At startup Mahakumbh, there are 3,000 people competing for funds, but few people lay off employees

India’s largest startup display cabinet is getting bigger and bigger. But behind the buzz, the founders are chasing attention, not just capital, but also finding that even ambitions have limitations.

On this year’s startup Mahakumbh, more than 3,000 startups have officially registered their ideas in 11 areas. But the actual number may be higher. Many aspiring founders choose not to register under the startup category, but instead enter as regular visitors, looping in the halls, hoping to improvise with investors or have conversations at any time.

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The areas on display range from agricultural technology to D2C, and it is clear that technology-led innovation dominates the narrative. Artificial intelligence, fintech, climate technology and Deep Tech attract the largest crowd, as well as the majority of investors’ attention.

Touted as one of India’s largest events, the event is a microcosm of entrepreneurial energy in the country, while growing policies focus on innovation.

But under optimism, reality is a more sober reality: Thousands of founders compete for increasingly limited investor interests, and in an ecosystem, scale and path to survival differ. The startup scene in India is expanding rapidly, but it is not without the pain of growth.

“Top a rock here and you’ll hit the founder of a startup,” said a 31-year-old entrepreneur from Bangalore.

However, many founders believe the scale of the activity corresponds to the kind of centralized network they wished to be.

“Last year, it was much more crowded, maybe around 1,000 to 1,500 startups,” said a Delhi-based founder. “This time, it was overwhelming.

“It would be more helpful if such events happen more frequently, but with smaller, focused startups,” said one Hyderabad-based founder. “With this density, what you really get is to exchange cards, not have meaningful conversations with investors.”

Some founders choose to showcase their work in exhibitor pods. Others find it easier to move freely, hoping to have spontaneous conversations.

“With pods, I personally have to stick with it. I have to stick with it or assign someone. Like this, I can walk and chat and catch them out of the venue or into a person in a short period of minutes,” said the founder of a Gujarat-based state-based founder.

“Since AI is the next big thing, other startups (even promising startups) are working hard to get the support we need,” said Assam’s Handicrafts startup. They added that metropolitan cities dominate the market with visibility, making it harder for startups from smaller areas to gain appeal.

Less bets, higher bets

Against the backdrop, the government has been showing a stronger commitment to supporting deep technology companies.

The center is reportedly considering providing a dedicated funding fund for the department in the upcoming union budget for 2025. This is after the launch of the Bhaskar portal in September 2024, aiming to focus on startup support and complement the broader startup India program.

As of now, the Ministry of Promotion Industry and Internal Trade (DPIIT) has recognized over 152,000 startups in the program, although more than 5,000 startups have been closed, according to data shared by Lok Sabha.

On the scene, the founders continued to face major challenges in funding and market readiness. Uncertainty is particularly serious for SaaS startups.

Flipkart recently decided to shut down ANS Commerce, the D2C-focused SaaS platform it acquired in 2022, stunning the ecosystem. The platform ceased operations by March 31, 2025, affecting more than 200 employees, although severance payments and internal job opportunities were reportedly provided.

The development highlights a growing sentiment: the pathways to profit or access are shrinking. For many founders, raising funds is no longer the main goal – survival and strategic exports are becoming increasingly important.

“We also had a POD last year. Raising funds was tough, but we hope to meet people who would listen. We are a SaaS platform, but the industry is changing. Honestly, even the acquisition is great for me,” Hyderabad founder of the Software-As-As-As-Service (SaaS) platform startup startup.

“The bank is hesitant to take risks. Such an activity at least brings us into the same room with investors,” explained the ED-Tech founder in Delhi.

Investors are becoming increasingly picky.

“Everyone here thinks it’s the next big thing – the spoiler. But out of 3,000, there are only one or two. That’s why we’re here.”

Another investor said: “Not everyone is doing something unique. Most platforms are the same as each other and we can understand who deserves the first 30 seconds of investment.”

Fatigue and fashion

Mode fatigue is being set.

