A new ORF study finds that India’s high-tech startups are increasingly outperforming returnee-led ventures, signalling a structural shift in the country’s entrepreneurial advantage
India’s startup ecosystem, once believed to draw disproportionate strength from Silicon Valley returnees, is now being powered primarily by entrepreneurs who built their careers entirely at home.
A new Occasional Paper published by the Observer Research Foundation (ORF) challenges the long-held assumption that overseas exposure confers a structural advantage.
Authored by AnnaLee Saxenian, the University of California, Berkeley professor known for her research on Silicon Valley’s rise, and technology entrepreneur and academic Vivek Wadhwa, the study analyses 596 high-tech startups founded between 2016 and 2023. Its core sample includes 521 firms with complete founder histories.
The findings are, in the authors’ words, “largely unexpected.”
Startups founded by all-domestic teams show “stronger and statistically significant associations with performance outcomes” than those led by returnee entrepreneurs.
The paper adds that “returnee-founded firms do not systematically outperform domestic firms on funding, valuation, or revenue, and in some cases exhibit weaker relationships with these outcomes.”
For policymakers and investors who once viewed foreign experience as a badge of credibility—particularly in early-stage fundraising—the results mark a notable recalibration. A decade ago, overseas credentials often opened doors. That edge, the study suggests, no longer guarantees superior commercial outcomes.
The rise of the ‘hometown heroes’
The report highlights the growing dominance of domestic founders across sectors such as e-commerce, fintech, mobility and enterprise software.
These “hometown heroes,” the authors observe, possess deep contextual insight and agility that allow them to navigate India’s regulatory complexity, consumer behaviour and cost sensitivities more effectively. They now outnumber returnees and have built many of the defining technology firms of the past decade.
In practical terms, competitive advantage has shifted. Local market fluency increasingly trumps a global resume.
The maturation of India’s venture capital ecosystem, the emergence of second-generation founders, and the scaling of domestic unicorns have further reduced reliance on diaspora-led networks.
From leading role to supporting cast
The study does not dismiss the value of returnees—but it reframes it.
It finds that returnees who join ventures after formation are more frequently associated with firms that reach higher growth categories, suggesting that overseas experience may now function better as a complementary asset rather than a founding advantage.
Returnees continue to add value, particularly in deep-tech and knowledge-intensive sectors. But the era in which they were presumed to be the primary drivers of scale appears to have faded.
The authors describe this shift as the “returnee paradox”—questioning why overseas experience, transformative in other economies, “appears muted or even displaced in India’s contemporary startup ecosystem.”
A different policy path from China
The paper also situates India’s trajectory in a global context.
China, it notes, actively built policy scaffolding around returnee talent, deploying targeted incentives, special zones and funding programmes that “created a relatively welcoming environment” for diaspora founders.
India, by contrast, adopted a broad-based approach. Initiatives such as Startup India did not distinguish between returnee and non-returnee founders, effectively creating a level playing field.
That difference, the study suggests, may have allowed domestic entrepreneurial capabilities to deepen organically—without institutional bias.
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