Naveen Tewari, the founder and CEO of InMobi, found out early in the company’s journey that his employees were struggling to find matches in the arranged marriage market.

Before, Tewari had dealt with other, more significant problems.  When he established InMobi in 2007 to transform mobile advertising, the terms startup and founder were virtually nonexistent, not to mention the idea of funding.  Many considered him insane for leaving behind his career as a business analyst in the US to relocate to India and launch his own business.

He was able to navigate the mindset and misgivings, but he found himself puzzled by the marriage market conundrum. “They could not get married,” recalls Tewari. “When they said they worked at a startup, no one wanted to marry them.”

This obstructed the recruitment and retention of quality personnel.  Thus, Tewari took the course of action that those with good intentions resort to when they are uncertain about what to do.  He convened a press conference—InMobi’s inaugural one.  While the aim was to secure media coverage, the ultimate objective was to establish the company’s credibility and portray its employees as desirable marriage candidates.

Something must have done the trick.  In 2011, InMobi was recognized as India’s first unicorn—a privately owned startup valued at over $1 billion—before the term unicorn became commonly used in India.

Since that time, India’s startup ecosystem has developed significantly.  According to the latest count, the number of officially acknowledged startups in the country is 140,000, which includes over 115 unicorns.  In this day and age, successful founders are hailed for generating value, riches, and the most essential resource for India: employment.  They receive invitations to meet influential individuals, speak at major events, and have a vast social media following.

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With the country’s rapidly growing number of internet users and the astonishingly high uptake of digital payments as their foundation, they now aspire to serve not only India but also the world.  And they easily find life partners.

However, now and then, an event occurs that disturbs the waters.  A scandal (the latest being BluSmart), a high-stakes failure (consider edtech), dismal stock performance of newly listed startups (multiple instances), governance and cultural issues, and more.  However, the most irritating question is whether India’s celebrated startups are merely copycats and lifestyle warriors.  Or, are they leading the way in terms of invention and innovation, not just receiving valuations but also generating value?

At the Startup Mahakumbh in April, Trade Minister Piyush Goyal voiced a sentiment shared by many when he asked: “Are we content just running shops?  Is it our goal to become delivery boys and girls? ”  He encouraged startups to transcend quick commerce and gig work, advocating for a focus on deep innovation—semiconductors, artificial intelligence (AI), and global platforms.  “While hyper-fast logistics and instant food deliveries may appear glamorous, they are not what the future of the nation is being shaped by,” he added.

Startup founders and investors quickly countered Goyal’s comments.  Aadit Palicha, who is the co-founder and CEO of the quick commerce startup Zepto, praised the role of consumer internet startups like his in fostering economic growth and generating employment.  “In the last twenty years, the majority of technology-driven innovation has come from companies in the consumer internet sector.  Who made cloud computing scalable?  Amazon (initially a company focused on consumer internet).  Who are the big players in AI today? Facebook, Google, Alibaba, Tencent etc (all started as consumer internet companies),” Palicha said in a post on X.

What Palicha says has some merit.  The question, however, is whether India’s consumer internet startups will eventually grow into global tech giants.  This should be viewed in light of the nascent nature of India’s startup ecosystem (not long ago, InMobi employees struggled to find partners) compared to that of the US (where technology startups were already aiming high and achieving success as early as the 1960s) and China (which experienced massive government backing and a rise in per capita income).

“India’s startup journey is only about 20 years old.  Kunal Khattar, founder of venture capital fund AdvantEdge and the first investor in Rapido, a fast-growing cab and bike taxi aggregator, states, “What the US achieved over six decades, we are just beginning to build.” That infrastructure had to be built from the ground up by Flipkart. Here, the difficulty is multiplied by 10, as we are frequently tasked with creating not only the product but also the ecosystem essential for its survival.

When Flipkart was founded in a Bengaluru apartment in 2007, its founders frequently had to clarify the meaning of ecommerce.  The infrastructure was inconsistent, funding was limited, and few founders aimed to pursue ventures beyond India.

When Harshil Mathur and Shashank Kumar from Razorpay started fundraising in 2014, Kumar’s grandfather questioned, “Why are people giving you money?” ”  Mathur’s father asked himself, “When is it due back?”  With their backgrounds in banking, they perceived venture capital as a loan rather than equity.

