Contributed by K. Chandran, MD & CEO of Campus Angels Network and Chief Mentor and Principal Advisor of SSN iFound.
Every few years, the Indian startup ecosystem declares a turning point — a narrative shift. Today, many believe we are moving from business model plays to innovation-led ventures. But is this real momentum or just a passing wave of hype?
Let us unpack this.
For most of the past decade, capital chased scale — not science. E-commerce, aggregators, marketplaces, fintech enablers — these were the poster children. The logic was simple: large markets, proven models, fast execution, and quick exits.
But signs of fatigue are showing.
Valuations of many unicorns have corrected. Public market outcomes have made investors wary of growth-at-any-cost stories. LPs are asking harder questions. In contrast, a different type of founder is emerging — one who is building not around a market gap, but around a technological edge. And a different type of investor is listening.
Is this a shift? Yes. But it is early and uneven.
We are seeing pockets of strong momentum in Deep Tech, HealthTech, Climate Tech, Space, and Advanced Materials. AI is the buzzword, but beyond buzz, real work is being done in vertical AI applications — in pathology, legaltech, precision agriculture, and drug discovery.
Consider Agnikul — a space tech startup born out of IIT Madras. Or Eyestem in regenerative medicine. Or even companies like IdeaForge and Tonbo Imaging in defence. These are not overnight sensations — they have taken 7–10 years to mature. But they are now attracting serious capital and government interest.
What is changing?
Three structural tailwinds:
- Institutional Recognition – BIRAC, iDEX, DRDO, DST, DBT, MeitY – these are now not just funders, but active supporters of innovation pipelines.
- Corporate Interest – Companies in pharma, defence, auto, and energy are seeing innovation gaps and are open to partnering or acquiring.
- Global Appetite – Global VCs and strategics are scouting innovation stories with long-term potential. They know the next wave of defensible unicorns will not come from discounts, but from IP.
Still, most of this capital is concentrated — in certain geographies (Mumbai, Bengaluru, Hyderabad, Chennai), certain incubators (SINE, IITM, C-CAMP, BIRAC partners), and certain sectors.
So what should incubators do?
First, focus on validation, not volume. Do not chase the number of startups. Chase the quality of one startup that gets from lab to market.
Second, build tech fluency within the team. If your team cannot differentiate between incremental and breakthrough tech, you will not attract the right founders — or investors.
Third, connect with demand. Reach out to corporates, government buyers, and global partners. Innovation without a pathway to adoption is just R&D.
Fourth, curate the capital stack. Many innovative startups need a different capital path — grants, patient equity, soft loans. Be the bridge.
Lastly, hold a long view. Innovation-led startups take longer. Your job is not to accelerate blindly, but to nurture wisely.
In conclusion — yes, the funding landscape is shifting toward innovation. But it is not a tide that will lift all boats. It is a current that will favour the prepared. Incubators that build depth, stay curious, and champion science-led ventures will shape the future — not myth, but momentum.