India’s startup ecosystem is going through a period of adjustment. Funding has become harder to raise, especially for early-stage companies, and investors are spending more time examining business fundamentals. While venture capital continues to back a small set of fast-growing companies, many founders are finding it increasingly difficult to secure early support.
This matters because of the scale of the ecosystem. According to Tracxn, India has more than 620,000 startups, but only about 33,000 of them are funded. The country has produced 125 unicorns, but these represent only a tiny slice of entrepreneurial activity. For the vast majority of founders, venture capital is not the first or most accessible source of backing.
It is in this space, between idea and investability, that incubators and venture studios are playing a more visible role. They are offering something traditional investors often do not: time, structure and hands-on support at the earliest stages. As brand strategist Ambi Parameswaran observes, incubators often feel more approachable than venture capital firms, which founders tend to perceive as large, monolithic and intimidating. In incubators, money is often secondary to guidance on people, strategy and execution.
Budding businesses
One example of this evolving model is Foundery, a new 90-day residential venture studio in Alibaug, Maharashtra, co-founded by Zerodha’s Nikhil Kamath and retail veteran Kishore Biyani.
Foundery describes itself as a “co-founder factory”, deliberately distancing itself from cohort-based accelerators. The distinction, its leadership argues, lies in assumptions. “Most existing accelerators are designed to help founders optimise ideas they already have,” says Arush Chopra, director at Foundery. “But we often hear of folks with great execution capabilities in startups and corporates who would love to become founders but don’t have an idea; then there are others in smaller towns and even in metros who lack the capital or the guidance needed to take the plunge; there are also repeat founders and folks from business families who want to start up but have not had the right platform.”
Foundery’s response is what it calls a launchpad rather than a programme. Participants enter a fully residential environment where ideas are developed from scratch, co-founders are matched, and ventures are built to an investment-ready stage. Selected startups are eligible for seed funding of up to Rs 4 crore, while founders can retain up to 25% equity. The intent, Chopra says, is to remove panic from the earliest stages of company-building and replace it with structure and judgment. “The core idea is to build entrepreneurs out of such people by giving them a true launchpad—one that combines capital, concepts, culture, and clarity in a fully residential environment.”
This focus on fundamentals resonates with investors who work closely with incubated startups. Girish Shivani, executive director and fund manager at YourNest Venture Capital, argues that incubators do some of the hardest and least visible work in the ecosystem. Many founders entering the startup system today, he says, are young, often straight out of college, with little work experience but strong ideas. “This is a critical gap that incubators help fill,” Shivani says.
For Ambi Parameswaran, this emphasis on early shaping is crucial. Incubators, he argues, play a constructive role not just in building companies but in shaping how founders think. They force uncomfortable conversations early, about customer demand, product-market fit and value proposition. “Strong incubators consistently push founders to think about the customer, why someone should buy, what value is being offered, and what problem is actually being solved,” Parameswaran says. A good incubator, he adds, is one that identifies flaws in an idea early, before they become costly mistakes.
If Foundery reflects a rethink at the idea stage, science-focused incubators address a deeper and older structural problem: India’s difficulty in translating research into products. Few organisations illustrate this better than Venture Center, founded in 2007 in Pune. Over nearly two decades, Venture Center has incubated more than 1,000 startups, of which around 85% remain active, a striking statistic in a domain known for long gestation periods and high failure rates.
“A few of the biggest challenges that we see in translating lab research to products and services are poor definition of problems or customer needs, difficulty finding full-time cofounders, and early-stage grant funding,” says its director, Dr Premnath V. Deep-tech ventures often require timelines that sit uneasily with venture capital expectations, making early institutional support particularly fragile.
Venture Center’s response has been to surround founders with non-financial scaffolding—regulatory guidance, IP support, shared infrastructure, fellowships, grants and access to professional networks. The hardest leap remains moving from proof of concept to adoption. “Venture Center runs accelerators that focus on improving product-market fit and market readiness,” Premnath says.