Tewari from InMobi states: “In my opinion, entrepreneurship involves exploring the unknown aspects of the world.  That was our initial wager, and I believe it turned out successfully.

India is distinguished not only by the size of its market but also by the uniqueness of its challenges.  As an example, Rapido was established in 2015 with the straightforward aim of making daily commuting affordable and accessible for everyone, particularly in smaller cities where ride-sharing options were both costly and scarce.

Pavan Guntupalli, co-founder of Rapido, explains, “Our mission was to unlock large-scale employment by enabling anyone with a bike and the time to earn a livelihood.”

Likewise, when PhonePe launched in 2015, the realm of digital payments was not yet known.  In an email to Forbes India, a PhonePe spokesperson stated, “The startup ecosystem was abuzz with early ecommerce pioneers and wallet experiments, but we were essentially asking a billion people to fundamentally rethink their relationship with money.”

Despite the influx of budget-friendly smartphones and inexpensive high-speed internet, the human factor—reliance on cash—continued to pose a challenge.  The United Payments Interface (UPI) was introduced in 2016, marking a significant breakthrough.  It served not only as a payments solution but also as a way to foster trust in an economy that prioritized cash.

“In an instant, the situation changed: we weren’t asking individuals to place their trust in a startup regarding their finances; rather, we were providing them with a novel option for utilizing their current banking relationship.  “The eventual success of PhonePe, which was greatly facilitated by the emergence of the UPI platform, was rooted in its capacity to tackle these trust deficits by providing a straightforward, interoperable, and real-time payment experience that is directly connected to bank accounts,” says the spokesperson.

Companies like Urban Company, Zepto, and Swiggy are flourishing as new-age tech giants by innovatively adapting global models to fit the needs of India, rather than simply replicating them.  They link the informal economy with the formal, offline with online, and underserved individuals with opportunities.

As India becomes adept at addressing issues of both scale and specificity, a new frontier appears—one that requires not only adaptation but also innovation.

Here is where deeptech comes into play: startups creating essential technologies in AI, semiconductors, electric vehicles, and biotech.  Indian startups of a new generation are establishing the foundation for innovations that might compete with the world’s finest.

A farmer with progressive views informed Anoop Srikantaswamy in 2023 that diesel was costly, whereas electricity for farming was free.  This led to the creation of Moonrider, a startup focused on developing electric tractors that are affordable and can be charged quickly.

Exponent Energy is creating a fast-charging energy ecosystem for electric vehicles and provides batteries that can be charged in 15 minutes and endure more than 3,000 cycles.  They are focusing on commercial vehicles in India and facilitating the retrofitting of current internal combustion vehicles.

In contrast to consumer-oriented platforms that grow rapidly and extensively, deeptech ventures are founded on years of research, experimentation, and—frequently—failure.  However, they also have the potential to reshape India’s standing in the global tech landscape.

“Deeptech companies take eight to 12 years to build. They require funds for the long haul.  Mohandas Pai, chairman of Aarin Capital and former CFO and CHRO at Infosys, states, “That money is not available.”  “An AI revolution is underway.  To ensure we dominate this industry and avoid becoming a digital colony for the US, we need to invest significantly.

Srikantaswamy, who is the CEO and founder of Moonrider, and Arun Vinayak, who is a co-founder at Exponent Energy, are in agreement: While the market is prepared and talent is developing, the ecosystem—particularly with regard to capital and policy—needs to advance accordingly.

“The ‘Make in India for the world’ theme requires patient capital, involving six or seven years of R&D without revenue.  “These sectors need a basic level of engineering and technical development before they can scale,” says Srikantaswamy.

Vinayak states that India lags significantly behind China.  “For generations, the Chinese government has been making investments in deeptech and research and development.  “And they placed a priority on vocational training,” he explains.

In India, there is often a negative perception of vocational training.  Factory work is viewed as undesirable, and all aim for white-collar positions.  “We need to change the way we think about this.  We must grow our comfort level regarding work in hardware, material science, and related areas.

A large portion of India’s activities consists of ‘dumb manufacturing’: assembling or producing using another party’s technology.  Vinayak adds, “We don’t design or innovate the core technology ourselves, which is a crucial difference.”

