India has become a hub of innovation and entrepreneurship in the last 10 years, birthing over 100 unicorns, which are privately owned firms valued at upwards of US$1 billion. While many of these firms originated with foreign investors, there are now signs of a shift in this pattern towards a more locally-owned venture capital landscape, although ownership will still largely be supplemented by a combination of investor interest, policy change, and national economic priorities.
Why Were Indian Unicorns Largely Foreign Owned?
Throughout the early 2010s, Indian startups engaged heavily with privately owned venture capital (VC) and private equity (PE) firms located in foreign markets including, but not limited to, the US, China, Singapore, and Japan. Private investors from abroad, in addition to offering funds, were also able to provide global exposure and experience. Some examples include:
- Flipkart, one of the first unicorns in India, was funded by Tiger Global and later acquired by Walmart.
- Paytm, secured funding from Alibaba and SoftBank.
- Ola, Swiggy and Zomato, facilitated large investments from Chinese and US firms.
Why the two-fold model of beginning and ownership? There was a lack of deep-pocketed Indian investors, almost no functional VC ecosystem locally, and the allure of large foreign cheques was simply too enticing.
The Return Towards Local Ownership
1. Government-Promoted Atmanirbhar Bharat: The Indian government has pushed self-sufficiency hard with an emphasis and talk of ‘Atmanirbhar Bharat.’ Along with restrictions for neighboring countries (to FDI especially China), it is promoting certain incentives for Indian investors, and start-ups so that the policy framework is supportive of domestic participation.
2. Increase in Indian Venture Capital Power: Indian firms like Blume Ventures, Chiratae Ventures, Elevation Capital, Nexus Venture Partners, etc. are now thriving as more developed, emerging from the growth stage, and leading early-stage rounds in some promising start-ups, and we see Indian family offices, sovereign wealth funds, and corporate houses, are also now playing the role of serious investors.
3. IPOs and Indian Retail Investors: With several unicorns going through IPOs in India (e.g., Zomato, Nykaa, Paytm), Indian retail and institutional investors are able to invest in some of these unicorns and reap the benefits slowly moving the ownership from foreign to local.
4. Buying Back and Selling Down: From the other side, founders and Indian institutional investors, are taking back stakes and increasing their ownership in companies where foreign investors have sold down or exited all together (Soft Bank and Alibaba for example have sold down very heavily into the Indian start-up ecosystem, and helped create space for Indian funds now).
Also read: Indian Startups Accelerate IPO Plans Before 2026; Here’s why
Notable Examples of Local Ownership of Unicorns Rising
| Startup | Key Change Towards Local Ownership |
| Paytm | Alibaba’s exit and stake reduction; Indian mutual funds step in post-IPO |
| Byju’s | Indian investors like Ranjan Pai and Premji Invest supporting recent funding rounds |
| Zomato | Public listing increased Indian retail and institutional shareholding |
| Ola | Indian investors like Temasek India and founder Bhavish Aggarwal increasing stake |
Why This is Important
- Economic sovereignty: Indian ownership in key tech and fintech sectors will decrease dependence on global capital while empowering India to control its digital economy and its future.
- Wealth creation for future capital formation: Local ownership will create wealth within the country. Returns on investment generated from local startups can be reinvested into the next generation of entrepreneurs in India.
- Closely aligned “national” policy perspectives: Investment in Indian startups by Indian promoters and investors will have a better affinity with key national priorities whether that is data privacy, re-employing local talent, or building digital infrastructure. Investors can benefit from being on the same page with mobility.
- What to watch for
- Foreign capital is still dominant and will replace domestic capital as a key driver of the growth of globally competitive unicorns.
- Local capital is increasing but remains relatively small w.r.t to global peers.
- Unicorns are still figuring out the balancing act between strategic global partnerships and local nationalistic investment sentiment.
Conclusion
India’s unicorns are gradually becoming less foreign – not only in origin but nationality. Foreign capital, while critical to first moving out of the stable, is gradually being replaced by domestic investors and institutional and public shareholders. If managed properly, this can lead to a more resilient and self-sustaining national startup ecosystem in which innovation can create wealth and influence which is kept and sustained in India.
Written by Pranjal Data
