Indian Startups Face Funding and Regulatory Challenges, but Bharat Holds the Key to Future Growth: Rukam Capital’s Archana Jahagirdar

Early-stage funding gaps, regulatory complexity, and talent retention continue to test India's startup ecosystem​

New Delhi, May 12 – Indian startups are navigating a complex landscape marked by funding inconsistency, regulatory hurdles, and fierce competition, says Archana Jahagirdar, Founder and Managing Partner at Rukam Capital. Despite the sector’s explosive growth over the past decade, these persistent challenges demand strategic adaptability and deeper engagement with markets beyond metros.

Jahagirdar, whose venture capital firm has backed consumer-centric brands like Beco, Sleepy Owl, Indus Valley, GO Desi, Burger Singh, and Antithesis, emphasized that while innovation and ambition run deep in India’s startup DNA, access to reliable early-stage funding remains a critical bottleneck.

“Unlike more mature ecosystems, India still sees uneven distribution of capital, with non-metro startups facing even steeper barriers,” she said.

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Regulatory and Market Obstacles Remain​

Apart from funding issues, Indian startups often struggle with complex taxation, cumbersome bureaucracy, and talent retention, all while trying to build consumer trust in a price-sensitive market.

Jahagirdar warns that many founders fall into the trap of chasing valuations without a clear path to profitability or product differentiation. She advocates for startups to focus on strong fundamentals, agile operations, and technology-enabled scalability.

“Surrounding themselves with the right partners, whether VCs, advisors, or early evangelists, can make all the difference,” she noted.

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A Decade of Transformation​

India’s startup ecosystem has seen dramatic expansion, growing from just a few thousand in 2016 to over 150,000 today. Consumer tech has been a cornerstone of this transformation, reshaping how Indians shop, pay, travel, and engage online.

“We are seeing a new generation of consumer tech startups coming from Tier 2 and Tier 3 cities, creating products that are hyperlocal, digital-first, and highly personalised,” Jahagirdar observed.

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Venture capital has played a catalytic role, not just by injecting capital but also by helping startups refine business models, scale up, and build strong leadership teams.

Building for ‘Bharat’ Offers the Next Big Opportunity​

Jahagirdar highlights the largely untapped potential in "Bharat" — India's non-metro regions, which house over 63 per cent of the population. She believes startups that create context-driven, cost-effective, tech-enabled solutions in sectors like agritech, education, clean energy, and financial services can make a meaningful impact.

“When you are building for Bharat, you are not just solving for scale, you are solving for relevance,” she said.

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A Call for Smarter Strategies and Policy Reforms​

To succeed in the increasingly competitive funding environment, Jahagirdar urges founders to develop compelling narratives, robust business plans, and explore alternative funding avenues like angel investments, crowdfunding, venture debt, and government grants.

Government initiatives such as Startup India, the Seed Fund Scheme, and state-led programs have helped shape the ecosystem by offering funding, mentorship, and regulatory support. Platforms like Startup Mahakumbh have also been pivotal in connecting early-stage ventures with national audiences.

To strengthen the ecosystem further, Jahagirdar recommends simplifying compliance procedures, enabling dual listing, and enhancing incentives for domestic investors.

“Indian startups aren’t just chasing growth anymore. They’re building with clarity, better unit economics, and a long-term vision. The bar is higher now, and that’s a good thing,” she concluded.

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