From 3,903 to 730: Indian start-up closures see drastic decline
What's the story
India's start-up ecosystem witnessed a major turnaround in 2025, with the number of shutdowns plummeting to around 730 from a staggering 3,903 in 2024, as per Tracxn. The sharp decline in closures isn't a sign of resilience but rather an effect of fewer start-ups being founded after mid-2022 as venture capital slowed and valuations corrected. And despite the decrease in shutdowns, several well-funded, high-profile start-ups with global investors couldn't survive a prolonged funding squeeze.
Consequences
Larger, older start-ups face consequences of scale-first growth
The remaining players in the ecosystem are larger, older start-ups and those with scale, payrolls, debt, and expectations built on years of easy capital. Their failures may be fewer in number but they are far more consequential. The Good Glamm Group is one such example, once valued at over $1.2 billion for its aggressive roll-up strategy to build scale quickly by acquiring multiple beauty and content brands, but faced challenges due to high leverage, delayed profitability, and working-capital stress.
Strategy failure
Good Glamm Group's strategy falters amid funding challenges
The Good Glamm Group's strategy of aggressive expansion worked well when capital was cheap but failed as cash flows tightened. High leverage, delayed profitability, and working-capital stress collided with a tough funding environment. Refinancing became difficult and optionality disappeared. What was once seen as ambition now appears to be fragility in the face of changing market conditions.
Relevance challenge
Hike's shutdown highlights relevance over funding
Hike's shutdown highlights a different risk: loss of relevance. Once an early challenger in India's messaging space, Hike struggled to compete with global platforms benefiting from scale and network effects. Its pivot into gaming and Web3 reflected ambition but lacked product-market fit, leading to declining user engagement. In 2025, relevance proved just as critical as runway for start-ups' survival.
Market hurdles
Dunzo's struggles and Builder.ai's challenges
Dunzo's struggles show that convenience doesn't guarantee viability. Hyperlocal delivery promised speed and scale but its economics remained fragile. High burn rates, thin margins, and intense competition left little room for error. When investor patience ran out, the business model was exposed. Meanwhile, Builder.ai faced a global phenomenon where AI continued to attract capital but execution gaps, governance questions weighed heavily on cash-flow challenges in 2025.
Business model
BluSmart's shutdown due to structural and credibility challenges
BluSmart's shutdown highlights structural and credibility challenges. The company built a fleet-owned electric mobility model, betting on vertical integration for long-term efficiencies and superior customer experience. However, as credit tightened and funding became selective in 2025, those structural pressures intensified. Promoter-level controversies and governance concerns also weighed on investor confidence, complicating fundraising efforts further.