The situation is changing. Indian startups have moved beyond merely following trends.  As reported by Venture Intelligence, India’s deeptech ecosystem garnered $324 million through 35 deals in the first four months of 2025.  This is over twice the figure from the same period last year.  Vecmocon Technologies, which provides electric mobility solutions in the deeptech sector, announced on June 9 that it had successfully closed its Series A funding round, raising $18 million.  Ecosystem Integrity Fund spearheaded the round, with involvement from Blume Ventures and Aavishkaar Capital.

While the initial indications of investor interest are promising, the funding necessary to maintain long-term innovation—particularly in sectors that rely on hardware and IP—is still limited.  With the acceleration of India’s deeptech sector, the question arises: Who will finance what’s to come?

Even though India might have joined the deeptech competition later than others, the momentum is gathering.  There is a revived interest from both public and private capital in supporting frontier innovation.

During the Startup Mahakumbh event, trade minister Goyal revealed the establishment of the Second Fund of Funds for Startups, which has a corpus of ₹10,000 crore.  A large part of the fund will be allocated for seed funding and to bolster deeptech innovation.

“This fund is designed to promote the advancement of innovative technologies such as AI, robotics, quantum computing, machine learning, precision manufacturing, and biotech,” he said.  During her Union Budget speech this year, Finance Minister Nirmala Sitharaman announced a ₹20,000 crore investment aimed at promoting research, development, and innovation led by the private sector.

Sanjeev Bikhchandani, who is the founder and executive vice chairman of Info Edge, expresses his approval of these initiatives.  “The positive aspect is that the government’s contribution to each fund is limited to 25–30%, necessitating that the remainder comes from private sources.  He states that this generates a multiplier effect of 4 to 5 times in the mobilization of domestic capital.

According to data from the previous Fund of Funds, the initial amount of ₹10,000 crore has already spurred over ₹89,000 crore in investments in startups.

Pai thinks the Fund of Funds is a good concept, but there’s room for improvement.  “The annual expenditure of India, combining central and state governments, amounts to ₹115 lakh crore.  Setting aside only ₹50,000 crore to ₹60,000 crore for startups and innovation would transform the situation.  With a tax-to-GDP ratio of approximately 18 percent, our yearly tax revenue amounts to almost $750 billion. We have the fiscal space, we just need the political will,” he says.

Kunal Shah, the founder and CEO of fintech unicorn Cred, holds a firm belief regarding private capital: leadership equates to followership.  “In venture capital investing, they seek the trajectory of success, competitive capability, comprehension, insightfulness, and leadership ability.  Thus, VC capital does follow,” he states.  According to Shah, the only reason he could raise capital for Cred was his track record as an experienced entrepreneur with a successful exit.  “For the first two-and-a-half to three years, we did not generate any revenue from the company.  It is only achievable if you have the credentials to assert, ‘Trust me, I’m doing the right thing by prioritizing distribution before monetization.’”

The same principle holds true for deeptech.  “Where can we find the large deeptech founder ecosystem or the traction regarding revenue or scale?  Where can we find the depth of the market cap for our R&D investments?  Shah states, “I believe we are still in the early stages of our deeptech journey.”

Moonrider’s Srikantaswamy concurs: “At the moment, it is mainly an investor’s market, and securing capital is very difficult.  Many want to watch your advancement, but only a handful are ready to put money into it.  He made the decision to first bootstrap his way.  Then, rather than directly contacting institutional investors, we sought out remarkable founders to serve as angel investors—individuals who had built and exited their own companies.  This assisted us in attracting the interest of institutional investors. And then we partnered with sector-focussed funds like AdvantEdge and Axilor”, he says.

In multiple sectors, the government has ‘missions’ that propel advancement.  “The creation of IDEX, InSpace, the Quantum Mission, the AI Mission, etc. marks a decisive and welcome move by the government to involve the private sector,” states Padmaja Ruparel, co-founder of IAN Group.  “A catalytic effect is observable.  Funds have started the process of raising more capital for deeptech.  Family offices and high-net-worth individuals (HNIs) have begun to issue payments, while banks have developed debt solutions tailored for these companies.”

