(The Weekend Insight) - The 'Startup Mafia': How Former Employees Are Building the Next Wave of Unicorns

In today’s deep-dive, we will explore the fascinating rise of the ‘Startup Mafia’ in India—tight-knit networks of former employees from successful startups who are now building the country’s next wave of unicorns. From Flipkart and Paytm to Zomato and Freshworks, these alumni aren't just launching companies—they’re creating ecosystems. We’ll uncover what fuels this phenomenon, spotlight the most influential mafias shaping India’s startup landscape, and examine how ESOPs, strong founder networks, and investor confidence are turning employees into entrepreneurs at scale.

Understanding the 'Startup Mafia' Phenomenon

In the Indian startup ecosystem, the term "Startup Mafia" refers to networks of former employees from successful companies who leverage their experience and connections to launch new ventures. This phenomenon mirrors the "PayPal Mafia" in the United States, where ex-PayPal employees founded prominent tech companies. This was one of the first big “mafia” in the limelight. Big names like LinkedIn, Uber, and Tesla are all products of ex-PayPal employees. Interesting right? In India, similar patterns have emerged, with alumni from companies like Flipkart and Freshworks creating their own startups, thereby enriching the entrepreneurial landscape.

Ever wondered how these mafias achieved skyrocketing success? Let’s dive deeper into this report to find out.

Why Startup Alumni Launch Ventures & The Power of a Strong Founder Network

Several factors motivate former startup employees in India to embark on their own entrepreneurial journeys:

Familiarity: These alumni are familiar with the larger industry obviously because they have worked in the same field before starting a venture of their own, giving them an edge with insider knowledge of a specific industry.

Ability to Scale Fast: Since they have already witnessed what not to do, they tend to make fewer mistakes on their journey and scale faster.

Trust: It is easier for alumni of established companies to bring investors on board as they have trust in these tried and tested folks.

Access to Talent: They know exactly who to hire and from where, making it easier to build the dream team.

Resource Sharing: The existing networks of these alumni facilitate the exchange of knowledge, skills, and resources, reducing entry barriers for new entrepreneurs.

Investment Attraction: Investors often view startups emerging from established networks as lower-risk, increasing their willingness to provide funding. As discussed earlier, there are fewer chances of mistakes being made, while the probability of the venture being successful is higher.

The Origin of Startup Mafias in India

Early Examples from the Indian Startup Ecosystem

The concept of 'startup mafias' has been integral to the evolution of India's startup landscape. Early instances include alumni from global companies like Google and Yahoo who ventured into entrepreneurship.

Let’s dive into the case studies of major startup mafias that Indian startup ecosystem saw-

1. The Flipkart Mafia: Pioneers of the Trend

Background of Flipkart’s Growth

Founded in 2007 by Sachin Bansal and Binny Bansal, both alumni of IIT Delhi and former Amazon employees, Flipkart began as an online bookstore operating from a small apartment in Bengaluru. The company quickly expanded beyond books, diversifying into electronics, fashion, and other consumer goods. Very soon, Flipkart became a familiar name in every household, this tells of its success. The drive for excellence sparked what would later be known as the “Flipkart Mafia.” Backed by early investors like Tiger Global Management, Softbank Vision Fund and Accel Flipkart was unstoppable.

Notable Startups Founded by Former Flipkart Employees

The entrepreneurial culture at Flipkart has led to the emergence of numerous successful startups, collectively referred to as the "Flipkart Mafia" and people going out were popularly called “Flipsters.” As of recent reports, around 44 startups have been founded by former Flipkart employees, with a cumulative valuation of $25 billion. However, other reports state that at its peak, there were 233 flipsters entrepreneurs. Notable examples include:

• Myntra: Founded by Mukesh Bansal in 2007, who recognized the potential of untapped e-commerce in India. He employed the lessons learned at Flipkart to shape Myntra—the e-commerce fashion giant it is today.

• PhonePe: Established in 2016 by Sameer Nigam (former VP of Engineering and Marketing at Flipkart), Rahul Chari, and Burzin Engineer, PhonePe has grown into one of India's leading digital payment platforms, offering services like money transfers, bill payments, and investments. However, Flipkart acquired it within one year of its launch.

• Udaan: Founded in 2016 by Amod Malviya, Vaibhav Gupta, and Sujeet Kumar—all from the tech wing of Flipkart, Udaan is a B2B e-commerce platform that connects manufacturers, wholesalers, and retailers across various categories, streamlining the supply chain and enhancing business efficiencies.

• Groww: Launched in 2016 by flipsters Lalit Keshre, Harsh Jain, Neeraj Singh, and Ishan Bansal, Groww is an investment platform that simplifies investing in mutual funds, stocks, and other financial products, making wealth management accessible to a broader audience.

