In February this year, a Bengaluru-based logistics startup quietly sent a two-line email to its employees. The subject line read: “Winding Down.” After four years, three pivots and two bridge rounds, the founders decided to call it quits. They had run out of money, and more importantly, out of patience. Their story is no outlier. Across India, thousands of startups are folding up, some after years of survival, others barely months into existence.
India saw the shutdown of 11,223 start-ups in 2025 YTD (year-to-date), as per Tracxn data shared with financialexpress.com. It’s just October, and this year has experienced a steep 30% jump from 8,649 closures in 2024.
According to layoffs.fyi, Hike, Beepkart, Astra, Ohm Mobility, Code Parrot, Blip, Subtl AI, Otipy, Log 9 Material, and ANS Commerce were some of the prominent startups that collapsed this year.
The figures, while stark, speak to a larger pattern of overreach, regulatory headwinds, and a painful recalibration of ambition. “The highest number of exits were observed in B2C e-commerce (5,776), followed by enterprise software (4,174) and SaaS (2,785),” Neha Singh, Co-Founder, Tracxn, noted. “This trend highlights the challenges startups face in achieving product-market fit and building sustainable business models. High customer acquisition costs, limited revenue visibility, and funding constraints have been key pain points, particularly for consumer-facing businesses.”
E-commerce takes the hardest hit
Nowhere is this correction more visible than in consumer tech. The B2C e-commerce sector, once widely acclaimed as the centre of the startup boom, accounts for over half of all the shutdowns. With 5,776 companies, this also translates into the model being exhausted after relying heavily on discounts and deep-pocketed investors.
Enterprise software and SaaS (Software as a Service), which were considered to be safer bets due to their revenue models, have also not been spared from the fate. Tracxn’s data shows 4,174 enterprise software and 2,785 SaaS startups have shut down this year, a sign that even B2B players are struggling to convert pilots into sustainable contracts amid tighter corporate tech budgets.
The human cost of the funding winter
In 2020, venture capital was abundant. Founders could test three business models before finding one that worked. By 2025, that was not true anymore. Tracxn’s data points to a more worrying shift: seven startups shut down within a year of inception in 2025, compared to just one in 2024. That means failures are happening earlier in the startup lifecycle. Seed-stage investors now demand clearer proof of traction before writing the first cheque.
“When we started Zerodha in 2010, ‘VC’ was an exotic term, and there was barely any startup activity. The most popular VCs were dads, uncles and aunts,” Nithin Kamath, co-founder and CEO of Zerodha, recalled via post on X (formerly Twitter). He added that while early 2010s VC waves focused on e-commerce and fintech, the ecosystem has since matured, with interest moving toward more complex sectors such as deep tech. Kamath also highlighted how better connectivity, education, and entrepreneurial infrastructure, from incubation centres at IISc and IITs to family offices and corporate investors, have created a wider, more vibrant ecosystem, but one where founders now face higher expectations for traction and proof of market fit.
Beyond the headline sectors, fashion tech, with 840 startups shutting down, HR tech at 846, and education IT at 549, have also seen rising attrition. Many of these companies built solutions in search of problems, misreading both customer needs and purchasing power.
Healthcare booking platforms saw 762 dissolved startups, investment tech saw 579, and internet-first brands saw 817 startups dissolved in 2025. “Startups in heavily regulated sectors such as healthcare, education, and financial services often struggle to navigate intricate legal and compliance requirements,” Singh added.
Survival by Fundamentals
The common thread knitted across sectors is the failure to achieve product-market fit before scaling. Founders tend to rush into building a product that might now have a validating demand. The consequences are bloated cost structures, unsustainable growth models and limited differentiation.
“Survival in India’s startup ecosystem depends on strong business fundamentals and effective execution. Startups that validate market demand, maintain financial discipline, and proactively manage regulatory requirements are better positioned to scale successfully and avoid the pitfalls that lead to setbacks,” Singh noted. Maybe this isn’t a bad omen, maybe it’s just a way of the market cleaning excess. For now, all we can do is wait and watch.