India’s startup ecosystem has earned global attention, producing 119 unicorns, ranking just behind the US and China. But raising money itself should not be a reason to celebrate. Venture funding is merely a means, not the finish line.
Late-stage investors typically eye public markets. Thus, a startup’s valuation must stem from its ability to build assets and generate cash flows. Data from platforms like Tracxn and Entrackr suggest that fewer than one-fifth of Indian startups are profitable.
Profitability often follows Initial Public Offers (IPOs) rather than precedes them. Sectors such as hyperlocal delivery show decent toplines, but their expenses often outstrip their revenues, impacting future funding rounds. The funding slowdown in Q1 2025 tells the tale, with just one new unicorn emerging, signalling investor caution.
Many high-profile startups, including BigBasket, Country Delight, and Unacademy, have seen steep markdowns. More worrying are the credibility crises engulfing names like Byju’s, BluSmart, and Gensol, each under fire for allegedly inflating metrics or obfuscating costs. These issues reflect a distortion of the entrepreneurial value of bricolage or jugaad.
In its purest form, bricolage refers to doing more with less—scrappy improvisations in the face of constraints. It’s how many early-stage Indian startups got off the ground, leveraging repurposed tech, second-hand infrastructure, and informal networks. India has genuine jugaad stories.
Zerodha scaled without external VC backing, using tech-led automation to drive down costs. Freshworks built its SaaS muscle in Chennai before listing on the NASDAQ, optimizing engineering costs. Agnikul Cosmos, a private space-tech firm, developed 3D-printed rocket engines with modest capital, turning engineering constraints into a competitive advantage.
These stories prove that true innovation often emerges from disciplined ingenuity, not excess funding. However, two distorted forms of bricolage have emerged: speculative bricolage and puffery bricolage. Speculative bricolage refers to startups stretching their limited resources based on optimistic projections and unproven models, creating a facade of value propped up by narratives rather than numbers.
Indian startups must prioritize sustainability
This leads to inflated valuations, down rounds, and sometimes, regulatory scrutiny. Behavioral economics provides insights into these behaviors.
According to Prospect Theory by Kahneman and Tversky, startups cannot see their valuation coming down. They focus on inflating numbers to avoid admitting failure. Investors, desperate to find the next unicorn, give rise to the herding effect where they back risky startups, ignoring poor unit economics.
Case studies like Byju’s, BluSmart, and Gensol illustrate these points. Byju’s has been riddled with aggressive sales, opaque finances, and high churn. BluSmart claimed to be an asset-light EV platform, but reports suggest vehicles were leased from affiliates at inflated rates, masking real costs.
Gensol has attracted green capital, but questions remain regarding its network of subsidiaries and transaction transparency. In contrast, Boat and OfBusiness, which started as bootstrapped ventures, scaled gradually. Their storytelling aligned with their numbers.
The real test of a startup’s viability lies in two questions: Are unit economics improving? Is the company transparent about its costs, margins, and dependencies? Stakeholders must align long-term sustainability goals with short-term profitability goals, calling for structural reforms.
Investors should broaden due diligence beyond spreadsheets. The focus should be on sustainability metrics like margins, churn, and payback, rather than valuations driven by capital flows and revenues. Regulators should mandate private market disclosures, and media should access data from the Registrar of Companies (RoC), especially for startups eyeing public listings.
When startups fail, blame must not fall solely on the founders; boards, VCs, and late-stage funders must also be held to account. India doesn’t need another unicorn. It needs camels that scale sustainably, are grounded in transparency, and driven by purpose.
The true legacy of India’s startup movement will be written not in valuation charts but in value creation, which must be authentic, auditable, and enduring.
