The entrepreneurial spring: India’s startup surge is back in full swing

“WHEN WINTER COMES, can spring be far behind?” goes the line by poet Percy Bysshe Shelley. And so it seems to be for India’s startup ecosystem, which has battled the funding winter for the past couple of years, and is now seeing better days again. During the heady days of 2021, venture capitalists were falling over each other to write cheques, due diligence was completed in a matter of days, and startups were playing the valuation game. Then came the global crunch, and the funding winter hit Indian start-ups hard. Storied startups that boasted unreal valuations came crashing down, governance issues came to the fore, and there was a major reality check. All this, however, did not take away from the fact that India is now the third-largest startup ecosystem in the world, backed in large part by the government’s strong policy push. Meanwhile, VCs became much more careful and ‘the path to profitability' became the guiding mantra for investors. It was perhaps a reality check India’s startup world needed to get back on the rails. The good news is that venture capital is back now, and startups are focussed on showing investors a sustainable growth path. Fortune India’s Most Promising Startups issue comes to you at a time when India’s entrepreneurial energies are once again revving up and new-age, interesting startups across sectors are making their presence felt. As V. Keshavdev, who helmed the startup package points out, the numbers are loud: $8.7 billion raised across 81 new funds, a 55% leap from 2023. “Early-stage companies are flush with $1.94 billion in fresh capital,” he writes. This comes despite global headwinds, demonstrating the continuing interest of investors in India’s startup space which now boasts over 100 unicorns.

For this issue, Fortune India, in its meticulous excavation of the startup universe of data analytics platform Tracxn, sought to map out this terrain by focussing on firms with an operational history of up to 10 years. The Top 3 startups across prominent sectors that are also aligned with the India growth story — including fintech, consumer, agritech, and EVs — have amassed a staggering ₹44,817 crore in revenue. But the paradox of Indian startups today: a universe of meteoric revenue growth shadowed by mounting losses. The cumulative losses of the Top 3 in the selected sectors amount to ₹10,863 crore. The numbers exclude edtech owing to industry challenges, and deeptech (including space and defence) as these firms, despite a strong order pipeline, have yet to generate significant revenue. The package focusses on select sectors, and some key players in each that have shown significant promise and are scaling up revenues smartly. The challenges will remain, and Indian ventures today are well aware of them, but India’s startup story is alive and healthy.

Elsewhere in this issue, Ajita Shashidhar helms the Fortune India-CIEL HR Future-ready Workplaces study that lists companies on select parameters of future readiness. In today’s dynamic workplace, companies that understand the needs of the workforce and help them grow as individuals and professionals with an eye on diversity and inclusion will be tomorrow’s winners. This year’s study underscores that fact.