Business
Over 28,000 Indian Startups Shut Down in Just Two Years — Is the Boom Turning Into a Bust?
Between 2023 and 2024, over 28,000 Indian startups shut down — a 12-fold increase from previous years. Here’s what triggered the closures and what it means for the startup ecosystem.
India’s startup ecosystem, long hailed as the world’s third-largest and fastest-growing, is witnessing a dramatic correction. According to data accessed from official records and industry estimates, over 28,000 startups have shut down between 2023 and 2024 — a number that dwarfs the 2,300 closures recorded across 2019 to 2022.
This marks a 12x increase in shutdowns over the previous period and reflects the tightening grip of a prolonged funding winter, unsustainable burn models, and macroeconomic headwinds that have hit India’s new-age businesses hard.
📉 Year-wise Startup Closures
| Year | Startups Closed |
|---|---|
| 2019–2022 (combined) | ~2,300 |
| 2023 | 15,921 |
| 2024 | 12,717 |
| 2025 (till April) | 259+ |
(Source: Financial Express, MCA records)
What’s Causing the Spike in Shutdowns?
Experts say the trend is a result of accumulated fragility in the system. Between 2020 and 2021, an avalanche of funding encouraged rapid expansion, but few startups focused on unit economics or real revenue models.
- Funding Slowdown: VC investments dropped by over 40% year-on-year after 2022, forcing cash-strapped startups to either pivot or perish.
- High Burn, Low Return: Business models in edtech, fintech, and quick commerce struggled to maintain customer retention and profitability.
- Regulatory Pushback: Segments like crypto, lending apps, and edtech saw increased oversight, creating compliance pressures many couldn’t absorb.
- Mass Layoffs & Consolidation: Over 24,000 layoffs were recorded in 2023 alone, as firms trimmed operations or merged for survival.
Notable Shutdowns
- Lido Learning: Once a rising edtech player, Lido shut operations in early 2022 due to a capital crunch.
- ZestMoney: A once-prominent BNPL fintech firm that folded in 2023 amid regulatory and operational challenges.
- Udayy: A pandemic-era live learning platform that exited the space in 2022.
- Anar: A B2B SME networking app that shuttered in 2023, citing scale limitations.
Even lesser-known startups in healthtech, crypto, and D2C struggled to maintain runway as customer acquisition costs surged and investor patience wore thin.
The Bright Side? A Market Correction
While the volume of closures is sobering, investors and analysts say the “cleanup” was overdue.
“This is a correction, not a collapse,” said a Bengaluru-based VC partner. “What we’re seeing now is a much-needed shift towards sustainable models, real value delivery, and lean operations.”
New startup launches also slowed in 2024 — with only 5,264 new ventures registered, compared to 9,600 annually during the pre-COVID years.
Conclusion
India’s startup dream is far from over — but it’s becoming more grounded. The age of free cash flow with no profits is ending, and the winners of the next decade will be those who combine ambition with accountability.