For almost a decade, India’s startup ecosystem has measured success in billions. The “unicorn” started out as a simple way to describe big ambition. Over time, it became a scoreboard, a fundraising pitch and, for some founders, a replacement for a solid business plan. I believe this obsession is finally easing, and that we should help it along. An ecosystem that celebrates only valuation will keep producing companies built to impress, rather than companies built to last.
The market has already moved on
Investors have quietly changed their behaviour, even if our conversations have not caught up. According to Inc42’s Q3 2026 funding report, Indian startups raised $2.2 Bn between July and September, up 5% from last year. Yet the number of deals fell 13%, and the number of active investors dropped by nearly a quarter. Money has not left the system. It is going to fewer companies, after harder questions.
The shape of that funding is just as telling. Growth-stage funding rose 38%, while late-stage funding fell 10%. Investors are backing companies that have already shown customers, margins, and repeat business, and they are less willing to pay a premium for a story that is still being written. I see this as healthy, not as a slowdown. Having worked with founders across markets, I have seen how different the conversation becomes once a founder has to answer a simple question: who is actually going to pay for this?
In my work with startups entering new markets, one of the hardest questions is also one of the most basic: where is the demand? We can help a founder identify partners, understand the market, build a GTM strategy, and make introductions. But none of that matters if there isn’t a real customer problem underneath it. And demand is much harder to manufacture than a valuation.
A good exit is not a consolation prize
For too long, we treated any outcome below a billion dollars as a lesser one. That view does not match the evidence, and it does not serve the people who take the risk. According to Inc42, India recorded 22 mergers and acquisitions in the same quarter, up 69% from a year earlier, and M&A has stayed above 20 deals for three quarters in a row. Six new-age tech companies were also listed on Indian exchanges during the quarter.
What I find most encouraging is that investors are no longer depending on one route. In the same survey, only 32% of investors expected IPOs to be their biggest source of liquidity over the next two years, while 38% pointed to secondary buyouts. That variety is the sign of a maturing market. It means a strong business in a focused niche can find a good buyer, a fair price, and a graceful exit, without having to inflate itself to unicorn size first.
This matters beyond investor returns. A founder who can take some personal risk off the table, or an early employee who finally sees the reward for years of work, is more likely to make calm, long-term decisions. Financial pressure rarely produces good strategy. If we want founders who build patiently, we must make it normal for them to be rewarded along the way, not only at the very end.
Our own habits need to change
None of this will hold if we simply swap one obsession for another. Artificial intelligence drew $438 Mn in the quarter, a jump of 265% from last year. Yet 63% of investors surveyed said Indian AI valuations had risen beyond comfortable levels, and only 12% considered them fully justified. When those who write the cheques are uneasy, the rest of us should pay attention. The unicorn headline can easily return wearing a new label.
We should also be honest that some of today’s discipline has been forced on us by tighter conditions, with inflation, softer household spending and weak equity markets all playing a part. Discipline that appears only when money is scarce is not discipline. The real test will come when funding gets easier again, and we will pass it only if we change what we reward now.
That responsibility sits with all of us who lead incubators, accelerators, industry bodies, funds and media platforms. What we celebrate on stage and in headlines shapes what founders choose to build. If we keep applauding valuations, we will keep getting valuation-driven companies. If we give equal respect to a first profitable year, a well-planned acquisition, a founder who exits and builds again, and an investor who returns money to their own backers, we will build a sturdier kind of ecosystem.
I don’t think India should stop building billion-dollar companies. We should absolutely celebrate them. But we need to stop treating the billion-dollar valuation as the definition of success.
A profitable company with loyal customers, a strong team, and a founder who can build again is not a consolation prize. Neither is a ₹200 crore exit. Neither is choosing to stay private and build a durable business.
India’s startup story does not need smaller dreams. It needs better yardsticks. The unicorn is not dead, but it should no longer be the only goal worth chasing.