• Cult.fit: Mukesh Bansal and Ankit Nagori acquired the company in 2016, and scaled it to the current levels. The company made $120 million in revenue in FY23.

• Navi: Sachin Bansal and Ankit Agarwal founded “Navi Group” in December 2018. It operates in digital loans, home loans, mutual funds, etc. Headquartered in Bengaluru, it made a massive $340 million in revenue in FY24.

2. The Paytm Mafia: Fintech Powerhouses

The Rise of Paytm and Its Alumni Impact

Founded in 2010 by Vijay Shekhar Sharma, Paytm began as a mobile recharge platform and rapidly evolved into one of India's leading fintech companies, offering services such as digital payments, e-commerce, and financial products. This growth trajectory not only transformed India's digital economy but also fostered a culture that encouraged employees to venture into entrepreneurship.

Collectively, former Paytm employees have founded 22 startups, amassing a combined valuation exceeding ₹10,000 crore. According to reports, most of these startups were founded post Paytm’s ₹300 crore ESOP buyback in January 2018.

Well, it is not always a foul play kind of example, Paytm provides incubation for emerging entrepreneurs while it has also created multiple liquidity events, encouraging employees to start something of their own.

Startups Founded by Former Paytm Employees

The entrepreneurial spirit cultivated at Paytm has led to the emergence of several notable startups:

• Pocket FM: Co-founded by Rohan Nayak, Pocket FM is an audio streaming platform that offers a wide range of content, including audiobooks and podcasts. The company has raised around $7 million from investors like Times Group and Lightspeed India.

• Park+: Founded by Amit Lakhotia (former vice president of Paytm Payments), Park+ provides smart parking solutions across various cities in India along with FasTag recharge feature. The company has raised $11 million funding by investors like Sequoia and Matrix Partners. It is also trusted by angles like Kunal Bahl, Kunal Shah and Deep Kalra.

• indiagold: Launched by Deepak Abbot (Senior Vice President of products at Paytm) and Nitin Misra (Senior Vice President and business head of Paytm), indiagold offers instant gold loans and secure gold locker services. People can also buy and sell 24-carat gold on this online platform The company has raised around $2 million in a round led by Leo Capital.

3. The Ola Mafia: Mobility and Beyond

Ola’s Expansion and Its Entrepreneurial Influence

Founded in 2010 by Bhavish Aggarwal and Ankit Bhati, Ola has grown from a ride-hailing service into a multifaceted mobility platform, encompassing electric vehicles, financial services, and more. This rapid expansion and diversification have not only transformed India's transportation landscape but also fostered a culture of innovation and entrepreneurship among its employees. Around 46 to 51 startups have been founded by Ola employees across various sectors, collectively valuing over 8 crores.

Startups Founded by Ola Alumni

The entrepreneurial spirit cultivated at Ola has led to the creation of several notable startups:

• Uni Cards: Founded by Nitin Gupta, it is a Fintech startup built to address the lack of credit card access for young Indians. They have raised $104 million across 6 funding rounds so far.

• Allo Health: It is a health and fitness brand founded by Pranay Jivrajka in 2021. It offers personalized and discreet healthcare solutions. The company is backed by Nexus Venture Partners.

• Hubble Money: Founded in 2021 by Neeraj Tulsyan and Mayank Bishnoi, former Ola employees, and ISB alumni, offers discounted gift cards for brands like Flipkart and Zomato, helping users save 10% on monthly expenses. Backed by Sequoia Capital, it has raised $3.5 million in one funding round.

The founders of Ola Mafia highlight the importance of a strong academic background in entrepreneurial success as most of them are IIM and IIT alumni.

4. The Zomato Mafia: Shaping the Food and Tech Space

Zomato’s Evolution and Talent Exodus

Founded in 2008 by Deepinder Goyal, Akriti Chopra, Gunjan Patidar and Pankaj Chaddah, Zomato (now Eternal) began as a restaurant discovery platform and has since evolved into a comprehensive food services company, offering online ordering, table reservations, and subscription-based loyalty programs. In 2023, it became the first Indian unicorn to go public.

Startups Founded by Former Zomato Employees

The entrepreneurial culture at Zomato has led to the emergence of several notable startups:

• BkinkIt: Founded in 2013 by Albinder Dhindsa (head of International Operations at Zomato) and Saurabh Kumar, the company provides on-demand grocery delivery solutions. Backed by Zomato, its last valuation was $13 billion.

• Mindhouse: Founded by Zomato’s co-founder Pankaj Chaddah, Mindhouse provides holistic digital wellness services. The company made INR 2.92 crores in revenue in FY24.

• Smartstaff: Co-founded by Arpit Dave (VP- Product at Zomato) launched workforce management platform for enterprises. It also offers job vacancies for workers based on skill sets. Backed by Alteria Capital and Blume Ventures, it made $4.19 million in revenue in FY24.

