Over 11,000 Indian start-ups shut down this year: Here's why
What's the story
India has witnessed the shutdown of 11,223 start-ups this year, a staggering 30% increase from the 8,649 closures recorded in 2024, according to the data shared by Tracxn with Financial Express. Some of the notable companies that have shut down this year include Hike, Beepkart, Astra, Ohm Mobility, Code Parrot, Blip, and Subtl AI, among others.
Market trends
B2C e-commerce hardest hit
The rise in start-up closures is indicative of a larger trend of regulatory challenges and market recalibration. Tracxn spokesperson noted that "the highest number of exits were observed in B2C e-commerce (5,776), followed by enterprise software (4,174) and SaaS (2,785)." These numbers highlight the difficulties start-ups face in achieving product-market fit and establishing sustainable business models amid high customer acquisition costs and funding constraints.
Sector impact
B2B players also struggling
The B2C e-commerce sector, once seen as the epicenter of the start-up boom, has taken a major hit, with over half of all shutdowns coming from this space. A total of 5,776 companies in this sector have shut down this year. The trend shows how heavily discounted business models and reliance on deep-pocketed investors are becoming unsustainable in today's market conditions.
Business challenges
Seed-stage failures on the rise
Even enterprise software and Software as a Service (SaaS) start-ups, which were thought to be safer bets due to their revenue models, have not been spared. Tracxn's data shows 4,174 enterprise software and 2,785 SaaS start-ups have shut down this year. This indicates that even B2B players are struggling to convert pilots into sustainable contracts amid tighter corporate tech budgets.
Market evolution
VC's evolving landscape
The shift from venture capital abundance in 2020 to a more cautious approach today is stark. Tracxn's data shows seven start-ups shut down within a year of inception in 2025, compared to just one last year. This indicates that failures are happening earlier in the start-up lifecycle, and seed-stage investors now demand clearer proof of traction before investing.
Investor scrutiny
Founders now face higher expectations for traction, market fit
Zerodha co-founder and CEO Nithin Kamath recalled how 'VC' was an exotic term when they started in 2010. He said that while early 2010s VC waves focused on e-commerce and fintech, the ecosystem has matured with interest moving toward more complex sectors like deep tech. Kamath also emphasized how better connectivity, education, and entrepreneurial infrastructure have created a wider ecosystem, but one where founders now face higher expectations for traction and proof of market fit.