The Indian stock market has kept investors on edge over the past year. Global uncertainty, geopolitical tensions, and volatile market movements have cooled the frenzy seen during the 2024 bull run. Even startup investing, once driven by abundant liquidity and aggressive risk-taking, is seeing a more cautious approach. However, stories of founders building billion-dollar companies and early investors making outsized gains continue to capture the interest of affluent investors looking beyond traditional asset classes.Take Mumbai-based Mahesh Kowshik, a 60-year-old retired project manager, who invested in a startup through his wealth manager nearly six years ago. He invested heavily because he trusted the founder and the person who introduced him to the opportunity. While the business struggled initially, it stabilised after course correction. However, Kowshik is still waiting for a meaningful exit.Many high net-worth individuals (HNIs) are also drawn to the glamour of startup investing, but face the reality of illiquidity, founder risk, and long holding periods. As per the Ministry of Commerce and Industry, India’s startup ecosystem has over 2.2 lakh startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT),and more than 130 unicorns.However, before you invest in a startup, understand why the reality is far more complex and less glamorous than the success stories suggest.