Rathish
Author – Ritesh Ranjan: ecosystem -India’s startup ecosystem has undergone one of the most remarkable transformations in the country’s modern economic history. What began as a relatively small entrepreneurial movement in 2016 has grown into a powerful national engine of innovation, employment, investment and regional development.
According to a new report by the Centre for Research on Start-ups and Risk Financing, or CREST, at IIT Madras, India’s startup ecosystem expanded from around 10,000 ventures in 2016 to nearly 250,000 startups by 2025. This 25x growth has led the report to describe the period from 2016 to 2025 as India’s Startup Decade.
The report, titled “2016-2025: The Startup Decade – The Making of a Bold and Powerful India,” highlights how the country’s entrepreneurial landscape has grown not only in size but also in depth and diversity. The decade was shaped by rising funding activity, stronger incubator networks, more women founders, increased government recognition and the rapid rise of startups beyond India’s major metro cities.
A Decade of Massive Startup Growth
In 2016, India had around 10,000 startups. By 2021, this number had increased to 120,000. By 2025, the ecosystem had grown further to around 250,000 total startups.
This growth was not limited to the number of ventures being created. The number of funded startups also rose sharply. In 2016, India had about 2,000 funded ventures. By 2021, that number had grown to around 30,000. By 2025, India had nearly 75,000 funded startups.
This indicates a major shift in investor confidence. More startups were not only being incorporated but were also becoming attractive enough for angel investors, venture capital firms, banks and institutional funders.
The report also shows that annual incorporations grew steadily over the decade. India saw around 10,000 startup incorporations in 2016. This increased to about 20,000 annually between 2017 and 2019. From 2020 to 2025, annual incorporations surged to nearly 30,000 per year.
This trend reflects the growing acceptance of entrepreneurship as a serious career path in India. Startups are no longer seen as risky experiments limited to a few technology hubs. They are increasingly becoming mainstream business vehicles across sectors such as fintech, edtech, healthtech, agritech, deep-tech, consumer services and manufacturing.
Women Founders Are Changing the Startup Landscape
One of the most encouraging findings of the IIT Madras CREST report is the steady rise in women founders.
The number of women founders grew from around 5,800 in 2017 to 14,200 in 2021. It further increased to 15,800 in 2023 and reached 18,700 by 2025.
This growth is significant because entrepreneurship in India has historically been male-dominated. The rise of women-led startups points to improving access to education, funding, mentorship, networks and digital tools.
Women founders are now building businesses across sectors, including education, healthcare, direct-to-consumer brands, financial services, sustainability, social impact and technology. Their growing participation is helping make India’s startup ecosystem more inclusive and representative.
However, the numbers also show that there is still a long way to go. While the rise is steady, women founders continue to face challenges related to funding access, investor bias, market networks and leadership visibility. Strengthening women-focused incubation, funding and mentorship programmes can help unlock the next wave of inclusive startup growth.
Startup Growth Moves Beyond Metro Cities
For many years, India’s startup story was largely associated with cities like Bengaluru, Delhi NCR, Mumbai, Hyderabad, Pune and Chennai. These cities continue to remain important startup hubs. However, the CREST report shows that entrepreneurship is now spreading far beyond the metros.
A growing number of startups are emerging from Tier-2 and Tier-3 cities. This is one of the most important changes in India’s startup journey.
Smaller cities are now producing founders who understand local markets, regional consumer behaviour and grassroots challenges. These startups often focus on practical problems in areas such as agriculture, education, logistics, healthcare, local commerce, skill development and financial inclusion.
The growth of digital payments, affordable internet, cloud technology, online learning and remote work has helped reduce the disadvantage once faced by non-metro entrepreneurs. Founders no longer need to be physically located in Bengaluru or Mumbai to build scalable businesses.
This geographic spread is important for India’s economic future. When startups grow in smaller cities, they create local jobs, attract regional investment, support local talent and reduce migration pressure on metros.
The Role of Incubators in India’s Startup Boom
Incubators have played a major role in supporting India’s startup growth. They help early-stage founders refine ideas, develop business models, connect with mentors, access funding and reach customers.
The IIT Madras CREST report provides detailed league tables for top incubators, venture capital firms, banks and deep-tech investors. This offers founders and policymakers a clearer view of the support systems driving India’s startup economy.
Among incubators, NSRCEL at IIM Bangalore leads the table with 3,163 supported startups and 437 funded ventures. T-HUB Foundation in Hyderabad ranks second, followed by Techno HUB in Jaipur. In the funded-startup category, SIIC at IIT Kanpur and T-HUB are also prominent names.
