"We will have start-ups which will attract attention, collect money and disappear. Such start-ups will not get a second or a third chance," Tata, who was feted with the lifetime achievement award at the TiECON awards here, said.
Tata, whose portfolio also consists of e-commerce company Snapdeal, exhorted businesses to conduct themselves ethically and not to be "fly-by-night" operators.
He said the start-ups require mentoring, advice, networking and also recognition, and welcomed the role played by TiE, an organisation that seeks to promote the start-up ecosystem in India.
Tata also urged TiE to work as a shadow regulator for ethics and good practices, and ensure that the start-up sector grows in a manner that it should.
He was granted the award by Infosys co-founder N R Narayana Murthy.