729 startups shut in 2025 as regulation, governance reshape India’s tech landscape
The formation of new businesses has fallen sharply as founders and investors alike pull back from aggressive expansion, with only 978 startups founded in 2025
ADVERTISEMENT
As 2025 draws to a close, India's startup ecosystem presents a tale of stark contrasts. While the year delivered a handful of blockbuster IPOs, it also witnessed a steady churn of shutdowns as funding tightened, costs rose, and business models came under strain.
According to data from the market intelligence platform Tracxn, 729 startups shut down their operations in 2025, down from 978 the previous year. The decline in closures, however, masks a deeper slowdown. The formation of new businesses has fallen sharply as founders and investors alike pull back from aggressive expansion. Nearly 19,000 startups were founded in 2020 at the height of pandemic-era exuberance; by 2025, that figure had shrunk to just 978.
The sectors most affected reflected where optimism once ran highest. Between 2020 and 2025, enterprise applications accounted for the largest number of shutdowns, followed by retail and education technology. These industries attracted a surge of founders during the pandemic, when digital adoption soared. Sustaining growth once demand normalized proved far more difficult.
Consumer-facing startups have borne the brunt of the correction. Since 2020, nearly 14,000 B2C companies have shut down — about 72% more than the B2B firms over the same period. High customer acquisition costs, fickle user loyalty, and business models dependent on continuous funding have made consumer startups especially vulnerable. B2B firms, by contrast, tend to benefit from recurring revenue, clearer pricing power, and more stable unit economics.
Several of 2025's shutdowns depicted how structural weaknesses, regulatory shocks, and governance failures converged.
BluSmart, once positioned as India's answer to sustainable ride-hailing, shut operations in April after allegations of financial misconduct against its promoters surfaced. The company's rapid expansion had been underwritten by large borrowing taken by affiliate, Gensol Engineering, to finance an electric vehicle fleet. A subsequent investigation found that a portion of the funds had been diverted for personal use and to maintain credit ratings through fabricated documents. BluSmart's collapse underscores how fragile even the capital-intensive "green" ventures can be when governance falters.
The implosion of Good Glamm Group, a heavily funded house of brands, offered a different cautionary tale. Built on an aggressive acquisition strategy that spanned beauty, personal care, and digital media, the company sought to convert content audiences into commerce at scale. Instead, the pace and cost of acquisitions overwhelmed its balance sheet. By 2025, the group was selling brands at steep discounts, investors had exited the board, and employee and vendor payments were delayed--a roll-up strategy that proved difficult to integrate and sustain.
Regulatory shifts also claimed casualties. Hike, founded by Kavin Bharti Mittal, shut down after struggling to monetise its gaming and Web3 offerings in the wake of restrictions on real-money gaming. Once valued as a unicorn, the company ended with a modest cash balance, enough to cover severance and liabilities, before returning the remainder to investors. Fantasy sports platform CrickPe, backed by entrepreneur Ashneer Grover, similarly suspended operations as a 28% goods and services tax reshaped the economics of online gaming.
In the electric vehicle sector, Altigreen, a Reliance-backed manufacturer of electric three-wheeler, closed operations in June after losses tripled even as revenue grew. The mismatch between scale ambitions and capital availability proved fatal. Elsewhere, BeepKart, a used two-wheeler marketplace, shut down after aggressive expansion led to cannibalisation across outlets, highlighting the thin margins that continue to plague asset-heavy commerce models.
Even newer ventures were not spared. Blip, a fashion-focused quick commerce startup promising 30-minute deliveries, ran out of capital before achieving scale. Plus Gold, a digital gold savings platform that gained visibility on Shark Tank India, shut roughly a year after raising funds, undone by high operating costs and weak unit economics. Subtl.ai, an enterprise AI startup, closed after failing to secure follow-on funding, despite early traction and angel backing.
These closures point to a broader reset. The startup ecosystem that flourished on abundant liquidity is being forced to adapt to a more disciplined environment--one that rewards governance, capital efficiency, and realistic growth expectations over speed alone.
