A closer look at India’s fast-growing startup landscape is challenging long-held assumptions about who builds the most resilient companies in the country.
A new study shows that homegrown Indian founders are outperforming returnee entrepreneurs from the diaspora over the long term, despite the latter’s overseas exposure. The research was authored by AnnaLee Saxenian, professor at the University of California, Berkeley, and tech entrepreneur-academic Vivek Wadhwa.
The study analyzed 596 Indian high-tech startups founded between 2016 and 2023. It compared performance across key indicators such as company longevity, employee strength, valuation, and revenue. The findings suggest a clear shift from earlier trends, including conclusions drawn in the authors’ own previous work.
According to the research, India’s startup ecosystem has entered a new phase. In sectors such as AI, fintech, mobility, and enterprise software, domestic founders now lead on commercial outcomes. Professionals returning from overseas increasingly add value in specialized or functional roles rather than as primary founders.
The authors described this shift as the “returnee paradox.” While global experience has helped entrepreneurs in other countries, its impact appears reduced in India’s current technology environment.
“The provocative takeaway is that India managed to nurture world-class entrepreneurs indigenously during a time when many expected the diaspora to lead the charge,” the authors said in their paper, published by a policy think tank. Saxenian and Wadhwa have long documented returnee entrepreneurship and earlier argued it would be central to innovation in countries like India and China.
“I expected our latest study to show that returnees dwarf the domestic entrepreneurs — even 10 years ago that might have been the case, but it’s clearly no longer true,” Saxenian said. Founders with deep understanding of local markets and faster adaptation to domestic needs are now thriving, she added.
The study notes that returnee founders still enjoy an early advantage in raising seed and early-stage funding due to global networks. However, this edge fades over time.
“For decades, non-resident Indians like me were treated like kings when we went back to India, it gave us a superiority complex,” Wadhwa said. “I thought the study would make returnees like me look like heroes.”
“Instead, we look like a bunch of losers compared with local entrepreneurs, it was the exact opposite of what I expected to find,” he added.
The research team also included MH Bala Subrahmanya of the Indian Institute of Science and DPK Muthukumaraswamy, founder of KrutiBimb Pvt., both based in Bangalore.
Despite extensive external reviews and data checks by academics from institutions such as Harvard University and Cornell University, the results remained unchanged.
“India and China are not depending on the US anymore, they can innovate on their own,” Wadhwa said.
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