From BYJU’S to GlobalBees: Why Many Unicorn Startups Are Facing Insolvency

India's startup ecosystem has been one of the biggest success stories in the global innovation economy. From tech unicorns to new-age D2C brands, the past decade has seen extraordinary entrepreneurial momentum. But as the ecosystem matures, some growing pains have become more visible—especially around financial discipline and long-term sustainability.

The recent insolvency plea against GlobalBees, and earlier financial troubles at BYJU’S, have sparked important conversations about how even well-funded and celebrated startups are navigating today’s tighter capital environment. These developments aren’t signs of collapse—but of evolution. And they underline the urgent need for startups to align aggressive scaling with sound financial practices.

GlobalBees: The Latest to Face Financial Stress

GlobalBees, the Thrasio-style brand aggregator backed by FirstCry and funded by the likes of SoftBank, Lightspeed, and Chiratae Ventures, is now facing an insolvency plea at the National Company Law Tribunal (NCLT), New Delhi. The plea was filed by the directors of Kuber Mart Industries, citing a default of ₹64.92 crore, including interest.

Interestingly, GlobalBees had earlier invested ₹50 crore into Kuber Mart in 2022, making the legal turn of events even more complex. GlobalBees is contesting the plea, and the matter is currently at the admission stage. The company has already seen several senior exits, including its CEO and key board members, signaling internal shifts.

Despite contributing over ₹1,500 crore to FirstCry’s revenue in FY25, the current situation shows how even strong performers can face stress when investments don’t yield expected returns or partner dynamics falter.

Before This: The BYJU’S Saga

The situation at BYJU’S was one of the most high-profile cases to stir this discussion.

Once the face of India’s edtech boom, BYJU’S grew rapidly—acquiring multiple companies across the U.S. and India. But delays in financial reporting, management changes, and a debt default on a $1.2 billion term loan led to court cases across countries.

In India, multiple insolvency pleas were filed by vendors and partners for unpaid dues. Internationally, lenders alleged a $500 million transfer was fraudulent. The company eventually had to sell key acquisitions like Epic and Tynker at a steep discount.

While BYJU’S is still in the process of restructuring, its story has become a case study in how rapid growth without strong financial controls can lead to trouble—even for market leaders.

It’s Not Just Two: A Wider Trend Emerges

The challenges faced by BYJU’S and GlobalBees aren’t isolated. A number of other startups have also found themselves under financial stress due to a mix of external conditions and internal missteps.

GoMechanic

Once a poster boy for auto-service tech, GoMechanic shocked the ecosystem when its founders admitted to financial misreporting. Investors pulled back, and the company was forced to lay off hundreds. A rescue acquisition followed, but the damage to its brand and trust was done.

Zilingo

Though headquartered in Singapore, Zilingo had deep ties to the Indian startup circuit. Valued at close to $1 billion, it saw a sharp downfall after allegations of financial discrepancies and a fallout between its CEO and board. Operations were suspended, and bankruptcy proceedings began.

Udayy

This edtech startup saw great traction during the pandemic but chose to shut down voluntarily once schools reopened and usage declined. Despite having investor backing, the founders chose to return remaining funds, highlighting how some startups are choosing strategic exits over financial collapse.

Trell

The lifestyle video and content-commerce platform also came under scrutiny in 2022 for governance issues and alleged financial irregularities. The startup had to pivot and reduce scale, demonstrating how a lack of control can disrupt even trending platforms.

Why Are These Startups Facing Financial Trouble?

The surge in financial stress and insolvency pleas isn’t a sign of ecosystem failure—it’s a sign that the market is maturing, and investors are now rewarding substance over style.

A Shift in Capital Environment

The global funding environment has changed. Rising interest rates, macroeconomic uncertainty, and investor caution have slowed the flow of easy capital. Startups that relied heavily on fresh funding rounds for survival have suddenly found their runways shrinking.

Gaps in Governance

Startups often build in high-speed mode, but processes like internal audits, independent boards, and regulatory compliance can get deprioritized. As scrutiny increases, these gaps are being exposed.

Valuation-Driven Growth

Many startups were valued on potential rather than profit. When expectations didn’t translate into financial performance, cracks started to show.

What Exactly Is Insolvency?

In simple terms, insolvency means a company is unable to pay its debts. In India, under the Insolvency and Bankruptcy Code (IBC), 2016, creditors—either financial or operational—can file for insolvency resolution if a company defaults.

Once a petition is admitted by the NCLT, the company enters a Corporate Insolvency Resolution Process (CIRP), where an independent resolution professional takes charge and the company’s fate is decided by the Committee of Creditors.

Importantly, insolvency is not always the end—it can lead to successful restructurings. But it’s a complex legal and reputational process that most startups try to avoid at all costs.

So, How Can Startups Stay Safe?

Insolvency is not inevitable. Startups can avoid financial crises by embracing some foundational principles:

• Focus on Sustainable Growth: Scale is good—but not at the cost of profitability. Strong unit economics must be the goal.

• Build Governance Early: Independent directors, transparent accounting, and good internal systems pay off in the long run.

• Don’t Depend on One Source of Funds: Explore non-dilutive capital, revenue-based financing, or partnerships.

• Have a Backup Plan: Always keep a 12-18 month runway and a contingency strategy.

An Ecosystem in Transition

India’s startup ecosystem isn’t crumbling—it’s evolving. As the country moves from the funding boom era to a discipline-driven phase, startups are learning to balance innovation with accountability.

Cases like BYJU’S and GlobalBees serve as reminders that ambition must walk hand-in-hand with governance. And as the next generation of founders builds new ventures, they’re better equipped to lead with both vision and responsibility.

The Indian startup story is far from over. If anything, this is a new chapter—more grounded, more sustainable, and perhaps even more exciting.