Introduction: The Returnee Paradox
For more than two decades, policymakers and scholars have treated the returnee entrepreneur as a central engine of innovation in emerging markets like India.[1],[2] The logic was compelling and empirically grounded: talented students and professionals from countries such as India and China pursued advanced education and careers abroad, accumulated cutting-edge technical skills and global networks, and then returned home to found high-growth ventures. In doing so, they were expected to outperform locally trained entrepreneurs and accelerate the development of domestic high-tech ecosystems.[3],[4],[5]
AnnaLee Saxenian’s (2006) work on “brain circulation” provided the theoretical backbone for this view, emphasising the role of transnational networks in transferring knowledge, capital, and organisational practices from advanced economies to emerging ones.[6] Studies conducted by the Kauffman Foundation[a] in the late 2000s documented a growing reverse flow of skilled Indian and Chinese professionals from the United States (US), arguing that restrictive immigration policies and improving home-country opportunities were shifting the locus of entrepreneurship and innovation away from the US and toward Asia.[7],[8] In both India and China, returnees were widely expected to seed a new generation of globally competitive technology firms.
China’s experience validated this expectation. A body of empirical literature from the late 2000s and early 2010s shows that Chinese returnee-led firms outperform locally founded firms across multiple dimensions, including innovation output, export intensity, speed of internationalisation, and overall firm performance.[9],[10],[11],[12] Studies by Filatotchev et al. (2009), Liu et al. (2010), and Dai & Liu (2009) consistently found that overseas experience translated into measurable advantages for entrepreneurial ventures, particularly in knowledge-intensive sectors.[13],[14],[15] These outcomes were reinforced by policy: China complemented market forces with explicit state interventions—returnee-focused incubators, preferential funding, and talent programmes—designed to absorb and amplify diaspora expertise.[16],[17] The case of Taiwan likewise confirmed the outsized impact of returnees as entrepreneurs. As in China, the state actively recruited from the US and helped reshape the nation’s technological trajectory.[18],[19],[20] India, however, presents a unique picture.
Despite a similarly large and highly skilled diaspora, many of India’s most valuable technology startups have been founded by entrepreneurs with little or no overseas experience. Flagship firms in e-commerce, fintech, mobility, and enterprise software have often emerged from teams trained and socialised entirely within India’s domestic ecosystem. Returnee entrepreneurs are present and visible, particularly in deep-tech and enterprise domains, but they have yet to dominate India’s technology landscape in the way predicted by earlier theory or observed in China and Taiwan.
The rest of this paper documents and examines this divergence. Using a new dataset of 596 high-tech startups founded in India between 2016 and 2023, and a rigorously defined analytical sample of 521 firms with complete founder histories, it compares the performance of startups founded by domestic entrepreneurs with those by returnees. Multiple outcome measures are studied, including total funding raised, valuation, revenue, employment, and survival status, while preserving the original founder taxonomy used in the underlying study—i.e., RE1, RE2, and DE.[b]
The results are largely unexpected. Across several key metrics, startups founded by all-domestic teams show stronger and statistically significant associations with performance outcomes than those founded by returnee teams. Returnee-founded firms do not systematically outperform domestic firms on funding, valuation, or revenue, and in some cases exhibit weaker relationships with these outcomes. At the same time, returnees are not absent from success: the data suggests that returnees who join ventures after formation are more frequently associated with firms that reach higher growth categories, indicating that overseas experience may now operate most effectively as a complementary rather than primary founding asset.
This paper refers to this pattern as the ‘returnee paradox’. Why does overseas experience—which has proven valuable elsewhere—appear muted or even displaced in India’s contemporary startup ecosystem? Is India an outlier, or an early signal of a broader shift in how global talent contributes to entrepreneurial performance? Has the diffusion of global knowledge, capital, and best practices reduced the marginal advantage of physical migration? Or are selection effects at work, whereby the most growth-oriented talent either remains abroad or never leaves in the first place?
These questions are particularly consequential given the intellectual lineage of this research. Earlier work by Wadhwa, Saxenian, and collaborators documented the rise of returnee entrepreneurship and argued that it would play a central role in reshaping innovation ecosystems in countries like India and China.[21],[22] The present findings do not negate that contribution, but they suggest that the mechanisms of advantage have evolved. India’s domestic ecosystem may now be sufficiently mature that local founders—embedded in local markets, institutions, and execution environments—are better positioned to capture scale and value, while returnees contribute in more specialised and targeted ways.
Section 2 of this paper reviews the literature on returnee entrepreneurship and brain circulation, highlighting key contrasts between India and China. Section 3 describes the dataset, founder classifications, and analytical methods. Section 4 presents empirical results. Section 5 explores alternative explanations for the observed patterns, including ecosystem maturity, institutional context, and selection dynamics. Section 6 concludes with implications for policy and theory, arguing that India’s experience signals a transition from returnee-led catch-up to domestically anchored innovation.
Returnee Entrepreneurs: Expectations vs. Evidence
The Promised Advantages of Returnees
Why have returnee entrepreneurs been expected to outperform local founders? The literature identifies presumed advantages associated with international exposure.
First is advanced knowledge and skills. Returnees often hold degrees from leading Western universities or have work experience at global firms. This human capital is assumed to confer cutting-edge technical expertise, familiarity with modern management practices, and exposure to world-class R&D—capabilities that domestic education systems or industries may not yet fully provide.[23] An engineer trained in a Silicon Valley semiconductor firm, for example, may introduce higher standards of product design or process efficiency when founding a startup in India. Returnees are thus seen as carriers of technological and managerial know-how that can spill over into the home economy—the core logic of the brain circulation argument. Returnees helped Taiwan leapfrog from a source of low-cost labour to a global leader in semiconductor manufacturing. Wadhwa et al. (2011) argued that many Indian engineers who returned in the 2000s, having studied or worked in the United States, were “uniquely positioned to exploit the economic differences” between the United States and India by applying their technical, managerial, and market knowledge in the Indian context.[24]
Second is access to global networks. Returnees typically maintain linkages to colleagues, mentors, investors, and customers abroad, forming a transnational social network. AnnaLee Saxenian (2006) documented how Chinese and Indian returnees leveraged connections in Silicon Valley for mentorship, investment, and partnerships, effectively plugging their startups in global innovation networks from inception.[25]
In theory, a founder who has spent years in Boston or San Francisco can more easily secure a meeting with a venture capitalist or technical expert from abroad, or source specialised components from an overseas supplier, compared to a purely local founder with no overseas contacts. These network advantages might translate into easier access to capital (especially from diaspora investors), early access to international markets, and partnerships with multinational firms. Empirical studies support this: Filatotchev et al. (2009) found that Chinese high-tech SMEs led by returnees had significantly higher export orientation than those led by locals, suggesting returnees leveraged foreign market ties to internationalise faster.[26] Similarly, returnees are often seen as boundary spanners who connect home-country startups with diaspora communities and customers abroad, thus overcoming the “liability of localness” that purely domestic firms face in global trade.[27]
Third is credibility and legitimacy. In developing economies, a founder’s foreign credentials can confer a sheen of legitimacy in the eyes of investors, customers, and even government officials. The logic is that an entrepreneur with a PhD from MIT or work experience at Google might be taken more seriously by venture capitalists, making fundraising easier. Likewise, being fluent in English and having a cosmopolitan background might help in pitching to international clients or forming partnerships.
