unicorns, but forget the unseen stallions the youth building quietly, courageously, and alone. The VBA campaign is not just a campaign. It is a corrective lens that shows us the full picture of India’s entrepreneurial potential.
It reminds us that:
Innovation is not exclusive
Access is not optional
And the future will not wait
If India is to become truly Aatmanirbhar by 2047, we must stop designing systems for the few, and start building platforms for the many.
Because until the Missing Middle becomes the Visible Vanguard, the Startup India dream will remain incomplete.
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