5. The Swiggy Mafia: Food Tech to Hyperlocal Ventures

The Growth of Swiggy and Its Role in Startup Spin-offs

Founded in 2014 by Sriharsha Majety, Rahul Jaimini and Nandan Reddy, Swiggy has rapidly evolved from a hyperlocal food delivery service into one of India's leading food-tech platforms. Notably, 46 former Swiggy employees have ventured into entrepreneurship, most of these were founded between 2020 and 2023, the time of Swiggy’s ESOP buyback events. None of the Swiggy Mafias have achieved a unicorn status.

Notable Startups Founded by Former Swiggy Employees

The entrepreneurial spirit cultivated at Swiggy has led to the creation of several notable startups:

• Teachmint: Co-founded by Divyansh Bordia (Senior Manager—Operation Strategy at Swiggy), it is an online teaching and classroom management solution, offering virtual classrooms, assignment sharing, and student progress tracking. Backed by Lightspeed Ventures and Kunal Bahl, the company has raised $118 million across 8 funding rounds.

• Stable Money: Co-founded by Saurabh Jain (Assistant VP—Business Projects), the company provides clients with stable returns from products including debt mutual funds, government bonds, and more. It is backed by Lightspeed Venture Partners.

• Lucidity: Co-founded by Vatsal Rastogi, Lucidity provides cloud block storage management solutions, aiming to build an intelligent orchestration layer on top of cloud storage to deliver a NoOps experience. It made INR 1.87 crore in revenue in FY24.

6. The Freshworks Mafia: India’s SaaS Boom

Freshworks' Role in the Indian SaaS Ecosystem

Founded in 2010 by Girish Mathrubootham and Shan Krishnasamy, Freshworks has been a trailblazer in India's Software-as-a-Service (SaaS) landscape. Originally launched as Freshdesk, the company provided customer support solutions before rebranding to Freshworks to encompass a broader suite of business software. In September 2021, Freshworks made history by becoming the first India-born SaaS firm to list on a U.S. exchange, raising $1.03 billion and achieving a valuation of $10.1 billion.

Notable Startups Founded by Former Freshworks Employees

The entrepreneurial culture at Freshworks has led to the emergence of several notable startups:

• SuperOps.ai: Co-founded by Arvind Parthiban, SuperOps.ai offers an AI-powered platform designed to streamline IT operations for managed service providers, enhancing efficiency and service delivery. It has raised $54.4 million across four funding rounds.

• Spendflo: Co-founded by Rajiv Ramanan, Spendflo delivers a SaaS buying and management service aimed at helping companies procure and manage their software subscriptions more effectively, ensuring optimal value and compliance.

How the Culture of These Companies Inspired Entrepreneurship

• Innovation-Driven Culture: Companies like Flipkart, Zomato, and Swiggy foster environments that prioritize creativity, problem-solving, and challenging the status quo, encouraging employees to think innovatively.

• Exposure to Scale and Complexity: Working in rapidly growing companies provides insights into scaling operations, managing complexities, and understanding diverse markets—essential skills for entrepreneurship.

• Collaborative Work Environment: A strong emphasis on teamwork, as seen at Flipkart, helps employees build robust professional networks, which later serve as valuable resources for their entrepreneurial ventures.

• Learning and Development Opportunities: These organizations invest in continuous learning and skill development, equipping employees with the tools needed for entrepreneurial success.

• Humility, Curiosity, and Integrity: Emphasis on these values fosters a culture of continuous learning and innovation, encouraging employees to challenge norms and develop creative solutions.

• Encouragement of Risk-Taking: The entrepreneurial spirit is nurtured by companies that promote calculated risk-taking and experimentation, enabling employees to explore new ideas and business models.

Why Do Startup Mafias Form?

Startup mafias don’t just happen by accident—they’re born out of a unique mix of shared experiences, strong connections, and the right environment. Here’s why they come together:

Shared Experience & Strong Internal Networks

When you’ve worked side by side with a group of people in a high-pressure, fast-paced environment, you build a bond that’s hard to replicate. These shared experiences create a deep level of trust and understanding. It’s like being part of a team that’s been through the trenches together. That trust becomes the foundation for future collaborations, making it easier to team up and start something new.

Learning from a Fast-Growing Company

Being part of a company that’s scaling rapidly is like getting a crash course in entrepreneurship. You learn how to navigate challenges, adapt to change, and scale operations—all while seeing firsthand what works and what doesn’t. This kind of experience is invaluable when you’re ready to start your own venture. It’s like having a playbook for success, written by the company you just left.

Access to Talent and Capital

Let’s face it—starting a business is tough, but it’s a lot easier when you’ve got the right people and resources behind you. Startup mafias often have access to a pool of talented individuals who’ve already proven themselves in a high-performing environment. Plus, the network you build at a successful company can open doors to investors who trust your background and are willing to bet on your next big idea.