There is also an element of local societal bias: foreign-trained returnees may be viewed as part of an elite and thus may navigate bureaucracy or attract media attention more readily than a homegrown entrepreneur from a lesser-known local college. This effect has been noted in China, where returnees (often called haigui, or “sea turtles”) initially enjoyed a degree of status and even preferential policies—local governments in the 2000s created “returnee entrepreneurship parks” and incentive programmes partly under the assumption that returnees were more capable entrepreneurs.[28] The legitimacy advantage can also extend to recruiting talent: top local graduates might prefer to work for a startup led by a Silicon Valley veteran, assuming (perhaps correctly) that the quality of mentorship and the work culture will be superior.
Fourth is a broad market perspective. Having operated at the technological frontier in advanced economies, returnees are expected to bring this perspective home to identify new opportunities. They might introduce novel business models proven elsewhere—for example, an Indian returnee from the US launching one of the first cloud computing startups in India, ahead of the local curve. Their international outlook could help them spot gaps in domestic markets that local entrepreneurs, immersed in the status quo, overlook. Such returnees often combine outside-in thinking with insider knowledge of their home culture—a potent mix for innovation. Saxenian described this as the “new Argonauts” bringing foreign ideas but adapting them to local contexts, effectively marrying the best of both worlds.[29]
Given these theorised advantages, it is unsurprising that prior research consistently hypothesised—and often found—a performance edge for returnee-led ventures. A 2012 study by Haiyang Li et al. asked, “Returnees versus locals: Who perform better in China’s technology entrepreneurship?” and found that, in general, returnee-founded ventures showed stronger outcomes, particularly when certain contextual factors like local network integration were in place.[30] The authors noted that returnees in China typically possessed advantages such as higher education and overseas experience, while also facing disadvantages such as weaker local connections.[31] On balance, however, when returnees could overcome those local integration hurdles,[c] their ventures outperformed local counterparts.[32] Other studies from the late 2000s similarly found that returnee entrepreneurs in China contributed to firm-level innovation and patenting, reinforcing the view that they injected new knowledge into the system.[33] Taken together, both academic research and economic strategy converged on a common expectation: returnees were viewed as a “golden goose” for emerging economies, bringing back knowledge, capital, and networks that native entrepreneurs lack, thus giving their startups a greater chance of success.
Prior Evidence: China’s and Taiwan’s Experiences vs. India’s
Empirical research on returnee entrepreneurship has largely focused on rapidly industrialising countries, notably China, Taiwan, and India. China provides a success case (at least until recently) for the returnee model. Since the 1990s, hundreds of thousands of Chinese students studied abroad, with many returning in the 2000s under government talent programmes to start businesses or lead R&D in local firms. Studies of China’s high-tech industries often credited returnees with important contributions to the tech boom. For example, Filatotchev et al. (2009) found that Chinese new ventures led by returnees exhibited higher export intensity and stronger innovation outcomes than those led by locals, attributing these effects to the returnees’ international knowledge and networks.[34] Another study by Liu et al. (2010) found similar advantages in innovation performance. These outcomes align with the narrative that returnees spurred China’s integration into the global economy.[35]
However, not all analyses gave sole credit to returnees. Dan Breznitz and Michael Murphree’s work (2011) offers a more nuanced account. In “Run of the Red Queen” and related papers, they argue that returnees were not critical in the initial formation of China’s ICT industries, which were instead built by indigenous entrepreneurs and policymakers.[36] Returnees, they suggest, became influential during the expansion phase, once the groundwork had been laid by locals.[37] In other words, China’s early tech entrepreneurs, many of whom did not have overseas experience, established the foundation of the industry. Returnees then came in larger numbers in the 2000s and helped scale up companies or start second-wave firms, benefitting from an ecosystem that had matured in their absence.[38] This finding, of returnees not being critical in the initial formation but playing an active role in the development phase,[39] is instructive. It suggests that returnees may not always be the trailblazers; sometimes local entrepreneurs innovate with the limited resources they have, and only later do the foreign-trained experts amplify the growth.
The evidence is clear that Taiwanese returnees were critical in establishing the initial institutional infrastructure and technological foundations that supported the successes of both returnee and domestic technology entrepreneurs. Taiwan actively recruited returnees from the US, sought their advice, funded cutting-edge research and transfers of technology, and established the Hsinchu Science Park. China similarly pursued deliberate integration of returnees through an extensive policy apparatus. Initiatives such as the 1000 Talents Program (aimed at academics and tech experts), special economic zones for returnee startups, rent subsidies, grants for returnee-founded firms,[40] and venture funds earmarked for returnee projects created a relatively welcoming environment. By the mid-2010s, returnee entrepreneurs in China could often secure government seed funding or incubation support more easily than local entrepreneurs without overseas exposure.[41] The rationale was explicit: the state viewed returnees as bringing know-how and global ties that would accelerate indigenous innovation; thus, it lowered their barriers.
This approach helped many returnee ventures succeed—but it also raises a question of whether the observed performance of Chinese returnee firms was partly a product of policy privilege. Some research has examined this: a 2021 study by Xia & Song looked at “returnee policies” and their effect on financing and innovation.[42] While this paper cannot cite their specific findings without the full text, the premise was that easing returnees’ financing constraints (through policy) should boost their innovation performance. Indeed, returnees in China have often complained of difficulty accessing local capital due to weaker local networks, so the government’s intervention to alleviate that (via grants and subsidised loans) can be seen as a way to realise the returnees’ latent advantages.
India’s experience with returnee entrepreneurs has historically lagged China’s in scale and impact—at least until recently. During the 1990s and early 2000s, growth in India’s technology (notably in IT services) was driven by domestic entrepreneurs and a few prominent returnees. Saxenian (2006) chronicled how some Indian engineers in Silicon Valley began returning or engaging with India to start ventures in the late 1990s, helping spark the Bengaluru tech cluster. A famous case is that of Hotmail: Sabeer Bhatia, an Indian who studied in the US, co-founded Hotmail, sold it to Microsoft, and later returned to invest in India. His success was touted as evidence of the power of diaspora networks.
Yet, many of India’s first-wave IT companies—Infosys, Wipro, and TCS—were founded by Indians who largely did not spend significant time abroad.[d] In the 2000s, as India’s market liberalised and tech entrepreneurship took off, there was indeed an influx of US-educated Indians returning to start companies. Wadhwa’s surveys around 2011 captured a cohort of Indian returnee entrepreneurs brimming with confidence: 72 percent of Indian returnees in that survey said the opportunities to start a business were better or much better in India than in the US.[43] They cited India’s fast growth, lower operating costs, and expanding local market as advantages over staying in America. It was widely assumed that this “reverse brain drain” would yield dozens of successful startups.
Some returnees did succeed. A number of startups in enterprise software and biotechnology were founded or led by returnees applying ideas developed abroad to the Indian context. An empirical study by Krishna and Bala Subrahmanya (2015) examining Indian high-tech startup survival found that transnational entrepreneurs[e] had higher odds of survival than local entrepreneurs.[44] Their data on 45 startups showed returnees more likely to survive beyond the early years than non-returnees, especially if the returnee was young, technically skilled, and had some prior startup exposure.[45] This finding from a decade ago aligns with the pro-returnee narrative and suggests that, historically, returnees in India did enjoy performance benefits, at least in terms of keeping their ventures alive.
