Bengaluru Beats Singapore on Startup Exits. But Liquidity Doesn't Mean Depth

Bengaluru has donned another feather to its cap as the city generated more startup exit value than Singapore between 2021 and 2025, according to the Global Startup Ecosystem Report (GSER) 2026. It is an impressive milestone for India's largest startup hub, signalling that more companies are reaching acquisitions and public listings than ever before.

But a closer reading of the report suggests the bigger story is not about which city has the larger exits. It is about what actually defines a mature startup ecosystem.

While Bengaluru has emerged as a global leader, Singapore continues to outperform it on the broader foundations that sustain innovation over the long term, such as funding depth, talent, research, market access, and institutional strength.

Performance vs Maturity

The GSER ranks Bengaluru 15th globally, while Singapore occupies eighth place. The difference lies in how the report measures ecosystems.

Startup Genome, the research and policy advisory organisation that furnished the report, evaluates six pillars—performance, funding, market reach, talent and experience, AI-native cluster, and R&D engine. According to the report, Bengaluru scores exceptionally well on performance, receiving the highest possible score for exits alongside ecosystems such as Silicon Valley and Boston. Singapore, however, posts stronger scores across other metrics, resulting in a higher overall ranking.

Importantly, Startup Genome notes that performance is calculated using a combination of ecosystem value, exit volume and growth, and startup success, rather than exit valuations alone.

That distinction reflects in investor sentiment as well.

Gaurav Chaturvedi, General Partner at Kae Capital, says both narratives can coexist. "$46 billion in exits over five years and 304 exit events show real momentum, but exit value and exit breadth tell different stories. The headline number is driven by a small set of large outcomes. The median exit in that pool of 304 is a very different figure," he tells AIM. 

For him, the more meaningful change is structural rather than statistical. He says Indian conglomerates are increasingly acquiring startups with genuine strategic intent, founders who have exited are backing the next generation, and public market investors are becoming more comfortable underwriting technology businesses. "These changes compound, and that's what makes this moment meaningful," he notes.

Viju George, Partner at Mela Ventures, offers a similar caution. "Concentration isn't immaturity; power laws define venture outcomes, so that will stay. What matters is what sits underneath the headline exits."  

He argues investors should look beyond blockbuster outcomes to metrics such as the number of Indian B2B companies scaling from $10 million to $100 million in annual recurring revenue, graduation rates between funding rounds, the density of mid-sized M&A exits, and the availability of domestic growth capital.

What Comes After Exits

Rather than viewing Bengaluru's exit surge as the finish line, the report points to a more important question: can those exits generate the next cycle of innovation?

Successful ecosystems are characterised not simply by liquidity events, but by founders becoming angel investors, employees launching new ventures, and capital being recycled into the next generation of startups. The GSER argues that ecosystems that are pulling ahead globally are those that can "mobilise capital at scale, integrate frontier technologies, and align public and private actors around strategic priorities."

George believes India's deeptech ecosystem has not yet reached that stage. "Cycle-dependent exits look great in bull markets and disappear in bear ones. Sustainable ecosystems produce exits across cycles," he says. 

The real test, he argues, will be whether global semiconductor, defence, space, and climate infrastructure companies begin acquiring Indian deeptech firms at Series B and C rounds, while large domestic groups such as Tata, Reliance, and L&T emerge as meaningful strategic acquirers. Predictable government procurement, rather than one-off grants, would also provide the commercial validation that investors seek.

AI Investment Raises a Different Challenge

The report arrives at a time when policymakers and investors are debating whether AI investments are creating durable economic value, or simply fuelling another technology investment cycle.

A recent Takshashila Institution report titled ‘The AI Investment Cycle’ argues that the current AI boom is better understood as investment preceding revenue, with hyperscalers continuing to spend aggressively because the strategic cost of falling behind outweighs the financial cost of overinvesting. 

Rather than viewing this purely as speculative excess, the paper suggests AI infrastructure spending reflects long-term competitive positioning. It recommends that India focus on areas where it can build a comparative advantage, such as inference infrastructure, open-source model adaptation, and enterprise AI adoption, rather than attempting to replicate frontier model development.

Bengaluru appears well positioned in that regard. The GSER highlights that the city already attracts 58% of India's AI startup funding, with around $1.5 billion invested since 2020. Karnataka has simultaneously launched initiatives spanning AI, quantum computing, and aerospace, including the Centre for Applied AI for Tech Solutions and the Karnataka Quantum Mission.

Yet investors caution against conflating stronger funding with stronger exits.

George argues that "unicorn count is a vanity metric that has already outlived its usefulness", particularly for hard tech and AI companies that typically require eight to 12 years to mature. Instead, he says India needs predictable exit pathways, deeper strategic acquirers, more patient capital, and public markets willing to back pre-profit deep tech companies.

Chaturvedi believes the narrative around Indian deeptech is already beginning to change. Companies such as EV maker Ather Energy and electronic control units manufacturer Sedemac, he says, demonstrate that deeptech firms can build sufficient revenue depth to pursue public listings rather than defaulting to early acquisitions. 

"Exits are a lagging indicator. What's actually happening is that AI and deeptech companies are maturing faster, building broader revenue pools, and increasingly seeing IPO as a real and attractive path rather than a distant aspiration," he highlights.

Bengaluru's stronger exit performance undoubtedly reflects an ecosystem that has become more capable of producing globally valuable companies. However, the next investor focus needs to be on whether those exits are creating a self-reinforcing innovation cycle, where capital, talent, and research continuously feed the next generation of globally competitive startups.