Capability Without Ownership: Who Should Fund India's First Risky Bets?

More Builders, Fewer Owners

The numbers point in opposite directions. India had 21.9 million developers on GitHub in 2025, up from 4.5 million in 2020. As reported, it added more than 5 million in a single year. Yet seed funding, the first and riskiest money that turns an idea into a company, fell 37 per cent to $698 million in the first nine months of 2026.

That followed a 30 per cent fall in 2025. The tension is real. India is creating more technical capability than ever, but far less ownership of what that capability produces. Is the seed squeeze a threat to India's future or a sensible correction?

The case for urgent concern Roopa Kudva's argument starts with who captures the value.

India clearly captures jobs: the tech industry employs about 5.8 million people and global capability centres about 2.36 million. Much of the profit stays in India too, through Indian IT services firms. But ownership of products, platforms and IP is the weakest layer.

NASSCOM estimates software products at about $16.1 billion of a $282.6 billion industry. Ownership is created early, she argues, when ideas are unproven and most will fail. Someone has to fund conviction before evidence arrives.

When seed capital dries up, a talented engineer in Bengaluru weighing a GCC job against a risky startup has every reason to take the safe salary. The cost is not one failed company; it is an entire generation of founders who never start.

The case for patience There is a strong counter-argument.

After the 2021 funding boom, many startups were built on growth with little thought to profit. Analysts argue that today's selectivity is a healthy maturation: capital is concentrating in fewer, higher-conviction hands and demanding sound unit economics.

Total tech funding actually rose 7 per cent to $10.3 billion and early-stage funding rose 27 per cent. India remains the third most-funded tech ecosystem in the world, after the US and the UK. On this view, money is not the binding limit.

India spends only about 0.84 per cent of GDP on research and development, far below leaders such as Israel at 6.33 per cent. Without deep research and without a domestic market willing to pay for Indian products, more seed money would simply fund more fragile companies.

TAN's position TAN's position is that both sides are right about different things and that this points to a specific role for the state.

The correction is healthy where it weeds out weak business models. But the seed stage is exactly where private capital is least willing to accept failure and where ownership is born. The state already has tools: the SIDBI-run Fund of Funds for Startups, with a second Rs 10,000 crore corpus announced in the 2025-26 Budget and the Rs 1 lakh crore RDI Scheme, which requires funded IP to stay in India.

These should be used to crowd private seed investors in, by sharing early risk and matching private cheques, not to replace them. And they must be paired with higher R&D spending, so there are better ideas to fund. For GS3, the lesson is that developer numbers measure capability, but only risk capital and research turn capability into national ownership.