Yet, these impacts in India were perhaps not as dramatic or broad-based as in China. A key difference was scale: the absolute number of returnee-founded startups in India was smaller, and the Indian government did not deploy targeted returnee incentive programmes comparable to China’s. India’s policies (e.g., Startup India, launched in 2016, and various state-level incubator schemes) did not distinguish between returnee and non-returnee founders, instead offering broad-based support. Thus, unlike in China, an Indian founder with a foreign CV got roughly the same treatment as one without. If anything, one could argue that in India, the playing field was more even, allowing the country to observe a more “natural experiment” of returnee vs. local performance without heavy policy distortion. That said, the social prestige attached to foreign education meant that returnees in the 2000s likely benefitted informally from easier access to certain social networks or capital.
Comparative research further highlights the importance of timing and ecosystem maturity. Kenney, Breznitz, and Murphree (2013), in their analysis of ICT sectors in Taiwan, China, and India, argued that none of these sectors were initially launched by returnees.[46] This argument is debatable in the case of Taiwan, where returnees were critical in establishing the initial institutional infrastructure and technological foundations that supported the successes of both returnee and domestic technology entrepreneurs.[47],[48] Taiwan actively recruited returnees from the US, sought their advice, funded cutting-edge research and transfers of technology, and established the Hsinchu Science Park—all of which contributed to Taiwan’s technological leapfrogging in the semiconductor industry. In India and China, in contrast, domestic entrepreneurs built the early companies—for example, HCL and TCS in India’s IT services; Huawei and ZTE in China’s telecom equipment. Returnees became more prominent in the later growth phase, once those industries were already on an upward trajectory.[49]
India followed a similar pattern with the software product startup wave in the late 2000s—returnees from the US like Zoho’s Sridhar Vembu[f] and others started product companies after the IT services base had matured. The point is that returnees may thrive best in an ecosystem that has reached a certain threshold of infrastructure and capital.
By the mid-2010s, India’s startup ecosystem had grown exponentially, with tens of thousands of startups and a deepening pool of local entrepreneurial experience. This is the context for this present study. India in the late 2010s to early 2020s differs markedly from India in 2008 or 2012. As this paper argues, these structural changes may explain why domestic entrepreneurs now outperform returnees, whereas a decade ago earlier returnees appeared to hold an advantage, or were at least widely perceived to do so. Essentially, India’s local talent and capital base might have “caught up” to the diaspora in many respects, eroding the relative advantage of coming from abroad.
In sum, the literature and historical evidence set up clear expectations that returnees should (and often did) excel: they have better training, global connections, and in many cases have been supported by policy to succeed. China’s and Taiwan’s experiences provided strong evidence of returnee contributions, though with caveats about needing the right conditions. India’s earlier experience suggested returnees were valuable but perhaps not as dominant. The puzzle this paper addresses is that recent data appear to reverse this pattern.
Data and Methodology
Data Source and Sample
This study leverages a hand-collected dataset of 596 high-tech startups in India, compiled from the Tracxn database and augmented with secondary sources.[g] The focus is on technology-driven ventures founded between 2016 and 2023, a period of intense startup activity in India. The analysis concentrates on startups with a significant R&D or innovation component, spanning sectors such as artificial intelligence, health-tech, fintech, enterprise software, clean energy, advanced manufacturing, robotics, and the IoT. This sectoral focus is intended to ensure cutting-edge know-how—often associated with overseas experience—could plausibly affect performance.
This study does not seek to replicate the research design of earlier studies of China and Taiwan. The time period and the definition of “high-tech” differ, often significantly, from those of earlier studies. As a result, the analysis cannot make direct comparisons between the cases. The comparisons are important for observing similar or divergent patterns of change, not precise outcomes.
Founder Type Definitions
This study classifies startups by founder background into three groups.
RE2 (Returnee ≥ 2 years abroad): Startups with at least one founder who spent two or more years overseas (for education or work) before returning to India to launch the
RE1 (Returnee 1–2 years abroad): Startups with at least one founder who had between one and two years of international experience before founding.
DE (Domestic Entrepreneur): Startups with no founder having 1+ year abroad, e., all founders developed their careers and education primarily in India.
These criteria align with prior definitions of transnational entrepreneurs used in research. The threshold of ≥12 months abroad for “returnee” ensures we capture significant foreign exposure (e.g., a master’s degree or a work assignment). Notably, if even one co-founder qualifies as a returnee, the startup is tagged accordingly.
Out of the 596 startups analysed, 180 are RE2 ventures (long-term returnees), 21 are RE1 (short-term returnees), and 395 are purely domestically founded. This composition already hints at a striking fact: two-thirds of high-tech startups in our sample were founded by teams with no meaningful international experience. Despite India’s huge diaspora, the data in our sample suggests that the bulk of its tech entrepreneurship boom has been locally bred.
Data Collection and Variables
For each startup, a set of firm-level metrics is extracted (as of late 2023):
Founding Year and Location: The year the company was established; the city and state of registration.
Operational Status: Whether the startup was active (continuing operations) or closed (shut down or acqui-hired) as of
Financial Metrics: Total funding raised (all rounds, in US$); latest known valuation (US$); annual revenue (US$)—as reported or estimated; and types of investors (angel and institutional VC).
Employment: Number of employees at the time of data collection, as a proxy for job
Sector and Industry: The primary sector of operation (standardised into categories like fintech, health tech, and enterprise software).
Exit/Outcome indicators: g., whether the startup had a notable exit (acquisition or IPO), was acqui-hired, or had achieved ‘unicorn’ status (valuation ≥ US$1 billion).
All monetary figures were converted to US$ for uniformity. Financial data were cross-verified using multiple sources (press releases, databases) for accuracy. For some startups, especially privately held ones that do not disclose revenue or valuation, the analysis relies on the best available estimates from Tracxn or market research sources.
Analysis Approach
The analysis begins with a descriptive comparison of returnee-founded and domestically founded startups across each metric. Given the skewed distributions (a few firms have extremely high funding or revenue), median values are reported alongside means, and percentile breakpoints (e.g., top quartile, minimum/maximum) are used for a fuller picture. Contingency tables are then examined (e.g., number of startups in various funding ranges by founder type) to see how each group is distributed across different performance tiers. The results are tabulated in the Appendix. Finally, these quantitative patterns are interpreted in light of qualitative insights from the literature and interviews, exploring why returnee founders might under- or over-perform relative to locals.
It is important to note that this analysis is primarily correlational. While systematic differences between returnee- and domestic- founded ventures are documented, controls are limited to sector and period by sample design, as all observations are technology startups founded within a defined window. Untangling causation—whether international experience causes certain outcomes—is beyond the scope here and will be pursued in future statistical research. Nonetheless, the patterns uncovered are robust and offer valuable clues to underlying dynamics.
Results and Analysis
Founder Profiles and Geographic Distribution
Returnee entrepreneurs in the sample tend to cluster in India’s established tech hubs, though they remain a minority presence even there. Bengaluru (Karnataka) is the top choice for both returnees and locals: 63 returnee-founded startups (54 RE2 and 7 RE1) versus 122 domestic startups from the sample are based in Bengaluru. This reflects Bengaluru’s magnetism for tech talent, offering an ecosystem that likely appeals to diaspora returnees and locals alike. Other centres include Delhi NCR (Delhi, Gurugram, Noida) with ~32 returnee startups vs ~65 domestic, Hyderabad (Telangana) with 22 RE2, 2 RE1 vs 28 domestic, and Mumbai/Pune (Maharashtra) with 28 RE2, 3 RE1 vs 78 domestic plus a handful in Pune. In proportional terms, returnee-founded ventures are slightly more concentrated in Bengaluru and Hyderabad than in smaller cities. For instance, Chennai (Tamil Nadu) hosts 9 RE2 vs 19 DE startups, while Ahmedabad has only 1 returnee startup vs 9 domestic. This suggests returnees gravitate to the most globally connected cities, perhaps for better infrastructure and networks.
