India’s startup ecosystem faced a challenging year in 2025, with 11,223 startups shutting down, according to data from the Ministry of Corporate Affairs. The closures highlight the growing struggles of early-stage companies to survive amid a funding winter, rising operational costs, and weak consumer demand.
While India remains the third-largest startup hub in the world, the surge in shutdowns paints a concerning picture. In comparison, only 4,800 startups shut down in 2024, showing a 134% increase this year.
Experts say the main reasons behind the shutdowns include:
- Difficulty in raising capital, especially for seed and Series A rounds.
- Unsustainable business models focused on growth over profitability.
- Investor caution after several high-profile startup failures.
- Layoffs and cash burn due to excessive marketing spends.
Some of the affected sectors include e-commerce, edtech, fintech, and mobility, which saw the highest number of closures. Many startups also voluntarily wound up after failing to scale beyond Tier-1 cities.
However, industry leaders remain hopeful. “This phase will separate the serious entrepreneurs from the opportunists,” said an industry analyst. “We’ll likely see stronger, more sustainable startups emerge in the next cycle.”
Despite the challenges, India still added over 3,500 new startups in 2025, showing that the entrepreneurial spirit remains alive.
📊 Summary Table
| Category | Details |
|---|---|
| Year | 2025 |
| Total Startups Shut Down | 11,223 |
| Compared to 2024 | 134% increase |
| Major Sectors Affected | E-commerce, Edtech, Fintech, Mobility |
| Key Reasons | Funding crunch, unsustainable models, investor caution |
| New Startups Registered in 2025 | 3,500+ |
| India’s Global Rank in Startups | 3rd |
| Outlook for 2026 | Recovery expected with focus on profitability |