The Role of VC Firms in Fostering Startup Mafias

VCs recognize the value inherent in backing entrepreneurs emerging from successful startup ecosystems. Their perspectives include:

1. Proven Expertise: Founders from established startups possess domain-specific knowledge and have navigated the challenges of scaling businesses. VCs are more inclined to invest in such entrepreneurs due to their demonstrated capabilities.

2. Established Networks: These entrepreneurs bring with them extensive professional networks, including potential clients, partners, and fellow innovators. Such networks can accelerate a new venture's growth trajectory, making them attractive investment opportunities.

3. Cultural Influence: The entrepreneurial culture fostered within successful startups often emphasizes innovation, resilience, and agility. VCs value these cultural traits, anticipating that they will permeate the new ventures and enhance their likelihood of success.

Following is the list of VCs who have backed some of these startups:

Challenges Faced by Startup Mafia Founders

Starting a new venture after being part of a successful company might sound like a dream, but it comes with its own set of hurdles. Here’s what founders from startup mafias often grapple with:

High Expectations and Market Scrutiny

When you’ve been part of a successful company, people expect big things from you—and they’re watching closely. Investors, customers, and even competitors assume you’ll replicate that success, which can create immense pressure. Every move you make is under a microscope, and the fear of not living up to those expectations can be paralyzing. It’s like trying to hit a home run when everyone’s already convinced you’re a star player.

Talent Retention and Leadership Transitions

Building a great team is one thing but keeping them motivated and aligned with your vision is another. As the startup grows, it faces the challenge of transitioning from a small, tight-knit group to a larger, more structured organization. This often means stepping into new leadership roles or bringing in experienced leaders—both of which can be tricky. It’s a balancing act between maintaining the culture and scaling effectively.

Maintaining Originality in a Crowded Market

Coming from a successful company gives you credibility, but it also means lack of diversity. The bigger challenge, though, is standing out in a market that’s already packed with competitors. If everyone comes from the same background or experience, it can hinder diversity of thought and perspectives, leading to lack of fresh ideas and hindered innovation.

The Future of Startup Mafias in India

As we look ahead, the future of startup mafias in India promises to be even more exciting, driven by the talent, experience, and wealth cultivated within the ecosystem. Here’s what’s on the horizon:

Emerging Startup Mafias from Recent Unicorns

While established mafias from giants like Flipkart, Ola, and Paytm have already made their mark, the next wave of startup mafias is emerging from recent unicorns in sectors like B2B services, healthcare, EdTech, and more. OYO Rooms has seen 60 former employees become entrepreneurs, leading to the creation of numerous startups. Also, Udaan, a mafia itself as discussed above, has seen 29 alumni transition into entrepreneurship, further enriching the ecosystem.

Potential Impact of Indian Startup Mafias on the Global Stage

Indian startup mafias are no longer confined to domestic markets. With Indian SaaS companies, in particular, focusing heavily on the US and other international markets, we’re likely to see the rise of overseas mafias. A prime example as discussed above is Freshworks, founded by Girish Mathrubootham, a Zoho alumnus, which achieved a successful IPO on NASDAQ.

Moreover, the IIT Mafia, comprising alumni from the prestigious Indian Institutes of Technology, has been instrumental in founding billion-dollar ventures, thereby enhancing India's reputation in the global startup ecosystem.

Will These Founder Networks Lead to the Next Wave of IPOs?

As startup mafias continue to grow, their collective experience and networks could very well drive the next wave of IPOs in India. Founders who’ve been part of successful exits are now reinvesting their wealth and knowledge into new ventures, creating a cycle of innovation and growth. For instance, Licious, an online meat and seafood retailer backed by Temasek, plans to go public within the next 12-18 months, targeting a valuation of $2 billion.

Furthermore, India has surpassed China to become Asia's leading market for IPOs, driven by high stock prices and prominent listings like Swiggy and Hyundai Motor. This trend indicates a robust pipeline of startups ready to tap into public markets, fueled by the entrepreneurial spirit fostered within these mafias.

Conclusion

Startup mafias have become a cornerstone of India’s entrepreneurial ecosystem, driving innovation, collaboration, and growth. These networks, born out of successful companies, create a ripple effect—experienced founders mentor new entrepreneurs, successful exits fuel angel investments, and shared knowledge lowers barriers for aspiring founders. Companies like Oyo, Ola, and Udaan have collectively seen 297 founders establish 253 new startups, underscoring this ripple effect. Over time, their influence will strengthen India’s position as a global innovation hub, extending to emerging sectors like healthcare, EdTech, and B2B services. Consequently, India is poised to maintain its trajectory as a global startup hub, with these networks playing a pivotal role in nurturing emerging talent.