BENGALURU: An emerging trend in India’s startup ecosystem is the rising number of founders stepping away from their ventures to start afresh. While reasons vary, they often stem from personal and professional challenges, including co-founder disagreements, dwindling passion for the original problem statement, time constraints, and intensifying market pressures.
As the Indian startup ecosystem grapples with a funding winter and increasingly competitive market dynamics, founder departures are becoming a symbol of both the challenges and opportunities in a rapidly evolving landscape. Recent high-profile exits underscore this shift. Founders at Dunzo, a hyperlocal delivery platform, and PharmEasy, a leading health-tech startup, departed amidst turbulent times marked by funding constraints and operational challenges at these firms.
Last year, Unacademy co-founder Hemesh Singh and Upgrad co-founder Mayank Kumar stepped down from the respective edtech unicorns. “One of the biggest reasons why we have seen founders in the Indian startup ecosystem splitting up is because the company has some shift in its path and has subverted its vision,” Siddharth Pai, founding partner of 3one4 Capital, said.
The proverbial funding winter – marked by a significant slowdown in venture capital inflows – further exacerbated the pressures on Indian startups. Following years of aggressive scaling fuelled by readily available capital, founders are now contending with tightened funding pipelines and heightened investor scrutiny. “The market was very buoyant in 2020-21. Startups raised a lot of capital and growth projections were very robust and investors wanted delivery on these, but it was extremely difficult given the macro-economic changes… there were huge tailwinds for edtech,” Madhur Nevatia, partner at executive search firm Longhouse Consulting, told TOI.According to data from industry trackers, venture funding in India fell sharply in 2023, with startups forced to focus on cost-cutting, operational efficiency, and paths to profitability. Data from Venture Intelligence showed that startups raised $8 billion in 2023, touching a six-year low. For many founders, the inability to secure fresh funding or align with changing investor priorities created insurmountable challenges, prompting some to step aside.
The funding crunch also exposed deeper structural issues within some startups, from unsustainable business models to over-ambitious valuations. In such scenarios, founders often find themselves caught between recalibrating strategies and managing investor expectations, a dynamic that can lead to burnout, loss of motivation, or disagreements over the company’s direction. “Sometimes it is also that the stage of the company is such that it no longer meets your skillset in the larger scheme of things. With the entire structure entirely changing, one may no longer be relevant,” Nevatia added.Market analysts suggest that these exits are part of the ecosystem’s broader maturation, with founders becoming more willing to acknowledge when a venture is no longer viable or aligned with their aspirations. Unlike the early days of the startup boom, when perseverance was seen as a badge of honour, today’s founders are more likely to prioritise personal well-being and professional reinvention.
While some transitions are part of planned leadership changes aimed at bringing in operational expertise or fresh perspectives, others stem from unresolvable tensions within leadership teams or external pressures that force tough decisions. Ola co-founder Ankit Bhati left Ola in 2018, when it was primarily a cab aggregator. This was just a year before Ola Electric was founded and took away a significant focus on part of the parent company’s leadership bandwidth. Multiple changes also occurred at Zomato, in the face of relentless demands of leading a public company. Co-founder Akriti Chopra resigned last year. Chopra joined a list of three other co-founders who exited the company from 2018 to 2023 – Pankaj Chaddah, Mohit Gupta, and Gunjan Patidar.