However, this story has additional layers.  A number of new-age technology startups still struggle with a lack of experienced founders, a limited market depth, and slow institutional support.  As the sector starts to grow, a more troubling problem emerges: Governance lapses.

Rahul Taneja, a partner at the major VC firm Lightspeed, states, “That is the kind of failure that is truly unpardonable.”  “The first three kinds of failure are acceptable—they come with the risk we assume…  He adds, “I’d estimate that 99 out of 100 startups don’t pan out as originally envisioned.”

Byju’s has been accused of financial mismanagement, which includes issues such as postponed audits and failure to adhere to filing standards.  In 2023, GoMechanic acknowledged that it had overstated its revenues and invented partnerships, which resulted in widespread layoffs and a distressed sale.

“It frequently boils down to avarice or stress.  Occasionally, investors push founders forward.  Once you commit to a particular growth path, you find yourself trapped in that cycle.  “You begin with a minor experiment, perhaps a little embellishment, and before you realize it, things spin out of control,” explains Alok Bansal from PB Fintech.

A lot of new-age founders lack a process-and-control mindset and have not held positions focused on governance or compliance.  “In essence, they lack a predisposition for process discipline.  Bansal adds, “That’s where the board and investors come in to guide and support them, not pressure them into cutting corners.”

Malintent is not a risk; it serves as a warning sign.  Taneja from Lightspeed adds: “You simply don’t want to engage in business with individuals like that.  And selecting the incorrect raw material—the founders—results in catastrophe.  Every so often, a rotten apple will appear.  All you can do is hope that you are not supporting one.  For this reason, it is essential to conduct comprehensive due diligence prior to making an investment.

Tewari from InMobi concurs that governance lapses are entirely unacceptable.  “The only thing I can say is that boards have failed to fulfill their role.  It is not possible for them to raise their hands and claim ignorance.  He states, “Such things take time to develop.”

An increasing number of Indian startups are creating products not just for the Indian market, but for a global audience.  Tewari refers to the worldwide introduction of his Glance AI in 140 countries as “the UPI moment of fashion commerce.”  As he states, the aim is to develop a tech-first product that can compete with global behemoths like Google and Meta.  “It’s no longer a question of resources; it’s about the mentality.”

In the realm of health tech, Qure.ai is leveraging AI to revolutionize global diagnostics, facilitating the early identification of illnesses like tuberculosis and lung cancer via chest X-rays and CT scans.  Its tools are currently used in over 100 countries.  At the same time, Razorpay has initiated its international expansion by launching in Singapore and establishing a presence in Malaysia, targeting Southeast Asia as a growth market.

“We are creating major tech firms that address India’s distinct challenges.  There is where the opportunity exists.  Bikhchandani says that some of them will also tackle global issues.

To begin with, startups in India need to transition from pursuing valuations to generating value.  Bansal of PB Fintech states, “You’re headed in the right direction as long as you’re addressing a genuine problem, scaling responsibly, and ensuring your unit economics don’t result in losses.”  “However, it’s impossible to burn ₹2 to gain ₹1 while lacking any perspective on how that will lead to improvement.  Those models are unclear to me. That’s not about establishing a business; it’s about purchasing revenue.  You are compensating someone to demonstrate growth.” He adds that valuation should be a by-product rather than the objective.

It is essential to bolster India’s R&D ecosystem.  Kumar from Razorpay states: “In the US, China, and Europe, there are excellent R&D labs that receive government funding.  This ecosystem is not present in India.  By funding R&D labs, you can help attract a better quality of talent that is currently leaving the country for PhD programs.  The most talented individuals in India don’t remain in research; they move into startups or corporate roles.

In addition to capital and R&D, India must cultivate industry-ready talent, particularly in deeptech and manufacturing.  “People who have experience in introducing new products in the fields of emerging or unclear technologies are scarce.  Vinayak explains, “Software does not encounter many of the difficulties that deeptech or hardware does.”  He believes that designing buildings from lab to field is a wholly different endeavor, necessitating knowledge of material science and manufacturing.

In spite of the difficulties, India has accomplished remarkable success in developing its startup ecosystem.  Says Pai: “We have achieved this success while being severely limited.  However, in order to progress, we must invest in innovation.  It is necessary to finance the aspirations of our youth.  It necessitates funding, strategic foresight and political backing.  We need to get our act together now.