“After a while, the trend started to reappear. What is still important from now on five years is the excitement of our hot spots and more,” said a partner at the Multistage Fund.

This view found unexpected reinforcement during the event, when Commerce and Industry Minister Piyush Goyal called on Indian startups to shift their focus beyond the food delivery and gig economy model, urging greater emphasis on deep technology. Goyal is in sharp contrast with China, urging Indian entrepreneurs to “target higher.”

Shared his image he once reposted to friends, Goyal notes that many Indian startups still rely on turning unemployed youth into low-cost gig workers, while Chinese companies build global technology muscles in areas such as battery innovation and electric mobility.

He acknowledged the entrepreneurial vitality of India but warned that the country must be known not only for producing “delivery boys and girls.”

He also scanned the growing fast business boom, which shows that capital is heading towards ultra-fast logistics with limited long-term returns.

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The comments sparked a pushback online, including Zepto CEO Aadit Palicha. In a detailed response, Palicha defended the fast business model, noting that Zepto (Zepto, who is only 3.5 years old) now employs 1.5 million Indians ₹10 billion tax attracted nearly $1 billion in foreign direct investment (FDI).

Even so, players in the industry, including Zepto, are under scrutiny. Retail industry institutions have raised concerns about potential FDI violations, adding another layer of uncertainty to the policy environment.

Deep technology, data and questions

Despite Goyal’s strong efforts to focus on the long-term sector in India, the underlying reality of the founder of Deep Tech is even more complex.

In 2024, India’s Deep Tech startup funding grew 78% to $1.6 billion, according to a NASSCOM report. More than 2,000 technology startups were launched during the same period. However, only about 1,000 fall into the deep technology category, a number described as “disturbing”.

His key message is clear: India must be inDukaandari“(Shop) and become one”Vishwavyaapi(Global Technology Leader). He also called on investors to rethink their approach and back technologies that could reshape India’s global position.

However, many investors have provided a more modest response.

“Yes, deep technology is important, but we can’t ignore departments that have proven their scalability and create value quickly,” said one VC. “Fast commerce or SaaS may not sound fascinating, but they have built real businesses.”

Another said: “India needs both – a slow-burning deep technology bet and a fast-scaling consumer platform. Each platform plays a different role in building a mature ecosystem.”

A third investor noted the risk of a narrow framework said: “Politicians need to be careful not to show that some models are not worth it. Founders are just following the market.”

Startups also point to long-standing structural constraints.

The Treasury friction against the now-extinct angel tax has stifled early investments over the years. While taxes were eventually canceled for all investor categories in the 2024 budget, its shocking impact continued.

“We are a deep technology startup, and like most in this field, we need at least three to five years of runway and a lot of money to build anything meaningful,” said one founder. “There are a lot of small players working on chip design, IoT, robotics and EV technology, but without the ongoing capital and policy support, we will strive to survive, let alone expand.”

Another challenge is data access. “We are trying to innovate in AI, but let’s clearly say that it’s not magic, it’s data,” said the founder of an AI startup. “The government has some of the largest data sets in the country, but they’re locked in by startups like us.”

He added: “If the government does release data, who can get it? How? Under what framework? If India wants to build serious AI products, an urgent answer is needed.”

Investors are cautious.

“AI is the buzzword nowadays, so I didn’t fully believe it until I saw the real integration. Just shooting ‘AI’ on the pitch deck doesn’t make the company defensive,” one said.

Another point to a common pattern: “We have encountered many AI startups, but few have access to proprietary data or novel applications. Most are just wrappers of existing technology.”

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Zepto’s Palicha also acknowledged structural restrictions. He noted that India lacks basic AI models, mainly because the country has never established a ruler in the Internet era. He said giants like Google, Facebook, Alibaba and Tencent have access to huge data sets, elite talent and a deep pool of capital that enables them to drive cutting-edge innovation in AI.

He took Amazon as an example. The initial e-commerce company eventually transformed into a global leader in cloud infrastructure and is now at the heart of AI development.