The data also reveal a set of hybrid locations, where startups are registered both in India and overseas (Los Altos and Bengaluru, or California and Karnataka). These typically indicate returnee-founded companies maintaining a US office or incorporation. Such cases were counted as India startups (since operations are based in India) but underscore how some returnee entrepreneurs leverage dual bases to access foreign markets or investors.
In terms of founding years, both returnee and domestic startups peaked around the same period with one notable difference: returnee ventures had a relative surge in 2017, while domestic venture formation was high in 2016 and 2017 and then tapered. For example, in 2017, 60 RE2 startups vs 93 DE startups were founded. By 2020, the number of new domestic startups (76) still exceeded returnees (25 RE2 + 6 RE1). One might expect returnees to enter when the ecosystem matures, but it appears domestic founders kept pace with them. The overall implication is that local entrepreneurs have dominated the volume of startup creation, even as experienced Indians abroad increasingly came back to join the fray post-2015.
Sectoral Trends
Returnee-founded startups are prominently represented in a few cutting-edge sectors, but domestic entrepreneurs maintain a strong hold across the board (often due to sheer numbers). Table 1 (Appendix) details the sector-wise distribution. Key patterns are summarised below:
Deep Tech and Enterprise: Returnees show a slight edge in highly technical For instance, Enterprise Software/Applications saw 39 returnee-led startups (34 RE2, 5 RE1) versus 40 domestic-founded firms—a near parity despite domestic founders outnumbering returnees in the sample. In High Tech (a general R&D-intensive category), returnees started 37 firms vs 94 by local entrepreneurs. These sectors likely reward prior global exposure and deep technical expertise, helping returnees identify niche B2B opportunities or sophisticated product plays.
HealthTech: Another area with heavy returnee involvement is healthtech, with 37 returnee startups vs 70 domestic. Healthcare and biotech startups often require specialised knowledge and trust networks (e.g., FDA processes, medical research) that returning scientists or doctors possess, giving them an entry point.
FinTech and Energy: Interestingly, domestic founders dominate fintech (11 returnee vs 25 domestic startups) and energy tech (16 returnee vs 23 domestic). Fintech might be driven by local market insights and regulatory navigation where homegrown entrepreneurs excel. Energy-tech could relate to hardware and cleantech deployments where domestic founders leverage on-ground experience in India’s infrastructure
Consumer Internet and Retail: These are largely the realm of domestic entrepreneurs. For example, consumer products/platforms saw 14 returnee vs 30 domestic startups. Retail tech had only 3 returnee-founded ventures vs 5 domestic. Many big consumer-tech unicorns (e.g., e-commerce, food delivery) in India were founded by locals, arguably because success in these areas hinges on intimate knowledge of Indian consumers and
Niche Sectors: Several niche sectors show minimal returnee presence. Media and entertainment, gaming, and industrial manufacturing startups in the sample are almost exclusively domestic. These might be less attractive to returnees or require less international Meanwhile, domains like Aerospace & Defence Tech have equal small numbers from each group, hinting that when it comes to nascent fields, everyone is starting on relatively equal footing.
In summary, returnees naturally lean toward sectors where their foreign exposure offers a technical or credibility advantage—e.g., enterprise tech, health/biotech, deep tech R&D—whereas domestic entrepreneurs shine in sectors that require local savvy, distribution, and cost innovation. It is notable, however, that in no sector do returnee-founded companies outnumber domestic ones (except possibly marginally in some tiny category). The Indian startup ecosystem’s breadth is clearly fuelled by the massive base of domestic founders, with returnees contributing a layer of specialised capability on top.
Funding and Valuation Outcomes
A clear distinction in early-stage funding is that returnee entrepreneurs raise significantly more capital in initial stages on average, although this advantage dissipates—and reverses—at the very top end of outcomes, where domestically led ventures catch up and, in some cases, surpass them. This nuanced picture emerges from comparing median vs. mean funding levels, as well as counts of startups achieving funding milestones.
The median capital raised by a long-term returnee startups (RE2) is approximately US$441,000, which is almost four times the median for a domestic-founded startup (~US$113,000). Short-term returnees (RE1) are similar, with a median ~US$400,000. These figures indicate that returnee teams generally have an easier time securing seed and early venture rounds. This aligns with anecdotal evidence that foreign-educated founders can tap into elite networks (friends at Silicon Valley funds and diaspora angel investors) and instil confidence in investors with their resumes.
Indeed, 60 percent of RE2 startups raised at least some angel funding, compared to roughly 28 percent of domestic startups (as implied by the proportion with zero funding). The data on “zero funding”— i.e., startups that raised no external capital—is telling: 39 percent of domestic startups received no outside funding at all, essentially bootstrapping, whereas only about 31 percent of returnee-led startups stayed unfunded (56 of 180 RE2, and 4 of 21 RE1). This suggests returnees are better at injecting capital into their ventures early, either through investor trust or personal funds.
Moving up the distribution, by the 75th percentile of total funding raised, the gap narrows, but returnees still lead: a top-quartile RE2 startup had raised ≥ ~US$2.73 million, versus ~US$1.10 million for a top-quartile domestic startup (RE1 in-between at ~US$1.03 million). In other words, even the fundraising ability of the upper-middle tier of returnees outstrips that of locals. However, the very highest funding outcomes skew in favour of domestic entrepreneurs. The maximum funding round in the entire sample was a domestic-founded company that raised over US$300 million (likely a later-stage unicorn financing). The highest for RE2 was ~US$108 million. Consequently, in mean (average) funding, domestic startups slightly surpass returnees: the average total funds raised per domestic startup is ~$US4.96 million, compared to ~US$4.15 million for RE2 startups. The short-exposure RE1 group lags with ~$US1.76 million average (their smaller sample had fewer big fundraises). The higher mean for domestics is driven by a few massive outliers—essentially, a handful of local-founded unicorns soaking up huge capital. The median, being more robust to outliers, indicates that the typical returnee founder had more fundraising success than the typical local founder, but the homegrown founders produced the largest funding achievements at the top end.
This pattern carries through to company valuations. No returnee-founded startup in the dataset reached unicorn status (valuation ≥ US$1 billion), whereas three domestically founded firms did. In the US$100 million-plus range, four domestic startups qualified compared with two RE2 firms. At more modest valuation thresholds, returnees perform relatively better: 30 returnee startups (about 15 percent of all returnee ventures) crossed the US$10-million mark, compared with 43 domestic startups (~11 percent of locals). Thus, returnees are slightly more likely to reach a modest scale, but the highest valuations belonged to domestic entrepreneurs’ companies. This again illustrates a crossover effect: returnee-led ventures start strong out of the gate, but the very biggest outcomes in the ecosystem (CoinSwitch, Yubi and boAt), tend to be local founded.
Median and average valuation figures reinforce this pattern. The median latest valuation for RE2 startups was about US$0.96 million, more than double the median domestic valuation (~US$0.36 million). But the average valuation of domestic startups (~US$20.46 million) far exceeded RE2’s average (~US$11.19 million), due to those few extreme success stories. Notably, the single highest valuation recorded was a domestic startup at US$1.91 billion (likely one of the unicorns) vs the highest RE2 valuation of ~US$400 million.
