India’s startup ecosystem is undergoing a significant transformation as over 28,000 startups have shut down in the past two years. According to a report by data intelligence platform Tracxn, 15,921 startups ceased operations in 2023, and an additional 12,717 closed in 2024. The reasons for these closures range from bankruptcy to prolonged inactivity.
This number is significantly higher than the 2,300 startups that shut down between 2019 and 2022. The rate of new startup launches has also declined sharply, with only 5,264 startups founded in 2024 compared to over 9,600 per year from 2019 to 2022. As of now, just 125 startups have been established in 2025.
The sectors hit hardest include agritech, fintech, edtech, and healthtech. These sectors faced challenges primarily due to early and large capital infusions that led to high cash burn and a relentless growth-at-all-cost mentality. Low customer retention also resulted in increased operational costs.
Acquisitions within the startup ecosystem have decreased significantly, from 248 in 2021 to just 131 in 2024. Experts attribute this to the lack of meaningful consolidation, which has further hampered the sustainability of many startups. Already, 259 startups have shut down in 2025, and experts predict that this number will rise in the coming months as economic and market pressures continue to mount.
Waves of startup closures in India
However, instead of signaling a crisis, this marks a necessary and overdue shift toward sustainability, financial discipline, and long-term success. The startup landscape is finally maturing, and the ecosystem is self-filtering, ensuring only the strongest models survive.
Investors and founders now see this as a natural correction—a shift toward quality over quantity. The funding winter of 2023-24 forced investors to rethink priorities, focusing on proven business models, financial discipline, and sustainable market strategies. Startups that pivoted quickly, prioritized financial stability, and built real customer value are emerging stronger than ever.
The era of acquisitions for hype is over, and startups now need operational strength, not just inflated valuations. India’s startup ecosystem is also being actively shaped by policy interventions and funding initiatives. The Startup India program has helped over 1.59 lakh startups gain recognition, making India the third-largest startup ecosystem globally.
Government-backed funds like the ₹10,000 crore Fund of Funds for Startups (FFS) have played a crucial role in supporting early-stage ventures. As 2025 unfolds, closures may continue, but they are paving the way for a startup generation built on substance, not speculation. The focus is no longer on just how many startups launch—but how many survive, adapt, and thrive.
This isn’t a crisis—it’s the foundation of a stronger future for India’s startup ecosystem.
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