Government Perspective: Scale and Relative Success
Union Commerce and Industry Minister Piyush Goyal on December 14, 2022, told the Lok Sabha that startups are inherently prone to failure, but added that the success rate of startups in India is “relatively higher than the rest of the world”. At the end of November (2022), India had 84,012 recognized startups, he said.
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Marking 10 years of Startup India on January 16, Goyal said the ecosystem has achieved a major milestone, with over 2 lakh startups recognized by DPIIT in the country and over 50 new startups recognized every day. These startups have generated over 21 lakh jobs, and India is now the third largest startup ecosystem in the world, backed by a cumulative funding of ₹15 lakh crore. He attributed the growth to policy reforms aimed at reducing bureaucratic hurdles and encouraging innovation and scale.
Debate about failure and reality check
Despite this scale, concerns about failure rates persist. A 2017 IBM-sponsored study found that nearly 90% of Indian startups fail within the first five years. Experts noted that while some startups had little chance of survival, many failed due to one-off circumstances or poor risk management, despite viable models and good technology.
This contrast between overall growth and high failure rates continues to shape the debate over the true maturity of the ecosystem.
Financing Trends: Capital Becomes Prudent
According to data shared by Tracxn, Indian startups raised $11.2 billion in funding in 2025, down 11.1% from $12.6 billion in 2024. This moderation reflects global macroeconomic uncertainty, tight liquidity and increased investor focus on capital efficiency and profitability. Large-scale funding rounds have become more selective, with capital increasingly flowing into sectors with better long-term visibility.
However, some segments recorded strong growth. Aerospace, maritime and defense technologies saw their funding increase by 80% in 2025 compared to the previous year, followed by real estate and construction technologies at 76.8% and environmental technologies at 53.5%. Tracxn attributed this to increased public spending, strategic importance, sustainability goals and regulatory efforts towards decarbonization.
Neha Singh, co-founder of Tracxn, said: “Capital is increasingly flowing into sectors benefiting from clearer political tailwinds, longer investment horizons and enterprise or infrastructure-led demand, while consumption-heavy and platform-driven sectors are experiencing a reset.
Primer towards Series A: a narrow funnel
The Tracxn data also highlights the significant filtering that occurs as startups scale. Of the 8,996 companies that raised seed funding, only 2,483 progressed to Series A or Series B rounds, which translates to a progression rate of approximately 27.6%. Key factors influencing progression include product-market fit, early revenue traction, and the ability to demonstrate scalable unit economics, as investors become more disciplined in follow-on financing decisions.
Tech startups and global reputation
In terms of global positioning, India ranked third in total startup funding in 2025, behind the US and the UK, and ahead of China, Germany and France. Experts say this reflects resilience rather than hyper-growth. As consumer internet and e-commerce players continue to selectively raise capital, funding momentum is increasingly visible across companies in enterprise technology, financial technology, climate-related sectors, logistics and infrastructure.
This trend also fuels last year’s debate sparked by Piyush Goyal’s comments about the need to create more startups focused on deep technology and innovation, rather than an over-reliance on mainstream platforms.
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The founders’ point of view: profitability and Bharat orientation
CarDekho Group co-founder and CEO Amit Jain said the ecosystem has evolved towards first-principles thinking, with startups increasingly balancing profitability and sustainable growth. He noted strong momentum in the areas of mobility, emerging technologies, AI, deeptech, SaaS and fintech, and highlighted that India is now home to around 30,000 technology startups.
Jain also highlighted that entrepreneurship is growing beyond metropolises, with a significant share of startups emerging from tier 2 and 3 cities, supported by incubation centers, accelerators and greater visibility through platforms such as Shark Tank.
Investor Perspective: Diversification and Discipline
Archana Jahagirdar, founder and managing partner of Rukam Capital, said startup growth in India is now much more diverse than a decade ago, when capital was largely concentrated in consumer internet and fintech. As these sectors continue to grow, SaaS, enterprise technology, health technology and climate technology are emerging as structurally strong growth areas.
She also highlighted changing consumption patterns in non-metropolitan India, where discovery is increasingly video and search driven, pushing startups to focus on affordability, vernacular adoption and offline distribution. Jahagirdar said the ecosystem is clearly moving away from “growth at all costs” towards capital-efficient, issue-led businesses with clearer paths to profitability.
In the words of Manas Pal, co-founder of PedalStart, “The ecosystem is no longer a matter of experiments. It’s about building serious businesses, capable of surviving cycles and creating real economic value. »
Deeptech and long-term bets
Manish Gupta, general partner at GrowX Ventures, said that while tech startups continue to grow faster than traditional sectors, capital is now looking for technological depth, defensibility and long-term relevance rather than scale alone. He highlighted growing interest in AI infrastructure, deep technology, space technology and advanced manufacturing, although these sectors take longer to develop.
NSRCEL CEO Anand Sri Ganesh echoed this view, noting increased interest in technology-integrated business models in robotics, drone technology, biotechnology and life sciences. He said founder mindsets are maturing, with an increased focus on governance, unit economics and sustainable scale, while investors are becoming more cautious and deliberate in their engagement.
A decade later
Ten years after the launch of Startup India, the ecosystem finds itself at a crossroads. While the big numbers speak to scale and global relevance, funding data and expert insights suggest a phase of recalibration – one where growth is slower, more selective, and increasingly aligned with long-term resilience rather than rapid expansion alone.
