As India positions itself as the world’s third-largest startup ecosystem, the term “startup” has become part of everyday language. Political leaders invoke it in speeches. Schools host startup fairs. Influencers urge followers to “startup karo.”
But amid the enthusiasm, the word itself is often misunderstood. What exactly is a startup? And how is it different from a traditional business?
This report takes a closer look—through definitions, business models, and Indian case studies.
What a Startup Is—and What It Is Not
A startup is not just a newly registered business. It is not simply a small shop, a tuition center, or a local agency.
In contemporary business terms, a startup is a young company built to grow fast by solving a problem through innovation, often using technology. It operates in uncertainty and typically explores new business models or industries.
What sets a startup apart is not its age, but its intent to scale, its approach to risk, and often its reliance on technology.
Characteristics of a Startup
1. High Growth Orientation
Startups are designed to scale, not stay local. They aim to serve thousands or even millions of users within a short period.
For instance, Zomato started as a food discovery platform in Delhi in 2008. It is now present in over 20 countries. That trajectory defines startup ambition.
2. Problem-Solving Focus
Startups begin with identifying a real-world problem.
- Urban Company emerged to fix the inefficiency in accessing home services.
- Dunzo started by fulfilling errands in Bengaluru using WhatsApp.
These companies weren’t created to sell a product—they were designed to eliminate daily friction.
3. Use of Technology as Infrastructure
Most startups rely on digital platforms, mobile apps, or software as the base of their operations. This technology is not optional—it is the engine that enables scale.
- Razorpay enables digital payments for thousands of businesses.
- Ninjacart uses supply chain tech to connect farmers with retailers.
Without technology, these business models would not be viable.
4. Innovation and Risk
Startups operate in high-uncertainty environments. Unlike established businesses, they do not always have clear paths to revenue or profit.
They are often funded by venture capital, operate at a loss for several years, and adjust models frequently.
India’s Evolving Startup Landscape
As of early 2024, India is home to over 117,000 DPIIT-recognized startups, according to government data. These ventures span edtech, fintech, healthtech, agritech, EVs, and deeptech.
India now hosts more than 100 unicorns—startups valued at over USD 1 billion (approximately Rs 8,300 crore).
Among the most prominent:
- Zerodha: A bootstrapped discount brokerage platform that transformed stock investing.
- Ola: Introduced app-based cab-hailing before Uber gained traction in India.
- Byju’s: Turned digital learning into a billion-dollar category, now under scrutiny but still a pioneer.
- PhysicsWallah: Focused on Tier-2 and Tier-3 students, achieving unicorn status without large venture rounds.
What Doesn’t Qualify as a Startup?
A business is not a startup simply because it is new.
For example:
- A shop selling handmade pickles in a local market is a small business.
- A coaching center offering standard tuition in one neighborhood is not a startup.
Unless these businesses use innovative methods, digital platforms, and scalable models, they remain small enterprises—not startups.
If that same pickle brand builds an e-commerce model to serve nationwide demand using cloud kitchens and logistics tech—it enters the startup zone.
Who Can Launch a Startup?
In India, the barriers to entry are lower than ever:
- Internet access is widespread.
- Digital payments and logistics are mature.
- Platforms like ONDC and UPI reduce setup costs.
A startup can be launched by anyone—student, homemaker, tech worker, or retiree. What matters is not background but clarity of vision and capability to execute.
Case Study: Zerodha
Launched in 2010 by brothers Nithin and Nikhil Kamath, Zerodha offered zero-commission trading when legacy brokers charged hefty fees.
The company did not raise venture capital, stayed profitable, and today handles 15% of India’s total retail trading volume. It employs over 1,500 people and is valued at over Rs 20,000 crore (approx. USD 2.4 billion).
Zerodha redefined finance for retail India—without marketing blitz or celebrity endorsements.
Why the Startup Conversation Matters
Startups are not just economic engines—they are cultural signals. They represent:
- Shifting aspirations from job-seeking to job-creating
- Adoption of digital-first solutions
- Grassroots innovation emerging from non-metro cities
In a country where over 50% of the population is under 30, the idea of a startup is more than a business choice—it is a generational statement.
As the startup economy matures, so must the public’s understanding of what these companies are—and how they differ from traditional business ventures.
