Decline in Startup Ventures from India’s Elite Institutes

India’s startup ecosystem, long driven by graduates from the country’s top institutions like the Indian Institutes of Technology (IITs) and Indian Institutes of Management (IIMs), is witnessing a noticeable shift in 2025. Data from industry observers indicates that the number of fresh graduates choosing to launch startups directly after completing their degrees has declined significantly compared to previous years.

This marks a departure from the trend that defined the last decade, where a surge of student-led ventures attracted venture capital and gave birth to several unicorns founded by IIT/IIM alumni. The slowdown reflects broader changes in the funding climate and the career choices of top talent.

Investor Caution Dampens Risk Appetite

One of the key reasons behind the decline is the growing caution among venture capitalists and angel investors. The global macroeconomic climate has slowed funding inflows into early-stage startups, especially those with untested business models. With capital becoming harder to access, many aspiring entrepreneurs feel discouraged from taking the plunge immediately after graduation.

Investors themselves are becoming more selective, prioritizing proven concepts, strong revenue models, and sustainable growth. This has reduced the appetite for funding experimental student-run ventures, which traditionally relied on early-stage bets to establish credibility in the market.

Shift Toward Stable Employment Opportunities

At the same time, graduates from IITs and IIMs are showing a stronger preference for secure, well-paying jobs in established companies. With attractive offers still flowing in from consulting firms, multinational corporations, and technology majors, many students are prioritizing stability and financial security over the uncertainties of entrepreneurship.

Experts highlight that the pandemic years, followed by waves of layoffs across the tech sector, have influenced career decisions. Graduates today are more cautious, seeking to build financial safety nets before considering high-risk entrepreneurial paths.

Changing Culture on Campuses

Campus culture at IITs and IIMs has also evolved. A decade ago, there was a strong push toward entrepreneurship, with incubators, pitch competitions, and venture funds encouraging students to launch startups while still in school. While such programs continue to exist, the enthusiasm levels are no longer at their peak.

Students now tend to explore entrepreneurial ambitions through internships, side projects, or after gaining a few years of professional experience. Faculty and mentors increasingly advise graduates to gain exposure in industry before venturing out on their own, allowing them to build domain expertise and networks that can help sustain a startup in the long run.

Industry Voices on the Decline

Industry leaders note that the decline should not be interpreted as a lack of entrepreneurial spirit but rather as a correction in expectations. According to startup ecosystem analysts, the “gold rush” of campus entrepreneurship has matured. Today’s graduates are still entrepreneurial at heart but are choosing to delay their ventures until they are better prepared to withstand market pressures.

Some alumni also point out that the prestige of securing top jobs at consulting and tech giants continues to carry weight, especially among families of students. This social factor further encourages graduates to take up traditional career paths before testing entrepreneurial waters.

What It Means for India’s Startup Ecosystem

The decline in immediate entrepreneurship from IITs and IIMs does not necessarily spell bad news for India’s startup ecosystem. Instead, it could lead to more sustainable and resilient ventures in the future. Startups founded after gaining a few years of corporate experience may have stronger business fundamentals, better leadership, and deeper market insights.

Moreover, government policies, state-level startup missions, and corporate accelerator programs continue to provide fertile ground for entrepreneurial growth. While campus-born unicorns may be fewer in number today, the next wave of innovation could be driven by more seasoned professionals bringing both vision and experience to their startups.

Outlook Ahead

As India moves toward its goal of becoming a $5 trillion economy, entrepreneurship will remain a key driver of innovation and job creation. IIT and IIM graduates will undoubtedly play an important role in this journey, but the timing of their entry into the startup ecosystem is shifting.

Instead of launching companies straight out of college, many of tomorrow’s startup leaders may first spend years building skills in technology, management, and finance before turning into founders. This trend could create a more mature entrepreneurial landscape—one less about hype and more about sustainable value creation.