Introduction
A very elderly person in the mid 70’s, over a fortnight ago, said, “What’s your take on Startup’s?” I want to allocate a very small corpus in this asset class. And do not go by my risk suitability. I want to be part of this. So, please tell me…
This prodded me to look over the past decade of the Venture Capital space.
The Journey
Venture Capital brings into mind – either an exit just the way Urban Company delivered to its early investors (~200x) over a decade in this week (Sep’25) or Byju’s, which bit the dust. Both massive and both had marquee investors on the cap table.
A decade journey is where the return (the 3-digit multiple) which is noticed. This is an aberration, then the human mind wants this to be the norm.
Over this decade, India produced over 100 unicorns (startups valued >$1B) compared to just a handful in 2015, reflecting a vibrant entrepreneurial boom.
Venture funding surged across multiple sectors – from fintech and edtech to health-tech and consumer internet – before a global market correction cooled the frenzy after 2022.
Venture funding in fintech soared after 2015, fuelled by demonetization, in 2016, the Unified Payments Interface (UPI) rollout, and a huge unbanked population.
Fintech startups in digital payments (Paytm, PhonePe), lending, and neo-banking attracted major VC rounds.
By 2020, fintech – alongside consumer tech and SaaS – was a top three sector, together making up 75% of VC investment.
In 2019, consumer tech (including e-commerce, on-demand services, etc.) was the largest sector, accounting for ~35% of VC investments. Several scale deals (>$150M) went into e-commerce leaders and platforms. By the early 2020s, new consumer internet segments like quick commerce (e.g. Zepto) and online gaming gained traction
Black Swan
This decade also had a ‘black swan’ event – Covid .
Education technology emerged strongly, especially during the COVID-19 . And saw edtech funding multiply as remote learning became essential in 2020–21. Investment in edtech and related consumer tech subsectors jumped ~4X in 2020 vs 2019. And by 2023 this sector faced corrections (e.g. layoffs, shutdowns) as schools reopened, and investor focus shifted to profitability.
Another sector which gained traction in Covid – Healthcare technology and digital health. Startups in telemedicine, online pharmacy (e.g. PharmEasy), and health SaaS gained funding around 2020. Healthtech even produced unicorns (Practo, PharmEasy) and saw big deals like Tata Digital acquiring 1mg in 2021. However, like edtech, many healthtech ventures struggled to sustain early hyper-growth, contributing to higher failure rates post 2022.
Deep-tech and climate tech also garnered niche funding by the mid-2020s, often supported by specialist funds. While these were smaller in funding share, they reflect widening scope of Indian VC beyond consumer apps.
This period also saw an evolution in exits (IPOs, acquisitions, secondary sales) and hard lessons in startup sustainability, as lofty valuations gave way to a focus on viable business models.
Mortality & Exit
Now this decade also witnessed mortality . Notably, the sectors with maximum shutdowns were agritech, fintech, edtech, and healthtech – sectors that had seen exuberant funding and high burn rates.
The bust often followed a boom.
Common reasons for failure included –
- Unsustainable “growth-at-all-cost” models,
- Low customer retention, and
- Inability to adapt to changing market dynamics.
In short, cash burn caught up with companies once capital became scarce.
Among all this, it also witnessed a startup maturing and listing in the Stock exchange through an Initial Public Offerings (IPOs). In July of 2021 food-delivery giant Zomato’s IPO was the first major tech startup listing and was met with exuberant response (stock jumping 65% on debut) .
It proved that domestic startups could achieve successful exits via IPO, spurring others.
Today public market exits are looking at becoming the mode for large VC liquidity events.
Way forward –
Overall, India’s VC ecosystem by 2025 is more mature and resilient. There is a
- Stronger base of local VC firms (large and small),
- A pipeline of experienced entrepreneurs (including those learning from failed attempts), and
- Supportive government policies for startups.
Firms like Auxano Capital highlight the growing depth of the investor base – willing to invest early on innovation and capable of guiding startups to fruition.
As India moves into its next decade of venture investing, the foundation built from 2015–2025 augurs well:
- An entrenched startup culture,
- Broad-based sectoral innovation, and
- Increasing global investor interest balanced by greater domestic capital participation.
And coming back to the investment of the elderly person, the first investment in this asset class has been initiated.
Author,
Brijesh Damodaran
