Even though India's startup ecosystem has been celebrated for minting unicorns, it has yet to evolve into one that consistently delivers liquidity events and meaningful returns for investors.
And that is precisely what is now being put to the test. As venture capital and private equity firms that backed Indian startups during the 2018-22 funding boom come under pressure to return capital to their limited partners, the focus is shifting from billion-dollar valuations to actual exits and cash returns.
A Mint analysis of data on 139 VC- and PE-backed companies sourced from market intelligence platform Tracxn showed that only 77, including Swiggy and Zomato, have generated a liquidity event, while the rest are either still pursuing exits or lack a visible path to one.
A liquidity event could be an initial public offering, a merger or acquisition, a founder buyback, or a PE stake sale, and does not include smaller secondary events like employee stake buybacks.
Of the remaining, 34, including BharatPe, boAt, Moglix, and BrowserStack, among others, are pursuing liquidity with plans for a public listing, and 26, including Apna and Dream11, have no visible path to an exit, and two have shut down.
Companies were classified as having no visible path where there were no publicly disclosed IPO plans, strategic sale processes, secondary transactions or acquisition discussions as of June 2026.
While unicorns have emerged since, this analysis focuses only on those that were valued at over a billion dollars by the end of 2022.
The only resort
India's startup ecosystem has historically offered fewer exit routes than developed markets, making liquidity harder to achieve, according to experts.
"India and Asia generally have a weaker track record on exits compared with the US because the avenues for liquidity are not as developed in parts," said Rishi Aswani, managing director at Houlihan Lokey, who advises private equity firms, limited partners and hedge funds on valuation and fund advisory matters.
To be sure, of the 77 startups that saw a liquidity event, about 44 went public. Acquisitions accounted for 29 liquidity events, including deals involving startups such as Unacademy and Rivigo, as well as larger PE-backed buyouts across sectors such as healthcare, manufacturing and infrastructure.
India's exit ecosystem remains less mature than the US's, agreed Piyush Gupta, founder and managing partner at secondary investment firm Kenro Capital.
“In the US, large companies with listed stock as currency play an important role in creating liquidity because they can acquire venture-backed companies for cash and stock. Google Wiz M&A for $32 billion cash, or CapitalOne Brex M&A for $5.2 billion for cash and stock, were a few. In India, such large strategic buyers are fewer and have done very small M&As,” he said.
Many early investors also have to wait till the IPO. “Earlier-stage investors often stay invested longer than they previously expected, partly because liquidity options remain limited,” said Rohit Bhayana, co-chief executive and co-founder of Oister Global, a private markets asset manager, which recently launched dedicated secondary funds.
In the absence of other viable exit routes, IPOs remain the primary path to liquidity. “For many technology and consumer internet companies, the IPO route remains a primary exit mechanism, as opposed to M&A. Exits to strategics have been low, though exits to buyout funds is on the rise,” said Aswani.
The secondary ecosystem, remaining in the early stages, is picking up fast. “We started with secondaries after seeing many PE and VC funds struggling with liquidity cycles, during our experience as a fund-of-funds investor,” said Bhayani.
The West Asia war impact
However, market volatility following the West Asia war has slowed unicorns' IPO plans.
“Companies are still preparing for IPOs behind the scenes. However, the pace has slowed from a few months ago when we would see multiple companies every week beginning IPO preparations,” Prashant Singhal, partner and leader, Clients & Industries, EY India, said, adding that several listings have been delayed rather than abandoned.
Singhal added that had the current geopolitical situation not emerged, “we would probably have seen seven or eight more unicorns get listed over the last few months".
Valuations remain a hurdle for startups that raised capital during the 2020-21 funding boom. “Many early unicorn listings struggled post-listing,” Singhal said, prompting private companies to recalibrate expectations to match public market realities.
Even when IPOs occur, they do not automatically translate into distributions for LPs.
“Investors do not necessarily achieve full liquidity immediately after listing because of restricted allocations to sell in the IPO and lock-up periods,” Gupta said.
“In the US, due to public markets being significantly more liquid and the tax rules permitting it, funds are able to distribute shares in the listed companies to their LPs. In India, despite an IPO, investors need to fully monetize their holdings to make distributions to the LPs,” Gupta added.
The gap between a liquidity event and actual distributions can often stretch over months or even years.
For many PEs and VCs raising maiden funds, this may be a roadblock. “Investors today are increasingly evaluating fund managers based on their ability to deliver returns rather than simply the type of fund they manage,” Bhayana said.
“The most important consideration remains the manager's ability to generate returns while navigating market risks.”