For founders emerging from this ecosystem, the incubator’s value often lies less in funding than in credibility, infrastructure and the ability to shorten painful learning curves. At Serigen Mediproducts, which works on silk-based biomaterials, founder Anuya Nisal recalls the challenge: “While silk has extraordinary regenerative potential, there was very little precedent for taking it from the lab to a clinically accepted, scalable product. Our challenge was not just scientific validation, but understanding regulatory pathways, product design, and how to build something clinicians would actually adopt.”
Venture Center helped effect a mental shift. “It helped us think beyond publications and toward product-market fit,” she says. “That shift helped us move from a promising innovation to a clinically validated, manufacturable product platform.”
For Sensivision Health Technologies, which builds affordable therapeutic hypothermia devices for newborns, the post-prototype phase proved most punishing. Founder Jayadeep Unni describes a period dominated by clinical validation and regulatory work, compounded by the pandemic. Venture Center, he says, provided structured mentorship, access to clinical and regulatory guidance.
Hydrogen startup Hydrovert faced a different kind of scepticism. “Initially, there was limited understanding of hydrogen within the investment community,” says co-founder Supriya Patwardhan. Government and CSR grants facilitated by Venture Center proved decisive, as did access to labs and testing facilities where safety concerns could be addressed.
At Kozhnosys, which is building a breath analyser for disease screening, founder Jilma Peruvangat says infrastructure mattered even more than money. “As a startup at the idea stage, you rarely get enough funding,” she says. “Having access to Venture Center’s well-established shared lab space made all the difference.”
Limits of incubation
Yet the strongest incubators have limits. Support often tapers just as startups enter capital-intensive commercialisation. Shivani describes this phase as the ‘valley of death’, the difficult transition from idea to a product customers are willing to pay for. “It’s like baking a cake,” he says. “Without the right ingredients in the right proportions, you don’t get something edible.”
Founders consistently point to a gap once startups move beyond prototyping into capital-intensive commercialisation. “Incubators are often strongest at the ideation and prototyping stage, but less equipped to support the long, capital-intensive path of deep-tech commercialisation,” Nisal says.
Unni echoes the concern, noting that support often tapers just as startups enter the most demanding regulatory phase. Peruvangat describes a persistent paradox: “You need funding to build and validate the technology, but you need validation and customers to attract funding.”
This tension between financial return and public value is most explicit at Social Alpha, a multi-stage innovation curation and venture development platform backed by Tata Trusts. Social Alpha claims to have evaluated more than 20,000 innovations since 2016 and supported over 300 startups, including more than 90 seed investments. It operates across six domains which are food, energy, resources, materials, health and spacetech, providing milestone-based seed funding, operational support, mentorship and market access.
“While VC funding has been pivotal in the start-up ecosystem, its traditional playbook… doesn’t align with the unique needs of deep tech startups,” says Manoj Kumar, founder of Social Alpha in his blog. These ventures often require extensive R&D before deployment and depend on non-dilutive capital such as grants, prize money and government programmes throughout their lifecycle.
Alongside impact platforms, philanthropic accelerators and large-scale hubs are shaping this quieter middle of the ecosystem. The Marico Innovation Foundation runs Scale-Up, a no-equity acceleration programme for startups focused on clean tech, agri-tech and plastic waste management. The foundation says over 50 innovations have scaled through the programme, 70 have been awarded and two have reached soonicorn status.
“The uniqueness of our programme is that we work with mentors, who are pulled in from the Marico ecosystem or domain experts from our wider networks, which means that we will take at least six to eight months to close each business challenge before moving on to the next,” said Suranjana Ghosh, head, MIF in an earlier interview with FE.
Every two years, MIF identifies a sunrise sector that holds the potential to solve a significant issue for India. The first sectoral intervention was launched in 2018 in the agriculture sector, followed by innovations in combating the Covid-19 pandemic in 2020. In 2022, MIF forayed into plastic waste management.
