Vector illustration – Startup
| Photo Credit: akindo
The Indian startup economy has truly come of age in the 10 years since Prime Minister Narendra Modi gave the clarion call during his Independence Day address on August 15, 2015, to make India the “Number 1” country in startups, and thereby sowed the seeds of significant directional change.
The three traits that make startups different from conventional businesses are an emphasis on innovation, the use of technology, and market opportunity. To distinguish startups from other businesses, the Department for Promotion of Industry and Internal Trade (DPIIT) started recognising companies that aligned with government guidelines as startups. Despite DPIIT recognition not being mandatory for startups to operate, there has been a significant growth in startups applying for its recognition. From 288 in 2016, which was just 3% of the total startups functioning then, the DPIIT’s coverage has increased to 77% in 2025. The growing willingness to join the formal startup ecosystem has been an important measure of success for India’s startup story.
Another indicator of success has been the penetration of startup culture across the length and breadth of the country. There has been a remarkable shift in startup formation from Tier 1 cities to Tier 3 towns. In 2016, Tier 1 cities dominated the startup landscape, accounting for about 65% of the total startups set up that year, while Tier 3 towns accounted for only about 15%. In 2020, these shares changed to 49% and 27%, respectively. However, the biggest change happened in 2025, when Tier 1 cities accounted for just 18% of new startups, whereas Tier 3 towns made up for 71%. This shift highlights the spread of innovation beyond major urban hubs.
The age and gender distributions of startup founders reveal a strong presence of the youth. A substantial portion of founders across both genders (approximately 66% are male founders and 59% female founders) are under 40. The embrace of entrepreneurship early in one’s career signals a favourable and supportive ecosystem for startups.
The data shows that women embark on their entrepreneurial journeys relatively later and their proportion increases notably with age. While women account for about 21% of the founders in the under-30 age group, they account for 33% in the 50-plus age group. Creating a supportive environment for women to pursue entrepreneurship has been an important policy imperative. The Compound Annual Growth Rate (CAGR) of women founders stood at 20%, compared with 14% for men, underlining the strong trend of women increasingly pursuing entrepreneurship.
The funding landscape
A surge in the confidence to invest in Indian startups has been yet another defining feature of the 2016-25 period. In 2016, India had 10,000 startups, of which 2,000 were funded ventures. The numbers have increased dramatically in 2025 with a total of 2,50,000 startups, of which 75,000 are funded ventures. This is an increase of 25-fold and 38-fold respectively.
Trends indicate that a supportive policy environment, robust startup growth, and a positive investment climate in the first 10 years of the Startup India scheme have created several moments of success. The decade from 2016 to 2025 has firmly placed India among the top four in the league of startup nations.
Note: The data for the charts were sourced from the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Corporate Affairs (MCA), and YNOS Venture Engine
Thillai Rajan A., Chinni Chaitanya and Dr. Vamika Perumal, the Centre for Research on Startups, Indian Institute of Technology Madras
Published – June 05, 2026 07:00 am IST