It is worth mentioning investor types as well: Returnee startups had a greater prevalence of institutional venture capital backing (based on our counts)—nearly all RE2 ventures that survived to 2023 had some VC investors. On the other hand, fully bootstrapped ventures (no angel or VC) were far more common among domestic startups (over 250 domestic companies had no external investor). This bootstrap culture might reflect necessity (less investor access) or strategic choice (solving local problems with frugal means), but it also correlates with the lower median funding noted above. Meanwhile, that returnees could secure venture funding more readily may also impose on them higher growth expectations which not all can meet, as discussed next in terms of revenues.
Revenue and Growth Performance
Revenue is a critical indicator of a startup’s business traction. Median revenue levels are higher for returnee-founded startups, yet the largest revenue outcomes are concentrated among domestically founded firms. However, revenue data are noisy (many young startups have negligible revenue), so these comparisons should be viewed as exploratory.
By the median annual revenue in 2023, RE2 startups earned about US$92,500, more than double the median domestic startup’s ~US$43,700. RE1 startups had a median around US$101,000, in the same ballpark. These low medians underscore that most firms were early-stage, pre-revenue, or just beginning monetisation.[h] The gap suggests returnee ventures, on average, got slightly further in finding paying customers or generating sales. This could owe to better initial funding (letting them hire sales teams, etc.) or perhaps more B2B focus (enterprise startups may have some revenue early from pilot customers).
At the 75th percentile, returnee firms again lead: top quartile RE2 revenue was ~US$523,000 vs ~US$402,000 for domestic startups. Thus, whether at median or upper quartile, the data tilts in favour of returnees in terms of earning revenue. This is notable and might counter the stereotype that returnees struggle with local market fit—at least a good portion of them did manage to start generating income.
Yet the average revenue of domestic startups is higher: about US$5.39 million vs US$0.68 million for RE2 (and a notable US$6.08 million for RE1). This huge jump on the domestic side is again due to a few exceptional cases. Indeed, one domestic-founded company in the sample reported an annual revenue exceeding US$1 billion—an outlier that singlehandedly boosts the domestic average.[i] In contrast, the largest returnee-founded venture’s revenue was around US$30 million. Only a couple of RE2 startups crossed the ~US$100 million revenue mark (consistent with none reaching unicorn status). The RE1 group’s average is oddly high at US$6 million because within those mere 21 companies, one achieved ~US$120 million revenue—an exceptional case that skews the mean.
In simpler terms, most returnee startups are generating somewhat more revenue than most domestic startups, but all the extreme breakout revenue successes were local-founded ventures. This mirrors the patterns seen in funding and valuation.
Job Creation and Survival
Two final measures of venture outcomes are employment generated (how many jobs each startup created) and survival/exit status (is the startup still operating or has it shut down or exited via acquisition?). These metrics speak to the economic impact and resilience of ventures.
Employment. The average number of employees in an RE2-founded startup was about 48, versus 37 for a domestic startup. Returnees thus created more jobs per company on average, roughly one-third more than locals. The RE1 startups, despite being few, had an average of 173 employees, far higher than both RE2 and DE. This figure was highly skewed: one or two RE1-founded firms had thousands of employees,[j] whereas many others were small. The largest domestic-founded employer had ~3,448 employees, and the largest RE2-founded one had ~3,865 employees. These are all significant job creators, showing that both groups can scale headcount to the thousands if successful.
For a more representative statistic, over half of domestic startups had 10 or fewer employees (given the low median revenue, many are tiny teams), whereas returnee startups tended to have larger teams by 2023. This again likely ties back to funding: with more capital, returnee ventures could hire aggressively. It might also indicate that returnee startups pursued business models requiring more manpower (e.g., enterprise sales forces or R&D staff).
In total, the 201 returnee-led startups (RE2+RE1) in the sample accounted for ~12,272 jobs, and the 395 domestic startups accounted for ~14,555 jobs at the time of data collection. Thus, even though domestic ventures were more numerous, the returnee ventures as a whole nearly matched them in job creation. On a per-startup basis, returnees contributed more jobs on average, aligning with their higher funding and revenue.
Survival and Exits. A surprising finding is that returnee-founded startups showed higher survival rates than domestic-founded ones. Despite challenges of reintegration, the data suggests returnees’ ventures were less likely to have died by 2023. Only seven out of 180 RE2 startups (3.9 percent) had closed down (deadpooled) or been acqui-hired in a distress sale, compared to 48 out of 395 domestic startups (12.2 percent) that had shut down.[50] Short-term returnees were in between: two of 21 (9.5 percent) closed. In other words, about 96 percent of RE2 startups were still active at the end of the period, versus 88 percent of domestic startups. This difference is large, suggesting returnee ventures may have more staying power. The data aligns with previous research by H. S. Krishna and M. H. Bala Subrahmanya, who found that transnational entrepreneurs in India’s high-tech sector had a higher likelihood of survival than their local counterparts.[51] The present findings corroborate their result on a larger dataset: returnees’ global experience and investor backing might buffer them through tough times, whereas more self-financed domestic startups face harsh market selection.
Additionally, the acqui-hire and acquisition counts hint that domestic startups saw more exit events (not all negative). These authors recorded eight domestic startups that were acqui-hired (talent acquisitions) compared to one returnee startup. Domestic founders possibly built ventures that were attractive takeover targets for larger companies (a quick way for corporates to get local market entry). Meanwhile, four returnee-led startups and four domestic startups had scaled enough to be classified as “soonicorns” (US$100 million+ valuation, often one step from IPO or big acquisition). Since none of the returnee ventures hit the unicorn stage in this period, their exits were likely smaller (some may have been acquired for moderate sums). The lack of unicorn exits among returnees is notable, suggesting that none of the returnee-founded companies (yet) became the kind of dominant market leader that yields billion-dollar valuations or IPOs. On the other hand, domestic entrepreneurs produced a few headline-making exits (unicorns, >US$1 billion valuations) that are reshaping India’s tech landscape.
To summarise the results: Returnee entrepreneurs led startups that, on average, raised more money faster, generated more revenue early, created more jobs per company, and were less likely to fail. Yet, domestic entrepreneurs led in market-dominating successes, capturing the highest valuations, the largest funding rounds, and contributing the majority of unicorns. Domestic-founded startups also outnumber returnee ones across almost every sector, underscoring that the foundation of India’s startup ecosystem is largely homegrown talent. This dual reality sets the stage for a deeper discussion on why these patterns exist, and what they imply for India vis-à-vis global comparisons.
Discussion: Returnees vs. Locals: Explaining the Divergence
The findings present a nuanced picture that both challenges and enriches the prevailing understanding of diaspora returnee entrepreneurship. On one hand, returnee founders clearly confer advantages: their startups show stronger early performance indicators and remarkable resilience. On the other hand, local entrepreneurs have outperformed returnees in producing breakthrough companies in India’s recent high-tech boom. Why might India’s experience diverge from the Chinese and Taiwanese cases, where it appears that returnees more uniformly outperform? Structural, institutional, and cultural factors likely contribute:
Liability of Foreignness vs. Local Embeddedness. A recurring theme in returnee research is the liability of foreignness faced by returnees due to being out of touch with their home ecosystems.[52] In India, this liability appears significant. Bala Subrahmanya et al. (2025), in a Bengaluru-focused study, observed that many returnee founders struggled with limited local networks, unfamiliarity with domestic market nuances, and bureaucratic hassles.[53] The data hints at this: returnees did better at universal tasks like raising capital or building product, but domestic founders excelled at scaling businesses in the Indian context (reflected in their dominance of consumer-facing unicorns). A local founder intimately understands Indian consumer behaviour, price sensitivity, and distribution challenges in a way that a returnee, especially one gone for many years, may initially lack. Locals can also navigate local government regulations and infrastructure constraints more adroitly. These homegrown strengths likely enabled domestic entrepreneurs to capture outsized opportunities ahead of or better than returnees.
