The Startup Illusion in India

India proudly claims over 1.2 lakh registered startups. On paper, that number sounds like an ecosystem bursting with innovation. But look closer, and you’ll see a different story: most of these so-called startups are simply small businesses dressed in fancier clothes.

A barbershop, a boutique, a café. They’re brilliant businesses. They create jobs, they serve their customers well. But they are not startups. And that’s not an insult—it’s a definition problem.

If you don’t know the difference, you may be chasing the wrong dream.

What a Startup Really Means

Paul Graham, in his essay What is a Startup?, cut through the noise with one line: a startup is a company designed to grow fast.

Not “a company with funding.”

Not “a company with an app.”

Not “a company aiming for an exit.”

Just growth. Relentless, week-on-week, market-bending growth.

By that definition, a two-person SaaS product adding users at lightning speed is more of a startup than a well-funded café chain. Startups aren’t defined by what they sell, but by the speed at which they expand.

The DNA Gap: Small Business vs. Startup

Here’s where the distinction really matters.

• Small Businesses

  • Built for stability

  • Grow predictably

  • Serve a specific market

  • Create steady cash flows

  Their strength lies in consistency.

• Startups

  • Built for scale

  • Chase big markets

  • Move fast, thrive in chaos

  • Growth is exponential, not incremental

  Their strength lies in acceleration.

Both paths are valuable. But they are not the same.

A boutique that caters to a loyal neighborhood will never be the same creature as Apple, Google, or Zerodha. The former is rooted in place. The latter was designed from day one to outgrow every expectation.

Growth: The Only Compass That Matters

Here’s the uncomfortable truth: if you’re not measuring growth every single week, you’re not building a startup.

Growth is what separates a cool idea from a scalable company. It validates your model, keeps investors interested, and attracts top talent. Without growth, even the smartest idea is just another shop on the block.

With growth, even a half-baked product can survive, because the market forgives flaws if the trajectory is undeniable.

Growth isn’t one metric among many. In startups, it’s the only compass.

India’s Founder Problem

In India, being a “founder” has become an identity. Everyone wants the title. But too often, the execution doesn’t match the ambition.

• They think funding makes them a startup.

• They think a sleek logo means innovation.

• They think being called “founder” equals building something that will last.

But markets don’t reward vanity. They reward velocity. And when the numbers don’t move, no amount of branding or storytelling can hide the truth.

This is why so many Indian startups plateau. Behind the decks and the PR, they’re not designed for growth—they’re designed for survival. Which is fine, if survival is the goal. But it’s not the same as building a startup.

The Real Question

Not every business needs to be a startup. Some of the most respected businesses in India are small businesses—profitable, steady, and deeply impactful in their communities. There’s honor in that.

But if you want to build a startup, you need to be honest with yourself. Growth is the DNA. Growth is the test. Growth is the only compass.

So ask yourself:

Are you building a company, or are you building a startup?

Both are amazing. But only one is built to scale.

Check out other blogs

1. When defining what a startup truly means, clarity matters as much as speed. Just like Joseph Müller Brockmann’s grid system turned chaos into structure in design, startups need systems that channel growth instead of noise. [Read how Brockmann’s design philosophy shaped order in modern branding →]

2. Many founders confuse venting for problem-solving. But venting without execution only amplifies stress — just as chasing the “startup” label without growth leads to frustration. [Explore the hidden costs of venting and why clarity always wins →]

3. This distinction also ties into India’s MSME ecosystem. Not every MSME has to scale like a startup, but knowing your DNA is critical. [See our MSME Day campaign on why small businesses deserve clarity in identity →]

4. At Sterling Arcus, we call this your Brand DNA. Just as startups are defined by growth DNA, businesses are defined by brand DNA. [Discover our Brand DNA framework and why it matters for scaling →]