As India’s startup ecosystem accelerates into its next growth phase, emerging businesses are reshaping their growth through digital innovation with AI, omnichannel strategies, creators, and access to tier-2 and tier-3 markets and equally to cross-border geographies.
On the occasion of World MSME Day, we’re unveiling a new Meta-commissioned report by leading global professional services firm Alvarez & Marsal India (A&M India) that captures insights based on deep conversations with 100 high-growth Indian startups and outlines six key levers of growth for India’s startups: AI adoption, cross-border expansion, omnichannel presence, Tier 2/3 market expansion, category diversification, creator-led brand building. A&M’s expertise in advising high-growth businesses and investors combined with its data-led, real-world approach has delivered forward-looking and actionable findings in the report.
India’s start-up ecosystem has witnessed exponential growth over the last decade, with a surge in early-stage funding, digital penetration, and consumer affluence across metros and non-metro geographies. And technologies such as AI are further fueling the growth of startups and MSMEs in the country.
“In today’s dynamic times, startups that think smart and act fast to evolve will lead the charge. At Meta, we’re proud to be partners in this journey, equipping startups with cutting-edge AI-powered tools to help them scale and turn their bold ideas into impact.” – Sandhya Devanathan, Vice President, India and South East Asia, Meta
“We’re seeing a significant shift in how Indian startups think about scale—not just for pursuing growth but building more sustainable businesses that focus on value creation. AI, tiered expansion, and omnichannel models are no longer future bets—they’re foundational to execution today. What stands out is how early-stage startups are applying these levers with surprising sophistication. At Alvarez & Marsal, we’ve partnered with many of these ventures through critical growth inflection points—whether it’s business model and strategy, cost efficiency, supply chain or org design —and this report with Meta captures the emerging blueprint that will shape the next phase of India’s startup economy.” – Himanshu Bajaj, Managing Director & Head – Alvarez & Marsal India and GCC
With AI becoming a game-changer for marketers, the report outlines that more than 70% of startups are integrating it into their business operations. In marketing alone, 87% of AI adopters reported a ~30% improvement in cost per acquisition (CPA). Sectors such as healthcare, edtech, and beauty are leading in AI maturity leveraging automation for customer service, predictive analytics, and personalization.
“At Krishna Herbals, we’ve always been at the forefront of innovation and experimentation. When Meta introduced Advantage+ solutions, we were one of the early adopters. We leveraged these cutting-edge tools to optimize our marketing campaigns, and the results have been nothing short of phenomenal. With Advantage+, we’ve seen a significant increase in conversions, improved ad targeting, and enhanced overall campaign performance. The automation capabilities have also freed up our team to focus on more strategic initiatives, allowing us to drive even more growth for our business.” – Shrawan Daga, Founder, Krishna’s Herbal & Ayurveda
The report outlines how 67% of startups have embraced omnichannel models recognizing that modern consumer journeys toggle between online and offline. Discovery typically starts with digital ads, creator-led Reels, or WhatsApp messages and ends in physical retail, particularly in high-involvement categories like fashion, home, and fitness.
“Attributing online spends to walk-ins and offline conversions is the most critical aspect to driving an efficient omnichannel business while continuing to use digital as the primary advertising channel.” – Ayushi Gudwani, Founder, FS Life (FableStreet | PinkFort | March)
Tier 2 and 3 markets are becoming the new battlegrounds for scale. Nearly all surveyed startups are expanding into these regions, driven by demand, digital accessibility, and distribution ease. Service-based startups are entering these markets nearly a year earlier than product counterparts, using WhatsApp, vernacular content, and regional influencers to break through.
“India’s next billion consumers are not waiting to catch up – they’re leapfrogging. In Tier 2/3 markets, relevance isn’t about scaling down your offering, it’s about showing up with empathy, accessibility, and trust. That’s where real brand loyalty is born. By utilizing the AI-powered Advantage+ App Campaigns, we focused on optimizing down-funnel app events such as trial confirmations that ultimately drove new user growth. And it also led to the desired business results – we observed 20% improvement in CAC with Adoption of Advantage+ App Campaigns.” – Swagat Sarangi, Co-Founder, Smytten
Going global is no longer reserved for mature players. The study shows 52% of startups are expanding cross-border, largely driven by larger total addressable markets (TAM) and increasing global appetite for Indian-origin offerings. USA, UAE, and the UK emerged as the top export markets.
“By harnessing the power of Advantage+ and Creative Diversification, we’ve successfully expanded our global footprint, achieving a remarkable 30% higher ROI in new markets. As we continue to push boundaries, we’re excited to explore new categories across various craft forms and leverage Meta’s AI-led campaigns to discover fresh audiences and deepen connections with our existing customers.” – Aakriti Rawal, Co-Founder, House of Chikankari
Category expansion has emerged as a vital growth lever for startups looking to deepen consumer engagement and unlock new revenue streams. According to the report, 84% of startups have diversified beyond their core offerings, leveraging synergies across product lines, customer cohorts, and distribution channels. Notably, startups are increasingly relying on digital tools such as social listening, keyword analysis, and marketplace data to identify expansion opportunities, with 94% leveraging these insights, and 92% citing brand equity as a prerequisite for successful category play.
”Wearable tech isn’t just a hardware game anymore. As Noise expands globally and enters new categories, our focus is on building performance-oriented smart tech that takes the ‘Make in India’ story to the world. 90% of our campaigns leverage Advantage+ to scale efficiently and with the Partnership Ads solution we have seen 60% Lower Cost per Purchase and 26% Higher Return on Ad Spend.” – Gaurav Khatri, Co-Founder & CEO, Noise
In parallel, startups are investing heavily in creator-led brand building to drive trust, relatability, and audience reach in a fragmented digital landscape. The report finds that 88% of brands now partner with creators, including niche influencers and celebrities, to build community-led storytelling. Strikingly, 60% of startups begin these collaborations within their first two years, even with minimal digital marketing infrastructure in place. Whether product or service-led, brands are tapping into the creator economy to target specific segments, while leveraging celebrity-led campaigns for broader visibility and mass appeal.
“Influencer marketing has been a core pillar of our growth. For us, content isn’t just a piece of the puzzle – it is the puzzle. Working with creators allows us to tell real, relatable stories that build trust and emotional resonance. When you work with the right creators, you’re not just marketing – you’re building a community. The approach increased our ROAS by 25% and also reduced our acquisition cost by 20%.” – Suramya Jain, Co-Founder, RAS
As India’s start-up landscape continues to evolve, the report serves as a timely roadmap for founders and marketers alike highlighting the levers that matter most for sustainable scale. Whether it’s through AI-led efficiency, creator-driven storytelling, or Bharat-first expansion, the next wave of Indian startups is building with speed, relevance, and resilience.
Download the report from here.
