Failed startups are common worldwide, but the consequences for founders vary across ecosystems. In the US, when a startup doesn’t work out, there is often a soft landing: a decent chance of acqui-hire, product acquisition, or team absorption by another company. This not only cushions financial loss but also preserves founder and team momentum, allowing them to transition to new ventures without starting over completely.
In India, the reality is quite different. Founders often face a complete shutdown without financial cushioning or clear forwarding paths. The startup ecosystem here hasn’t yet built reliable fallback mechanisms, reinforcing the founder’s blunt observation that failure means “you lose everything.”
Check his detailed LinkedIn post:
“In the US, if your startup doesn’t work out, there’s a decent shot you get acqui-hired. Your product gets bought. Your team gets absorbed. You walk away with something.”
In US tech hubs like Silicon Valley, acquihiring and product buyouts are relatively routine. Companies view failed startups as valuable talent pools or complementary product lines, preserving founder careers and delivering partial financial recovery. This ecosystem maturity encourages serial entrepreneurship and fosters risk-taking, knowing there is some safety net.
“In India? Acquihire isn’t a norm, it’s an exception you hear about in news articles.”
While acquihiring is rarer in India, it is gradually emerging with high-profile examples:
- Swiggy’s acquihire of AI startup Kint.io
- Ola’s acquihire of Pikup.ai
- Lenskart’s acquihire of Courier-Wala
- Zoho’s acquihire of ePoise Systems
- BHIVE’s acquihire of Praemenio
These deals signal a growing but still limited culture of talent-driven startup exits. Unlike the US, where acquihire is ingrained, in India it’s an outlier, underscoring the need for broader adoption and ecosystem support.
“The secondary market is almost non-existent in India. No one wants to buy, everyone wants to build.”
Contrary to this perception, India’s secondary market is maturing quickly and gaining importance:
- In 2024, secondary transactions comprised 62% of large startup deals ($50M–$500M).
- Liquidity from secondaries and public block deals surged past $5 billion in 2024, a leap from just $700 million in 2023.
- Private capital-backed exits reached $25 billion in 2023 and $11.5 billion in the first half of 2024.
While still behind developed markets in scale, the secondary market’s growth is a positive sign that liquidity options beyond IPOs are expanding for Indian founders and investors.
“When you fail in India, there’s no soft landing. No partial exit. No bridge to your next thing. You shut shop. You dust off your resume.”
For many Indian startup founders, failure often means an abrupt end: shuttering operations and reverting to job hunting with few safety nets. Unlike in ecosystems that recognize startup experience, Indian founders face stigma and career setbacks, forcing restarts often far from prior entrepreneurial status. This cultural challenge hampers serial entrepreneurship and talent retention.
“And chances are, you won’t start from where you left. Because here, failure doesn’t get valued as experience; it gets filed under ‘risk.’”
The stigma around failed startups remains significant in India. While some investors now appreciate the learning in failure, broader corporate attitudes tend to classify failed founders as risky hires, making re-entry into entrepreneurship or building new ventures harder. This cultural factor leads many entrepreneurs to abandon startup ambitions after failure.
“We talk a lot about celebrating entrepreneurship, but until we build an ecosystem that catches founders when they fall, we’ll keep losing people who could have built India’s next big company.”
This is the ecosystem’s challenge: without mechanisms for graceful exits, talent recycling, and second chances, India risks losing its most promising entrepreneurs. Building robust secondary markets, encouraging acquihires, destigmatizing failure, and providing supportive policies can create a safety net that retains founders within the innovation economy.
The Contrast: Positive Outliers Show Graceful Exits Are Possible
Though the majority struggle, some founders successfully exit. A Reddit post cited a 14-month-old startup sold in a 100% buyout to a private equity firm, without the founder continuing post-sale. Such examples highlight that while exceptions, graceful exits through acquisitions do occur, showing potential paths for improvement in India’s ecosystem.
Normalizing Graceful Exits: What India Needs
To build resilient entrepreneurship, India must:
- Grow acquihire culture so talent absorption is routine.
- Deepen secondary markets for liquidity ahead of IPOs or shutdowns.
- Promote policies that recognize failure as experience, not risk.
- Offer public and private supports like incubation and reskilling for founders post-failure.
- Strengthen corporate, investor, and ecosystem incentives for founder-friendly exits.