These institutions show how structured mentorship and ecosystem support can make a major difference in the early stages of a startup’s journey.
However, the report also highlights a major concern: India still has a significant incubation gap. Fewer than 10 percent of startups, or around 25,000 ventures, have received formal incubation support. Multi-incubator support is even rarer.
This means a large number of Indian startups are still building without adequate mentorship, technical guidance, investor access or market support. Closing this gap could become one of the most important priorities for India’s next phase of startup development.
Funding, Banks and Venture Capital Support
Funding has been a central force behind India’s startup decade. The report shows that the ecosystem became far more investable between 2016 and 2025.
Venture capital firms, angel investors, banks and government-backed schemes all contributed to this growth. Among venture capital firms, LVX Ventures leads with 365 funded startups, followed by Peak XV Partners and AngelList. Peak XV also leads the IPO table with 11 portfolio companies going public.
Banks have also become more active in supporting startups. In the banking segment, HDFC Bank leads startup funding, followed by State Bank of India and ICICI Bank.
This is an important development because startups often require different kinds of financial support at different stages. Venture capital may help high-growth companies scale quickly, while banks can support working capital, credit access and financial services for maturing ventures.
The growing participation of banks suggests that startups are becoming more integrated into India’s formal financial system.
DPIIT Recognition and Policy Support
Another important trend highlighted in the report is the rise in DPIIT recognition.
In 2016, only 3 percent of startups sought government recognition. By 2025, this figure had risen to 79 percent.
This sharp increase shows that founders now see formal recognition as valuable. DPIIT recognition can help startups access tax benefits, government schemes, grants, incubation support and easier engagement with public institutions.
Policy support has played an important role in giving legitimacy and structure to India’s startup ecosystem. Over the years, government initiatives have helped promote entrepreneurship, support innovation and create a more founder-friendly environment.
Deep-Tech and the Next Phase of Growth
The CREST report also highlights the growing importance of deep-tech financing. Deep-tech startups work in areas such as artificial intelligence, robotics, advanced manufacturing, biotechnology, semiconductors, space technology, clean energy and advanced materials.
These startups often require longer development cycles, high-quality research talent and patient capital. That makes deep-tech funding different from regular consumer or software startup funding.
The report notes that Kunal Shah leads angel investors in deep-tech with 23 investments, followed by Lakshmi Narayanan and Kris Gopalakrishnan. Among VCs, LVX Ventures leads deep-tech funding, while HDFC Bank tops the list of banks supporting deep-tech ventures.
Deep-tech will likely play a major role in India’s next startup decade. If supported well, it can help India move from being a service and consumer-tech startup hub to becoming a global innovation powerhouse.
Conclusion
India’s startup decade from 2016 to 2025 was defined by scale, diversity and maturity. The ecosystem grew from 10,000 startups to 250,000, while funded ventures increased from 2,000 to 75,000.
But the real story goes beyond numbers. More women are becoming founders. More startups are emerging from Tier-2 and Tier-3 cities. Incubators, banks, angel investors and venture capital firms are creating a deeper support system. Government recognition has become mainstream. Deep-tech is gaining serious attention.
At the same time, challenges remain. The incubation gap is still large, women founders need stronger support, and many non-metro startups require better access to capital and mentorship.
Even so, the message of the IIT Madras CREST report is clear: India’s startup ecosystem is broader, stronger and more resilient than ever before. The first startup decade created scale. The next one may decide how deeply innovation can transform India’s economy.
FAQs
1. What is India’s Startup Decade?
India’s Startup Decade refers to the period from 2016 to 2025, during which India’s startup ecosystem grew rapidly from around 10,000 startups to nearly 250,000 startups, according to the IIT Madras CREST report.
2. How many startups did India have by 2025?
According to the CREST report by IIT Madras, India had around 250,000 startups by 2025, with nearly 75,000 funded ventures.
3. What role did women founders play in India’s startup growth?
Women founders played an important role in making the startup ecosystem more inclusive. Their number increased from around 5,800 in 2017 to 18,700 by 2025.
4. Why are Tier-2 cities important for Indian startups?
Tier-2 cities are important because they show that entrepreneurship is spreading beyond metros. Startups from smaller cities are solving local problems, creating jobs and expanding India’s innovation economy.
5. What is the incubation gap in India’s startup ecosystem?
The incubation gap refers to the limited number of startups receiving formal incubation support. The report says fewer than 10 percent of Indian startups, or around 25,000 ventures, received such support.