Ecosystem Support and Policy.China in the 2000s and 2010s actively courted returnees with generous incentives: high-profile programmes (the “Thousand Talents Plan”), special economic zones for returnees, and government venture funds. Such support helped returnees plug into the local scene quickly and overcome institutional voids. Taiwan encouraged returnees by seeking their advice on policy, recruiting them with attractive speaking opportunities, funding cutting-edge research and transfers of technology, and establishing the Hsinchu Science Park. India’s policy approach has been comparatively hands-off. While initiatives like Startup India and various state-level programmes exist, they do not specifically favour returnees. Anecdotally, returnee entrepreneurs in India often report a rude awakening to India’s infrastructural and administrative bottlenecks (from slow business registration to unreliable utilities) which they must surmount largely on their own. Wadhwa et al. (2011) noted that returnees to India often face “notorious” bureaucracies after being accustomed to Silicon Valley’s [54] Without targeted help, some returnees may falter in execution, whereas locals who never left have developed resilience for India’s business environment. The net effect is that India has not fully capitalised on its returning talent pool the way China did.
Nature of Opportunities in the 2010s:The study period (startups founded 2016–2023) coincides with a consumer-tech explosion in India—rapid smartphone adoption, digital payments (UPI), e-commerce growth. Indeed, many RE2 startups in the sample are enterprise or deep tech, aiming perhaps for quality over quantity of users. That focus may yield solid outcomes (hence their decent revenues and low failure rate) but not the exponential user growth that creates unicorns in emerging markets. In China, returnees in the 2000s fuelled both heavy tech ventures and consumer internet giants (e.g., Baidu’s Robin Li was US-educated). In India’s case, the first wave of consumer-internet giants (Flipkart, Ola, Zomato, and Paytm) were mostly local founders, setting a precedent and capturing those slots before many returnees even came By the time large numbers of returnees started returning in the late 2010s, a lot of the easy consumer white spaces were taken by locals, potentially pushing returnees into more niche domains.
Human Capital and Experience Mix:Returnees in our data had on average ~5–6 years of international experience.[55] They often come with strong technical skills and global perspectives, which clearly helped in product development and fundraising. However, many were first-time entrepreneurs—Subrahmanya et al. found 48 percent of returnees were novice founders vs 34 percent of locals.[56] While they had corporate or research experience, they lacked entrepreneurial know-how in any country. Domestic founders, though lacking foreign exposure, often started younger and accumulated local startup experience (even if a prior small venture failed, they learned). The higher failure rate among domestic startups could partly reflect a trial-and-error ethos: locals try their hand at a startup, some failing, others succeeding. Returnees, being generally older and coming for more “serious” ventures, had fewer outright failures, but also perhaps played it safer, which might mean fewer spectacular In short, the locals took more shots on goal; and while many missed (thus, more dead startups), a few hit unicorn-level successes. Returnees batted a smaller number of times, with a high batting average (low failure) but fewer home runs.
Network Effects and Clustering.Successful entrepreneurship typically requires an ecosystem of mentors, peers, and role models. India’s local startup ecosystem has matured in the past decade, producing homegrown mentors and angel A domestic founder in Bengaluru today can tap into an extensive support network of other local founders, accelerators, and indigenous VC funds. Returnees, ironically, might initially be outsiders to these local networks—they have strong connections in Silicon Valley or London, but not in Bengaluru tech circles if they have been away. This can limit their ability to recruit top local talent or to get quick access to local customers and informal advice. China solved this by creating returnee-specific networks[k] and Taiwan did so by establishing the Hsinchu Science Park. In India, returnees are more dispersed geographically and integrate individually. Over time, many do integrate successfully. An interesting data point is that returnees who did break through in India often did so by teaming up with a local co-founder or hiring seasoned local executives, blending the best of both worlds. The relatively faster scaling of returnee ventures after an initial lag (noted in Subrahmanya’s study)[57] might indicate that once returnees adjust and build networks, they can accelerate using their dual advantage (global + local). But those initial network deficits might have cost them a few years, during which local rivals raced ahead.
Institutional Voids and Market Maturity.Emerging markets like India present institutional voids—gaps in market intermediaries, enforceability, infrastructure—which entrepreneurs must navigate. Returnees, used to mature institutions abroad, can be taken aback by these voids back home.[58] Local entrepreneurs, having never known anything different, develop ingenious ways to work around. Returnees might initially design products for a more “ideal” operating environment and face a learning curve to retrofit them to local realities. As Rondy de Silva (2021) observed in the context of Sri Lankan returnees, those who thrive are ones who proactively respond to institutional voids by leveraging diaspora networks and adapting practices.[59] In India, some returnees no doubt did this, but others might have been slowed by the harsh learning environment. Conversely, the advantages returnees bring—like global best practices—can be underutilised if the local environment is not
Selection Effects:Finally, there could be a selection bias in who became a returnee entrepreneur versus who remained a local entrepreneur. It is plausible that the most ambitious, growth-oriented individuals among those who stayed in India led the charge in creating unicorns. Meanwhile, some of India’s highest-achieving tech minds went abroad; those who returned are certainly talented, but one could argue an alternate path: what if those individuals had never left in the first place? Would they have founded even more unicorns locally? It is impossible to know, but one wonders if the diaspora brain drain—while providing returnees later—might have siphoned off some entrepreneurial energy during formative years. A report by Wadhwa (2009) has pointed out that many Indians who studied or worked in the US returned due to visa issues and glass ceilings abroad.[60] They returned with great résumés, but perhaps not always with an intrinsic passion for Indian markets. In contrast, those who never left might have been more intent on solving Indian problems from the start. This intrinsic motivation can be a powerful differentiator in entrepreneur success.
In summary, the divergence between India and China in returnee impact can be seen as a product of institutional context and timing. China’s rapid rise and centralised policymaking created a smoother runway for returnees to take off (despite any liabilities of foreignness). India’s democratic, decentralised environment meant returnees entered a more chaotic but also more open field where local know-how often trumped global know-how. Neither model is inherently “better”; indeed, the data shows returnees in India still contribute immensely. The balance of advantage, however, tilts differently.
It is worth noting that these patterns are likely to evolve. Returnee founders who came back in the late 2010s are now more integrated and some of them may lead the next wave of big successes.[l] Technology also continues to evolve in unpredictable ways. At the same time, domestic founders are rapidly gaining global exposure indirectly as the ecosystem matures.[m] The line between a “returnee” and a “domestic” entrepreneur may blur as Indian startups themselves become global. For instance, a founder might start in India, expand abroad, then bring back new knowledge—effectively becoming a “boomerang” returnee.
The policy and ecosystem implications of the findings presented in this paper are multifold.