“They have to have some component to generating livelihood, some component of impacting the environment. We have a very stringent due diligence process, as stringent as any other VC firms would be. Any startup that meets with the diligence process is then onboarded,” said Ghosh. On asking if it is better to just fund the startups instead of going through the entire mentoring process, which is both cost and time intensive for the mentor company, Marico in an earlier interview to FE, said they have deliberated upon this several times, but always ended up agreeing on the mentorship programme. “Most companies are not looking at financial assistance; they can raise money from other investors. So this is not our job. They don’t know how to scale up and our job is to create value by helping them scale up several times. And we believe this is the right way forward,” the company added.
Meanwhile, T-Hub, through its various programmes and initiatives, has provided crucial support and resources to nurture promising startups and facilitate their journey towards success.
Launched in 2015, T-Hub now engages with over 2,000 startups, runs more than 100 programmes and provides access to mentors, markets, capital and policymakers across a 5,85,000 sq ft campus.
In December, Google and the Telangana government announced the launch of the Google for Startups Hub at T-Hub in Hyderabad. It is the first Google-branded startups hub to be launched as part of Telangana’s incubation and innovation ecosystem.
Push from government
The government has played a central, if uneven, role in shaping India’s startup ecosystem over the past decade. In his speech on the occasion of India’s 69th Independence Day in 2015, PM Narendra Modi stressed the importance of encouraging the culture of entrepreneurship, and said, “Start-up India and Stand up India should be our mantra.”
The cornerstone of this effort is Startup India, a flagship programme launched on January 16, 2016. Implemented and overseen by the Department for Promotion of Industry and Internal Trade (DPIIT), the initiative was designed to move India from being a nation of job seekers to one of job creators.
Since its inception, the scale of government involvement has grown sharply. The number of DPIIT-recognised startups has increased from around 500 in 2016 to 1,97,692 entities as of October 31, 2025.
Recognition under Startup India unlocks a suite of benefits aimed at reducing friction. These include simplified compliance through self-certification, single-window clearances and faster regulatory approvals, all intended to improve ease of doing business. On the funding side, the government-backed Rs 10,000 crore Fund of Funds for Startups channels capital into Sebi-registered venture funds, indirectly supporting early-stage companies.
More recently, the government has positioned itself as a connector, signing MoUs with companies such as CarDekho Group, Zepto, Hero MotoCorp and Roche India to provide startups with mentorship and market access.
For CarDekho, the partnership reflects an attempt to address structural gaps that persist even as startup numbers grow. Amit Jain, co-founder and CEO of CarDekho Group, says many founders, particularly those emerging from Tier 2 and Tier 3 cities, struggle with access to real market environments.
Beyond capital, startups supported through the initiative gain access to pilots, integrations and distribution opportunities across these platforms. “This ensures startups move beyond visibility to real market integration,” Jain says, allowing founders to learn through live business feedback rather than simulations.
Targeted interventions have also become more prominent. Sector-specific policies focusing on biotechnology, agriculture and renewable energy seek to align entrepreneurship with national priorities. Under the MeitY Start-up Hub, for instance, 6,148 startups and 517 incubators are currently supported.
Other than these, under the Niti Aayog, Atal Innovation Mission (AIM) also supports the establishment of new greenfield incubation centres called Atal Incubation Centres (AICs) that would nurture innovative start-ups to become scalable and sustainable businesses. The mission provides a grant-in-aid of up to Rs 10 crore for a maximum period of 5 years to cover the capital and operational expenditures to establish the proposed AIC. So far, there are 72 AICs operational across the country, together supporting over 3,500 startups.
Taken together, these incubators, venture studios, impact platforms and policy initiatives point to a recalibration underway in India’s startup economy. Between unicorns and outright failures lies a large cohort of companies that may never dominate markets but can generate steady revenues, create skilled jobs and address real economic needs. Incubators are becoming central to how India builds companies that last, with patience, deliberation, and one founder at a time.
