India's Startup Ecosystem

I have been building companies in India, from Odisha, specifically, for long enough to have watched this ecosystem transform within a single career. When I started, the concept of Indian founders building products for global markets was a fringe idea. The mainstream assumption was that Indian engineers built things for Western companies, not for themselves.

That assumption is now wrong. The question worth asking is not whether India has a startup ecosystem, it does, and a substantial one, but what kind, built on what foundations, and whether the third wave currently forming is the one that produces globally defining companies or just globally competitive ones.

By headline measures, the ecosystem is a success. 128 unicorns with a combined valuation of over $391 billion. The third-largest number of registered startups globally after the US and China, with over 1.25 lakh DPIIT-recognised startups and 45% originating from Tier 2 and Tier 3 cities. Significant venture capital from both domestic and international funds. The headline is accurate. The more interesting question is what's underneath it.

What built the ecosystem

The Indian startup ecosystem was built in roughly three phases, each of which established conditions that the next phase required.

The first phase (roughly 2006–2015) was the outsourcing-to-product transition. Engineers who had built careers in IT services companies began starting product companies, often initially targeting global markets because the Indian consumer market was too price-sensitive for the products they wanted to build. The technical capability came from IT services; the entrepreneurial instinct came from the recognition that services was a ceiling, not a ladder.

The second phase (2015–2022) was the consumer internet explosion. Smartphone penetration and mobile data costs collapsed simultaneously with the arrival of global capital looking for the next China. Companies grew fast, valuations reached levels that attracted more capital, and the cycle accelerated until it didn't. The correction of 2022–2023 was not a collapse of the ecosystem, it was a recalibration of valuation expectations and a shift of attention from growth-at-all-costs to unit economics discipline.

The third phase (2023 onward) is what's being built now: a more mature ecosystem with more experienced founders, more disciplined investors, a stronger base of SaaS companies with real international revenue, and a new wave of deep tech and AI companies built by people who have seen a full startup cycle from inside a previous company.

The funding stack

India's funding environment has matured substantially. Angel networks like the Indian Angel Network and LetsVenture provide early-stage capital that was absent a decade ago. The domestic VC community, Peak XV (formerly Sequoia India), Accel, Matrix, Blume, Kalaari, and others, has grown in both fund size and investment sophistication. International funds including Tiger Global, SoftBank, and latterly a16z and General Catalyst have written India-specific checks.

The gap that remains is in the growth stage between Series B and pre-IPO. Indian companies that reach $20–50M ARR often find that the capital required to scale to the next level requires either US-based investors who can lead at those valuations, or an IPO that brings them into public market territory earlier than comparable companies in the US would go public. The public market option has become more viable as India's capital markets have deepened and as SEBI has improved the IPO framework for technology companies. Zomato, Nykaa, Delhivery, and others have demonstrated that technology companies can list in India at meaningful valuations.

The founder profile shift

The most significant structural change in Indian entrepreneurship over the last decade is the change in who is founding companies.

The first wave was primarily IT services alumni who were technically strong but had limited experience with product, sales, or marketing. Companies from this wave often struggled with go-to-market even when the product was solid.

The current wave includes a significant number of people who worked at first-generation Indian startups, saw what high growth looked like from the inside, understood the failure modes, and are starting their own companies with that experience already built in. Former Flipkart, Ola, Zomato, and BYJU'S employees are founding companies at rates that are meaningful for the ecosystem. These founders know how to hire, how to manage growth, and what not to do, which is as valuable as knowing what to do.

There is also a growing stream of Indian-origin founders who built careers in the US and are returning to build in India, attracted by market size and cost structure. This diaspora return creates a specific profile: deep technical or commercial expertise developed in top-tier US companies, combined with Indian market and cultural knowledge that purely US-trained founders lack.

I see this founder profile shift directly in executive search. When I started placing technology leaders across Indian companies, clients were asking for functional experience, someone who had done the job, at scale, somewhere else. They still ask that. But the best clients now add a different question: can this person build a team that learns faster than the environment changes? The shift is subtle but significant. The teams being built at the current frontier are not staffing toward a static model, they are trying to hire people who can revise the model as it fails. That is a different kind of talent judgment, and the search market has changed to reflect it.

What the ecosystem builds well and not yet

Indian startups execute well on: engineering-intensive product development, B2B SaaS with global distribution, fintech infrastructure, and consumer internet applications for the Indian mass market.

The domains where the ecosystem is still developing: enterprise sales in Western markets (the relationship-based selling that enterprise B2B requires in the US and Europe is a learnable skill but requires time and presence in those markets), deep hardware and physical product companies (which require a different capital structure and supply chain than software), and consumer brands that export to global markets.

The B2C-to-global model has been harder for Indian startups than the B2B-to-global model. Indian consumer internet companies have largely served the Indian market, which is large but price-sensitive. The companies that have broken out to serve global consumers (not many) have usually done so by identifying a specific niche where the Indian origin provides an advantage or is irrelevant.

The ecosystem cities

Bangalore is the undisputed capital. The density of founders, engineers, investors, and accelerators in Bangalore makes it the default starting location for Indian startups with global ambitions. The clustering effect is real and self-reinforcing.

Hyderabad is the second-tier startup hub, with a meaningful unicorn cohort and a government that has invested in tech infrastructure more consistently than most Indian states. Delhi NCR has significant consumer internet company density and is strong in edtech, healthtech, and D2C brands. Mumbai is strong in fintech and media, with proximity to financial services creating natural advantages in those categories. Pune has a growing startup scene, particularly for B2B and manufacturing technology.

The honest assessment

India has an ecosystem that is real, substantive, and producing companies that compete globally. The question that remains open is whether it will produce the next generation of globally significant platform companies, not just competitive SaaS businesses, but companies that define categories the way Amazon, Google, or Alibaba did in their respective markets.

The inputs are in place. The capital is available. The talent is developing. The question is whether the execution, the choices that founders make, the support that the ecosystem provides, the patience that capital shows, will be up to the level that the opportunity requires.

I am one of the people trying to answer that question from inside it. The honest assessment: the next ten years will be more interesting than the last ten. The last ten proved the model. The next ten will determine the ceiling.

The current wave of Indian founders includes a significant number of people who worked at first-generation startups, saw what high growth looked like from inside, understood the failure modes, and are now starting their second companies. That accumulated experience is the ecosystem's most underrated asset.

The last ten years proved the model. The next ten will determine the ceiling.

Manas Majhi grew up in Junagarh, Kalahandi, Odisha. He writes about opportunity, development, and the systems that fail to distribute either equitably. He is the founder of Majhi Group and Majhi OS.

See also: India's Technology Ecosystem, Building for a Billion People, Digital Public Infrastructure

Sources

India's unicorn club: complete list and valuation data, Inc42

45% of Indian startups from Tier 2 and Tier 3 cities: YourStory / KPMG

India added 2nd-highest number of unicorns in 2024: NASSCOM/Entrepreneur