The Startup Divide, Ultrahuman’s Redesigned Ring, and Chhalaang 4.0

Indian startups today are living two very different realities. At the top, a handful of scaled players are raising large rounds, turning EBITDA positive, and gearing up for IPOs. Urban Company, with $37 million profit in FY24, is targeting a $2 billion listing that could deliver 29x returns for its earliest backers. Boat, with ₹3,000+ crore in annual revenue and steady profits, is polishing its DRHP. Physicswallah, after touching ₹3,000 crore in revenue and ₹432 crore adjusted operating profit in FY25, is IPO-ready too. At the other end, first-time founders are struggling to even raise seed checks. Seed-stage deal volume fell 44% YoY in H1 2025; Series A and B rounds contracted nearly 50% from their 2021–22 peaks. It is no exaggeration to call this a “tale of two ecosystems.”

The funding slowdown has been brutal in sectors that once defined India’s growth narrative. Healthtech and edtech, once darlings, saw funding fall by 60–70% from FY22 levels. Byju’s implosion cast a long shadow, with Unacademy, Vedantu, and others forced into layoffs and down-rounds. In contrast, capital still flows into “safe” categories like D2C beauty and personal care - Mamaearth, Sugar, and Plum collectively raised over $350 million in 2024, despite a broader downturn. It shows where investors’ risk appetites now lie: brands with quick payback cycles over deep-tech plays that need patient capital.

The concentration at the top is distorting incentives. Globally, 41% of all VC dollars in 2025 went into just 10 AI-first companies, led by OpenAI, Anthropic, and Inflection. In India, the same pattern holds: Flipkart, Zepto, and Lenskart raised billion-dollar rounds even as hundreds of smaller startups shut shop. Of the $7.2 billion raised by Indian startups in 2024, 70% went to just 20 companies. In deep-tech, fewer than 15 startups managed to raise Series A or beyond last year. The rest are stranded in the “valley of death,” surviving on grants and accelerators, but unable to cross into scalable growth.

Policy was supposed to balance this. The Startup India Seed Fund (₹945 crore) and the Fund of Funds (₹10,000 crore corpus) were designed to catalyze early-stage checks. But as of March 2025, less than 60% of committed funds had been disbursed, with founders citing six-to-nine month delays between application and sanction. For a seed-stage company with six months of runway, bureaucracy is often a death sentence.

The investor landscape reflects the split. Global capital has pulled back: Tiger Global has almost frozen new India bets, SoftBank is cautious, and Sequoia’s rebrand to Peak XV coincided with partner exits. Domestic investors are stepping up - Nexus, A91, 3one4, and family offices are writing more early checks - but their bandwidth is finite. In 2024, early-stage deal count fell below 900, down from 1,500+ in 2021. Meanwhile, consolidation has become the survival strategy. Physicswallah acquired Sarrthi IAS; Globalbees, Mensa, and Thrasio-style roll-ups continue to pick off distressed D2C brands. Scale players are eating smaller fish before they even reach growth stage.

Globally, India is not alone. In the U.S., the “Magnificent Seven” tech giants now account for 30% of S&P 500 market cap, while early-stage VC activity has halved since 2021. China’s startup ecosystem, once frothy, is dominated today by a few giants in e-commerce and AI, with small ventures stifled by both regulation and capital scarcity. India risks falling into the same trap: a handful of public-market-friendly giants, while the next generation never gets a shot.

The road ahead has three plausible scenarios. One, capital concentration worsens, creating an ecosystem of giants and “missing middles.” Two, policy fixes early-stage bottlenecks - faster disbursement, tax breaks for angel capital - helping seed flow revive. Three, founders themselves change tack, bootstrapping longer and focusing on profitability from day one, effectively rewriting the playbook. The likeliest outcome may be a hybrid: more IPOs at the top, but fewer new disruptors entering the funnel.

The real test is not whether India can create more IPOs - it’s whether it can still create new companies worth taking public at all.

Let’s go through what else is happening in Indian startup world - Grab your simmering cup of StartupChai.in and unwind with our hand-brewed memes.

“Vardan Mangunga Nahi”: After US Import Ban, Ultrahuman Plans Redesigned Smart Ring

Ultrahuman is hustling to beat the US import ban clock with a redesigned smart ring, set to ship just before the October 21 deadline.

To dodge future tariff headaches, the startup is even eyeing US manufacturing, though current duties already eat into margins by 10–13%. For now it’s profitable, but the price tag may soon climb from $350 to $400.

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“Sanso Ki Zarurat Hai Jaise”: Zupee To Pivot To Short Video Content Post RMG Ban

With real money gaming off the table, Zupee is hitting rewind and pivoting to short video content right inside its existing app.

A pilot is already live, and the platform plans to roll out subscriptions while setting up an overseas entity, likely in the US, for global users. Think of it as Zupee’s bid to swap cash stakes for screen time.

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“Aaj Ki Naari, Sab Par Bhaari”: Chhalaang 4.0 promises bigger stage for women technologists with Rs 7 lakh in prizes

Bengaluru is set to host Chhalaang 4.0 on September 13, bringing together 350+ women engineers on ground and nearly 10,000 registered participants nationwide.

With Rs 7 lakh in prizes up for grabs, the event isn’t just a coding contest but a platform tackling career breaks, biases, and barriers in tech. What began in 2022 as a small initiative has now leapt into a nationwide movement for women innovators.

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1. Venture Catalysts has raised INR 150 Cr ($18 Mn) through a mix of primary and secondary transactions, with marquee backers including Aishwarya Rai, Shah Rukh Khan’s family office, and Ashish Kacholia. The funds will fuel leadership hires and new fund launches.
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2. Trufrost & Butler has secured $7M in growth funding led by Carpediem Capital to boost order fulfilment, expand service infrastructure, and ramp up domestic manufacturing. The company also plans to tap select international markets with this fresh capital.
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3. Flipspaces has bagged $50M in Series C funding from global investors including CE-Invests, Panthera Growth Partners, and SMBC Asia Rising Fund. The interior design firm will use the capital to scale geographically, fortify its supply chain, and sharpen its AI-driven tech.
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