There’s a particular sound Indian business news has gotten addicted to over the last ten years: the funding announcement. A seed round on Monday, a Series B by Wednesday, and every few weeks, someone crosses the billion-dollar mark and gets a press release with three exclamation points in it. Fair enough, honestly. It’s been a wild decade to watch. When Startup India was announced from the Red Fort back in January 2016, the country had a few hundred recognised startups to its name. We’re past 2.14 lakh now, with more than a hundred unicorns and a cumulative valuation crossing $350 billion. And nearly half of these companies aren’t even coming out of the usual six metros anymore. Jaipur, Indore, Coimbatore, and Bhubaneswar are all producing real companies now. That part of the story gets buried under the unicorn headlines, but it’s the more interesting one. This stopped being a Bangalore story a while ago.
But talk to any founder who’s actually tried to push a company past that first seed round, and money is rarely what they bring up first. What comes up is the CFO hire that went wrong and cost them half a year. The compliance filing nobody flagged until it was sitting on the cap table like a landmine. The go-to-market deck that read beautifully in a boardroom and fell apart the first time it touched an actual customer in Nagpur. We’ve built a genuinely impressive machine for finding and funding ideas in this country. We have not built much of a machine for what comes after: turning a funded idea into a company that’s still standing in year five.
You can see this if you look past the headline numbers. India is producing more recognised startups every year and a half than a lot of countries manage in a decade. That’s not an exaggeration; it’s roughly where the DPIIT numbers sit. But the die-off rate between year two and year five is brutal, and it’s rarely the money that kills these companies. It’s execution. The stuff nobody wants to talk about at a demo day: whether the unit economics actually hold up, whether the team can survive its own growth, and whether a first-time founder from a Tier-2 town has any real shot at navigating India’s compliance maze without help. We built a funnel that’s wide and shiny at the top but leaks like a sieve everywhere below it.
Look at what happened to some of our most celebrated names once anyone actually looked closely. Byju’s is the textbook case now, not because edtech was a bad bet, but because the company scaled its marketing and fundraising a lot faster than it scaled its governance or actual delivery. BharatPe went through its own very public boardroom mess for roughly the same underlying reason. Neither of these was a failure of vision. They were failures of the boring, invisible stuff: financial controls, board discipline, and basic operational rigour. None of it shows up on a pitch deck, but all of it is needed from day one.
Now put that next to Zerodha, which ran profitably for years before it ever needed outside money, largely because the founders treated operating discipline as the actual product rather than something to bolt on later. The lesson is sitting right there in our own market: money doesn’t fix a weak company; it amplifies whatever was already true about it. Give a shaky business more capital, and you don’t get a stronger business; you get a bigger, more public collapse.
This is really where “venture-building” needs to be separated from “venture-funding,” and I don’t think our policy conversation makes that distinction cleanly enough yet. A VC writes a cheque and hopes the founder sorts out the rest on their own. A venture-builder, a proper studio, an accelerator with actual teeth, or a corporate innovation arm that isn’t just for show, gets in there before the cheque, working on compliance, hiring, market strategy, and all the tedious groundwork, so that when the capital does show up, it’s landing on something solid instead of sand.
South Korea figured this out with its TIPS programme, which pairs government-backed funding with private accelerators and requires startups to work with experienced operators before the money is released, rather than simply handing out a cheque. Singapore’s Enterprise Singapore runs on a similar logic: it treats startup support as an engineering problem, not a networking event. We have flashes of this here too. Some of our incubation centres and Atal Community Innovation Centres are doing genuinely good work. But too much of what gets called “acceleration” in India is still a three-month cohort, a demo day, and a photo op with a minister. That’s a marketing event. It isn’t venture-building.
The angel tax abolition a few years back was a real, welcome fix; it cleared a genuine obstacle on the funding side. But clearing friction on the funding side after they’ve already made the mistakes a term sheet can’t undo. doesn’t touch the execution gap on the building side at all. If anything, cheaper, easier capital without the building infrastructure to match just means more companies hit the wall faster, once their weaknesses start costing real money.
So what would it actually take for India to be a venture-building nation and not just a startup-funding one? Start by judging success differently, not by how big a Series A is, but by how many of those companies are still around and profitable five years on. Judge incubators and accelerators by survival and revenue, not by how many logos they can put on a graduation slide. Get corporates to actually co-build with startups instead of running an innovation lab as a PR line item. And get the next generation of founders, the ones building real products out of Indore or Bhubaneswar without a CFO or a compliance lawyer anywhere in reach, the support they need before they’re staring down a term sheet, not We didn’t stumble into becoming the world’s third largest startup ecosystem. It took policy, capital, ambition, and a fair amount of national stubbornness to get here. The next ten years should be about what happens after the cheque is written. Because the real measure of a startup ecosystem isn’t how many companies it can fund, or how many unicorns it can produce. It’s how many companies it can help build, survive, grow, and matter. India has learned how to fund ambition. Now it needs to get much better at building the companies that ambition creates.
*Aaquib Hussain is the Founder of Free Flow Ventures, a 0-equity venture builder that has helped shape 272+ startups across India, the Middle East, Africa, and East Europe. A former Googler and IBMer and an angel investor in 35+ startups, he previously served as a Cyclical Support Architect for Invest India.
