New realities for startups: Fortune India Boardroom highlights challenges and opportunities in India's maturing ecosystem

In FY25, venture-backed Indian startups raised over ₹44,000 crore (USD 5.3 billion) from public markets via IPOs, FPOs, and QIPs, with Eternal (Zomato) even joining the benchmark Indian stock market index NIFTY50. From a high valuation driven euphoric listing a couple of years ago, it has now given way to looking for good business models.  At Fortune India Boardroom investors and startup founders gave their insights on the changing reality for startups today.   

Challenges and opportunities for the startup ecosystem  

Pranav Pai, Founding Partner, Chief Investment Officer, 3one4 Capital, whose investments include unicorn companies like Darwinbox and Licious, sees India’s GDP growth reflecting in the consumer spend, and the country now home to the third largest startup ecosystem undoubtedly giving it a global footing. With the growing scale of Indian startups, he says today's founders face challenges from human resource management to board management to GST changes, along with second order effects like the geopolitical tension that are not under their control. “Today's founders must deal with much more from the surface area of threat and opportunity for a country that is worth $4 trillion. We've come a long way, long way to go,” he says.  

For founders, as startups are coming of age, the customer acquisition chase at all costs has led to a pivot to a more sensible, sustainable and long-term focused businesses. With many founders now in their second and third innings, Ananth Narayanan, former Myntra CEO and now founder & CEO of BRND.ME, sees this change in strategy as a good thing to have happened to the startup ecosystem. Also, as many of the new-age companies have gone public in the past couple of years, it has brought its own sets of opportunities and challenges. “I think the public markets are unforgiving and they are also very transparent. Being able to deal with governance as well as how to be in a public market is now an important skill for founders,” Narayanan adds.

Drawing from the learnings of the past 10 years, everyone in the startup ecosystem — founders, VCs, employees and even customers — as Abhay Hanjura, Co-founder, Licious says, “have come to their senses”, with focus now shifting towards building companies with depth. “When the clutter cuts out, the impending hard problems will remain and tough founders, those VCs who believe, will stay put,” Hanjura adds. Also, the understanding of business models of the Indian startup companies from a western lens has faded as the ecosystem matures.    

For venture capital firms, this growth has not only brought in public market exit opportunities, but also faster returns compared to a decade ago. Rahul Chandra, Managing Director, Arkam Ventures, who has seen the evolution of the Indian VC space over the last decade and half, says the current times are a venture capitalist's delight. Compared to a few years ago, today what India presents is a digital-ready, critical mass consumer base, allowing in the creation of large companies. “The willingness to get on the digital rails, the ability to pay, to get on-boarded very quickly on digital rails -- I think it is a much smoother playbook for a founder to build companies now,” Chandra says.   

Also, being a risky asset class where maximising returns is the playbook, venture capital opens the doors to global funds and for Indian VCs, Indian startups today hold promise comparable to the AI startup returns in the U.S. Chandra points out the IPO bound companies, even now, are largely those that have existed for over decade or more. However, what's changing is that startups are achieving good stable financial models and are scaling up at a much quicker, six to seven years' time frame . “For me, that's a very good sign of a venture system, which can give venture returns comparable to the best in the world in record times. So that's very exciting,” Chandra adds.