8 months ago

India's 2025 Startup Shutdowns: Fewer Failures, Deeper Issues

India's 2025 Startup Shutdowns: Fewer Failures, Deeper Issues
India’s startup shutdowns in 2025: Fewer failures, deeper fault lines · CNBC TV 18

In 2025, fewer Indian startups shut down compared to 2024, but the ones that did were bigger and had more serious problems.

These companies had a lot of money from investors but struggled because they grew too fast without making a profit.

Some, like The Good Glamm Group, had too much debt and couldn't get more money when they needed it.

Others, like Hike, lost their importance because people stopped using their services.

Dunzo had trouble making money from delivering things quickly, and Builder.ai couldn't turn its AI ideas into successful products.

BluSmart had high costs and problems with how it was run.

Overall, the startup world in India is becoming more careful, and companies now need to show they can make money and manage well to keep growing.

In 2026, investors are expected to be more selective, focusing on high-conviction startups in areas like AI and fintech.

IPO activity is picking up, and there's a shift towards more balanced, cautious investment.

However, there are still challenges, like ensuring sustainable profitability and addressing regulatory uncertainties.

The future looks promising for strong, well-managed startups, but it's a tougher environment for those that can't prove their value.

Key facts

Total Startups Shut Down in 2025
730
Total Startups Shut Down in 2024
3,903
Registered Startups in India (DPIIT)
2.06 lakh
The Good Glamm Group Peak Valuation
$1.2-1.3 billion
Hike Peak Valuation
~$1 billion
Dunzo Peak Valuation
$700-800 million
Builder.ai Peak Valuation
$600-700 million
BluSmart Peak Valuation
$300-350 million
Total Startup Funding in 2025
$11 Bn
New Funds Launched in 2025
$12.1 Bn
IPOs in 2025
16 new-age tech companies
AI Patents Filed (2019-2025)
83,059
AI Patents Filed (2010-2018)
3,931

Timeline

  1. May 2025: PE-VC funding plunges to $1.5B, sparking Indian startup slump.

  2. Q2 2025: Indian startups' funding nosedives 43% to $5.3B.

  3. Late 2025: Investors pivot strategies amid funding crunch.

  4. Q3 2025: Funding drought persists, investors tread cautiously in 2026.

  5. 2025: Startup shutdowns decrease, but survivors face growth, debt, relevance crises.

Quotes

Pranav Haldea

Managing Director of PRIME Database

“It is for the first time in India’s history, that there have been two consecutive years of all-time high IPO fundraising activity. In the past, a strong IPO year almost always was succeeded by a lull lasting two to three years.”
indianexpress.com
“If valuation discipline is maintained by issuers and the secondary market continues to remain stable, even if not bullish, the next few years can be a golden era for India’s IPO market.”
livemint.com

Harshal Dasani

Business Head at INVAsset PMS

“Elevated subscription numbers and grey market premiums tend to compress future returns if growth delivery falls even marginally short of projections. Therefore, he advised investors to shift from momentum to valuation discipline and business resilience as selectivity matters more than participation.”
livemint.com
“While several high-demand IPOs delivered sharp pop-ups on debut, a meaningful portion of those gains has since eroded, and the fact that two out of the top ten listings are now trading below issue price highlights how quickly sentiment-driven excess can unwind.”
livemint.com

Bank of Baroda Research team

Research team from Bank of Baroda

“The highest share of the deployment list (IPO proceeds) is repayment of debt which is 29 per cent. This is part of the deleveraging process where companies are going to market to raise funds which are used for repaying debt.”
indianexpress.com

Sources

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