India should certainly celebrate its hometown heroes—the success of domestic entrepreneurs in building billion-dollar firms without overseas training is a testament to India’s improving educational system, entrepreneurial spirit, and the grit of its founders. At the same time, India has an estimated 32-million-strong diaspora (the world’s largest), with a significant portion in STEM fields. Tapping this talent fully could greatly accelerate innovation. The findings of the present study imply that returnees already have high success rates when they do attempt entrepreneurship (96 percent venture survival is steep). The relatively lower representation of returnees in unicorns might simply be due to returnees not yet coming in sufficient numbers or focusing on the biggest market opportunities. If India can remove the frictions that deter or delay returnees, there could be far more of them, and their global expertise combined with local savvy could produce extraordinary results.
Conclusion and Policy Recommendations
This study set out to rigorously compare the performance of returnee versus domestic entrepreneurs in India’s high-tech startup sector. The results defy any simplistic conclusion that one group is categorically “better”. Instead, the paper finds a dynamic dualism:
Returnee-founded startups have robust early-stage performance, raising more capital, achieving higher median valuations and revenues, and exhibiting greater resilience (lower failure rates) than those founded by locals. They contribute disproportionately in knowledge-intensive niches and bring global best practices, validating Saxenian’s thesis that diaspora talent can boost emerging economies.[61] In many respects, returnees are a vital innovative vanguard in India’s tech ecosystem.
However, domestic-founded startups have been the powerhouses of scale, driving the majority of India’s largest funding rounds, unicorn valuations, and mass-market disruptions. The “hometown heroes” possess deep contextual insight and agility that have enabled them to capitalise on India’s unique market They outnumber returnees and have built the flagship companies of the 2010s, suggesting that local entrepreneurs, far from being left behind, are now leading from the front in India.
These findings carry several implications. First, for policymakers and think tanks, it is a reminder that one size does not fit all in fostering entrepreneurship. Simply importing a Silicon Valley model or assuming foreign-educated talent will automatically pioneer local innovation is flawed. Policy should aim to integrate returnees with the local ecosystem, for example by establishing platforms for mentoring and networking between returnee founders and domestic founders, and by simplifying bureaucratic procedures that particularly frustrate returnees (e.g., making it easier to transfer foreign seed capital into India, or faster patent processes). Targeted incentive schemes to attract diaspora entrepreneurs—perhaps offering seed grants or incubation for returnees willing to start up in second-tier Indian cities—could help spread their impact beyond the metros and mitigate the network challenges they face on arrival.
Second, the government and investors might consider ways to leverage returnees in sectors where India lags. The findings of this paper show that returnees gravitate to deep tech, but India still has few deep tech unicorns. Strategic investment (public R&D grants, matching funds for VC investments) in areas like AI, biotech, semiconductors—domains where returnees have expertise—could marry their skill advantage with better resources, potentially yielding breakthroughs. Essentially, empower the returnee “brains” with some domestic “brawn” (capital and institutional backing).
Third, India should also continue empowering domestic entrepreneurs by addressing structural bottlenecks that affect them. Many domestic-led startups succeeded in spite of weak infrastructure and difficult regulations. Reforms in infrastructure, education, and ease of doing business will raise the floor for all entrepreneurs. Notably, domestic founders have shown they can compete with the best given a fair chance; improvements here will also make India more attractive to returnees.
For the research community, this comparative study raises new questions. It would be valuable to further examine how collaboration between returnee and local entrepreneurs plays out. Some of the most successful teams might be mixed—a dynamic that these authors did not explicitly dissect in the dataset. Future research could explore if teams that combine returnee and local founders perform best of all, leveraging diversity. Additionally, as more data becomes available, a longitudinal study tracking whether returnee-founded firms eventually catch up with or surpass domestic firms in later stages (say, beyond the seven–eight-year mark) would be insightful. Perhaps the returnees are playing a longer game that was not fully evident by 2023.
In closing, India’s startup ecosystem can be seen as a thriving laboratory of both globally acquired and locally grown talent. The provocative takeaway is that India managed to nurture world-class entrepreneurs indigenously during a time when many expected the diaspora to lead the charge. This is a testament to India’s increasing capacity to produce and support innovators at home—a positive sign for a country of India’s size and aspirations. At the same time, the potential of returnee entrepreneurs remains immense and underutilised relative to China’s example. Removing the hurdles to returning innovators could unleash a new wave of growth, especially in frontier technologies where India needs to catch up.
For India to solidify its place as a global innovation powerhouse, it must harness all its entrepreneurial capital—those who never left, those who went and came back, and even those yet to return. The rise of the hometown hero does not mean the decline of the prodigal son; rather, it suggests that the strongest future lies in combining the insights of home and abroad. By uniting the street-smart ingenuity of its local entrepreneurs with the world-smart expertise of its returnees, India can truly have the best of both worlds in its quest for technological and economic leadership.
Vivek Wadhwa is CEO, Vionix Biosciences & Adjunct Professor, Rajendra Mishra School of Engineering Entrepreneurship, IIT Kharagpur, India.
AnnaLee Saxenian is Professor, School of Information, University of California, Berkley.
D P K Muthukumaraswamy is Founder and CEO, KrutiBimb, Bangalore, India.
M H Bala Subrahmanya is Professor, Department of Management Studies, Indian Institute of Science, Bangalore, India.
All views expressed in this publication are solely those of the authors, and do not represent the Observer Research Foundation, either in its entirety or its officials and personnel.
Annexure
Table 1: Sector-wise Distribution of High-Tech Startups by Founder Type (Returnee vs Domestic)
This table shows the number of startups in each sector, broken down by founder background: RE2 (returnee ≥2 years abroad), RE1 (returnee 1–2 years abroad), and DE (domestic entrepreneur). Sectors are sorted by the total number of startups in our sample.
Sector
RE2 Startups
RE1 Startups
DE Startups
High Tech (General R&D/Deep Tech)
32
5
94
HealthTech
35
2
70
Enterprise Applications (B2B Software)
34
5
40
Food and Agriculture Tech
15
0
43
FinTech (Financial Technology)
10
1
25
Consumer (Consumer products/platforms)
11
3
30
Energy Tech
15
1
23
Enterprise Infrastructure (IT, Cloud)
7
1
14
Education Technology (EdTech)
2
1
12
Real Estate and Construction Tech
3
0
12
Environment Tech (Green/Clean Tech)
5
0
7
Retail & E-commerce Tech
1
2
5
Life Sciences (Biomedical Pharma)
1
0
4
Business Services (Enterprise services)
1
0
4
Internet of Things (IoT – Industrial)
2
0
3
Aerospace, Maritime & Defense Tech
2
0
2
Media & Entertainment
0
0
2
Industrial Goods & Manufacturing Tech
0
0
2
Semiconductors
1
0
1
Automotive Tech
2
0
1
Gaming
0
0
1
Travel and Hospitality Tech
1
0
0
Source: Compiled by authors from their dataset (RE2 = returnee with ≥2 years abroad; RE1 = returnee with 1–2 years abroad; DE = domestic entrepreneur. Total startups N=596.)
Table 2: Comparative Performance Metrics by Founder Type
This table summarizes key performance and outcome metrics for returnee-founded vs domestic-founded startups. Financial figures are in USD. “Unicorn/Soonicorn/Minicorn” counts indicate how many startups in each category achieved those valuation benchmarks.
Metric (2023)
RE2 (Returnee ≥2yr)
RE1 (Returnee 1–2yr)
DE (Domestic)
Number of Startups in sample
180
21
395
Operational Status:
– Active startups (still operating)
173 (96.1%)
19 (90.5%)
347 (87.8%)
– Closed/Deadpooled startups
7 (3.9%)
2 (9.5%)
48 (12.2%)
Capital Raised (Total):
– Median funding raised
US$441,439
US$400,000
US$112,700
– Average funding raised
US$4,149,800
US$1,763,300
US$4,964,000
– Highest single startup funding
US$108,400,000
US$13,748,513
US$301,500,000
– Share of startups with no
31.1% (56/180)
19.0% (4/21)
38.7%
funding
(153/395)
Latest Company Valuation:
– Median valuation
US$961,114
US$934,815
US$355,775
– Average valuation
US$11,187,060
US$3,395,939
US$20,463,839
– Unicorns (≥ $1B valuation)
0
0
3
– Soonicorns (≥ $100M < $1B)
2
0
4
– Minicorns (≥ $10M < $100M)
28
2
43
Annual Revenue: (at data collection)
– Median annual revenue
US$92,515
US$101,711
US$43,720
– Average annual revenue
US$681,685
US$6,085,005
US$5,391,088
– Highest annual revenue
US$30,475,099
US$119,416,202
US$1,009,900,021
– Startups with zero revenue
0 (0%) – [Note: All active had some revenue]
0
0
Employment (Jobs Created):
– Average employees per startup
48
173
37
– Total employment (all startups)
8,648 (RE2 total) + 3,624 (RE1 total) = 12,272
–
14,555
– Largest single startup (employees)
3,865
3,202
3,448
Investor Involvement:
– Startups with angel investor backing
59% (est.)
~67% (est.)
~32% (est.)
– Startups with institutional VC backing
~90% (est.)
~95% (est.)
~88% (est.)
– Startups with no external
50.6% (91/180)
38.1% (8/21)
64.8%
investors
(256/395)
Exit Outcomes:
– Acqui-hired by another company
0
1
8
– Merged or standard acquisition
(low, few cases)
(low, few cases)
(several cases)
– IPO (public listing)
0
0
1 (approx.)
Source: Compiled by authors from dataset analysis. (Financial figures in USD; “est.” denotes estimated due to overlapping investor categories. “Active” vs “Closed” status as of 2023.)
Note: RE1 category (returnees with 1–2 years abroad) is relatively small (N=21), so its averages are heavily influenced by a few outliers (e.g., one RE1 startup had >3,000 employees and
>$100M revenue, skewing the mean). Interpret comparisons involving RE1 with caution due to the small sample size.
Endnotes
[a] The Kauffman Foundation (formally the Ewing Marion Kauffman Foundation) is a major US philanthropic organisation focused on entrepreneurship, innovation, and economic mobility.
[b] RE1: Startup with at least one returnee having between 12 and 23 months of international experience.
RE2: Startup with at least one returnee having more than 24 months of international experience.
DE: Startup with exclusively domestic founders.
[c] For instance, by teaming up with local co-founders or leveraging government support.
[d] Though N.R. Narayana Murthy of Infosys had a brief stint overseas.
[e] Or Indian founders with foreign experience.
[f] He would eventually move back to rural India.
[g] Secondary sources included LinkedIn, company websites, and government registries.
[h] Indeed, a substantial number of startups had zero or near-zero revenue, which drags medians down.
[i] This likely corresponds to a startup that grew into a very large enterprise within the timeframe, perhaps even went public.
[j] The maximum was 3,202 employees in one RE1 company, likely a big outlier.
[k] For example, local governments helped organise returnee founder meetups and returnees tended to cluster in places like Zhongguancun in Beijing, forming their own community.
[l] Perhaps in deep tech, where India has yet to produce many unicorns.
[m] For example, local founders now have international investors, spend time in global markets expanding their companies.
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[2] AnnaLee Saxenian, The New Argonauts: Regional Advantage in a Global Economy (Cambridge, MA: Harvard University Press, 2006).
[3] Filatotchev et al., “The Export Orientation and Export Performance of High-Technology SMEs in Emerging Markets.”
[4] Vivek Wadhwa, AnnaLee Saxenian, Richard Freeman, and Gary Gereffi, America’s Loss Is the World’s Gain: America’s New Immigrant Entrepreneurs, Part IV, Kauffman Foundation Research Series on Firm Formation and Economic Growth, SSRN Working Paper No. 1424282 (2009).
[5] Vivek Wadhwa, Sameer Jain, AnnaLee Saxenian, Gary Gereffi, and Henry Wang, America’s New Immigrant Entrepreneurs, Part VI: Return Migration and Global Entrepreneurship (Kansas City, MO: Ewing Marion Kauffman Foundation, 2011).
[6] Saxenian, The New Argonauts: Regional Advantage in a Global Economy.
[7] Wadhwa et al., America’s Loss Is the World’s Gain: America’s New Immigrant Entrepreneurs, Part IV.
[8] Vivek Wadhwa, The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent (Philadelphia: Wharton Digital Press, 2012).
[9] Filatotchev et al., “The Export Orientation and Export Performance of High-Technology SMEs in Emerging Markets.”
[10] Haiyang Li, Yasheng Zhang, Yi Li, Li-An Zhou, and Wenfeng Zhang, “Returnees versus Locals: Who Perform Better in China’s Technology Entrepreneurship?” Strategic Entrepreneurship Journal 6, no. 3 (2012): 257–272.
[11]Wadhwa et al., America’s Loss Is the World’s Gain: America’s New Immigrant Entrepreneurs, Part IV.
[12] Oi Dai and Xiaohui Liu, “Returnee Entrepreneurs and Firm Performance in Chinese High-Technology Industries,” International Business Review 18, no. 4 (2009): 373–386.
[13] Filatotchev et al., “The Export Orientation and Export Performance of High-Technology SMEs in Emerging Markets.”
[14] Wadhwa et al., America’s New Immigrant Entrepreneurs, Part VI: Return Migration and Global Entrepreneurship.
[15] Dai and Liu, “Returnee Entrepreneurs and Firm Performance in Chinese High-Technology Industries.”
[16] Li et al., “Returnees Versus Locals: Who Perform Better in China’s Technology Entrepreneurship?”
[17] Xiaohui Liu, Jiangyong Lu, Igor Filatotchev, Trevor Buck, and Mike Wright, “Returnee Entrepreneurs, Knowledge Spillovers and Innovation in High-Tech Firms in Emerging Economies,” Journal of International Business Studies 41, no. 7 (2010): 1183–1197.
[18] Saxenian, The New Argonauts: Regional Advantage in a Global Economy.
[19] AnnaLee Saxenian and Jinn-Yuh Hsu, “The Silicon Valley–Hsinchu Connection: Technical Communities and Industrial Upgrading,” Industrial and Corporate Change 10, no. 4 (2001): 893–920.
[20] Liang Huang and Jinn-Yuh Hsu, “How Semiconductor Became National: A Historical Review of the Nationalist Aspect of Taiwan’s Semiconductor Technology and the Birth of TSMC,” working paper, Department of Geography, National Taiwan University, 2025.
[21] Saxenian, The New Argonauts: Regional Advantage in a Global Economy.
[22] Wadhwa et al., America’s Loss Is the World’s Gain: America’s New Immigrant Entrepreneurs, Part IV.
[23] Li et al., “Returnees Versus Locals: Who Perform Better in China’s Technology Entrepreneurship?”
[24] Wadhwa et al., “The Grass Is Indeed Greener in India and China for Returnee Entrepreneurs.”
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