Startup Shutdown: The Big Indian Startups That Couldn’t Survive 2025

For India’s startup ecosystem, 2025 will be remembered as a year of contrast.

On paper, the numbers look reassuring. Startup shutdowns fell sharply, plunging from a staggering 3,903 closures in 2024 to about 730 this year. The ecosystem itself continues to expand, with the Department for Promotion of Industry and Internal Trade (DPIIT) now recognising over 2.06 lakh startups across India.

Yet beneath this surface-level stability lies a more complex and sobering reality.

Some of the startups that shut shop in 2025 were not fringe experiments or early-stage moonshots. They were well-funded, widely known names—companies that once symbolised India’s ambition in electric mobility, hyperlocal delivery, consumer internet, and new-age commerce. Their exits sent ripples across founder circles, investor boardrooms, and policy discussions, raising difficult questions about governance, capital discipline, regulation, and the sustainability of popular business models.

Here’s a closer look at the major Indian startups that closed down in 2025—and what their stories reveal about the changing nature of India’s startup journey.

Startups Who Stopped in 2025

BluSmart: When a Clean Mobility Dream Hit a Governance Wall

Founded in 2019, BluSmart entered India’s crowded ride-hailing market with a bold promise: emission-free, reliable rides driven by salaried drivers. In a sector dominated by price wars and contractor-driven models, BluSmart positioned itself as a premium, predictable alternative—especially for airport travellers in Delhi.

The idea worked.

At its peak, BluSmart commanded nearly 9% market share in Delhi, operated a fleet of over 8,000 electric vehicles across India, and raised around $168 million from investors, including BP Ventures and celebrity backers. For many, it was a rare example of a climate-first startup scaling responsibly.

But in April 2025, the narrative changed dramatically.

India’s market regulator, SEBI, uncovered a large-scale financial fraud at Gensol Engineering, a listed solar EPC firm promoted by BluSmart’s founders, the Jaggi brothers. While Gensol did not own equity in BluSmart, it held ownership of a significant portion of BluSmart’s EV fleet—creating deep financial linkages between the two entities.

SEBI’s findings were damning. The regulator alleged that the promoters siphoned off at least ₹262 crore from EV loans, forged lender documents, manipulated share prices, misled investors through false disclosures, and diverted funds into stock trading and personal luxury purchases.

The fallout was swift.

BluSmart’s internal cracks became visible almost immediately—delayed salaries, falling daily ride numbers, and exits at senior leadership levels. Trust evaporated, operations became unsustainable, and the company eventually suspended services. Its fleet was transitioned to Uber, marking an abrupt and painful end to what was once hailed as India’s most promising clean mobility challenger.

For the startup ecosystem, BluSmart’s collapse became a stark reminder that governance failures can undo even the most well-loved and well-funded business models.

Dunzo: A First-Mover That Lost the Quick-Commerce Race

There was a time when Dunzo was synonymous with convenience in urban India.

As one of the earliest hyperlocal delivery platforms, Dunzo became the app people turned to for everything—from groceries and medicines to forgotten phone chargers. Its rise culminated in a $240 million investment from Reliance Retail in 2022, a deal that seemed to cement its long-term future.

But the market moved faster than Dunzo could adapt.

The emergence of aggressive quick-commerce players like Zepto, Swiggy Instamart, and Blinkit, all promising 10-minute deliveries backed by deep capital reserves, fundamentally reshaped consumer expectations. Dunzo struggled to match their speed, scale, and spending power.

The company also found it difficult to raise follow-on funding, just as costs mounted. Strategic missteps—most notably its high-profile IPL sponsorship—added to financial pressure without delivering sustained customer growth. Debt piled up, customer churn increased, and operations slowed.

By September 2025, Dunzo was effectively without leadership. Co-founder and CEO Kabeer Biswas exited to build Flipkart’s quick-commerce arm, Minutes, bringing Dunzo’s long decline to a close.

What began as a pioneering story ended as a cautionary tale: being first is not enough in a capital-intensive, speed-driven market.

Hike: From Messaging Pioneer to a Quiet Exit

When Kavin Mittal launched Hike in 2012, it felt like a rare homegrown challenger to global messaging giants such as WhatsApp and Telegram. Backed by heavyweight investors like Tiger Global, SoftBank, and Tencent, Hike raised over $250 million within four years.

At its peak, the app boasted over 100 million registered users, sending more than 40 billion messages every month. Mittal famously said, “We’re here to stay.”

But global network effects proved unforgiving.

By 2021, Hike shut down its core messaging service, acknowledging the difficulty of competing with entrenched international platforms in India. The company pivoted multiple times—most notably rebranding as Hike Sticker Chat and later launching Rush, a real-money gaming platform.

What was once seen as innovation began to look like desperation.

The final blow came in 2025, when the Promotion and Regulation of Online Gaming Act imposed a blanket ban on real-money gaming apps. With Rush rendered illegal overnight, Hike shut down its remaining operations in September.

One of India’s earliest consumer internet success stories quietly faded away, underscoring how policy shifts can decisively alter startup outcomes.

The Good Glamm Group: When the Roll-Up Dream Unravelled

At one point, The Good Glamm Group looked unstoppable.

With over a dozen brands under its umbrella, a near-unicorn valuation, and a strategy inspired by global roll-up models like Thrasio, the company aimed to build a beauty and personal care powerhouse through rapid acquisitions.

But scale came at a cost.

Over time, cracks appeared as brands like Sirona and The Mom’s Co were wound down. Heavy acquisition-led debt, slowing growth, and a tightening funding environment exposed structural weaknesses. Many acquired brands were either loss-making or too small to scale meaningfully, while promised synergies—from shared supply chains to centralised marketing—failed to materialise.

By 2025, lenders triggered an asset breakup, with brands being explored for individual sales. The Good Glamm Group’s decline became emblematic of a broader reckoning for India’s roll-up ecommerce experiment, where growth through acquisition proved harder than expected.

Otipy: A Model Overtaken by Speed

Launched during the pandemic by former Blinkit CTO Varun Khurana, Otipy entered the grocery space with a distinct proposition. Instead of racing toward instant delivery, it built a subscription-based, farm-to-fork model, relying on community resellers for last-mile delivery.

The idea resonated early on.

Operating in Mumbai and Delhi-NCR, Otipy raised $44.2 million and positioned itself as a thoughtful alternative to quick commerce. But as 10-minute delivery became the norm, consumer expectations shifted dramatically.

Otipy’s network simply couldn’t match the speed promised by deep-pocketed competitors. Financial stress followed—delayed salaries, unpaid vendor dues, and shrinking operations. In May 2025, the Crofarm India subsidiary shut down the business, leaving around 300 employees and delivery partners without jobs.

Fewer Shutdowns, Tougher Lessons

Data from Tracxn shows that startup shutdowns in India fell by nearly 80% in 2025, a sharp contrast to the 2021–22 period, when more than 11,000 startups shut down.

Over the past five years, most deadpooled startups have come from enterprise applications, followed by retail and edtech, with healthtech and media also seeing significant failures. Regionally, Maharashtra and Karnataka recorded the highest number of shutdowns.

The message from 2025 is clear: capital alone is no longer enough. Governance, regulatory awareness, sustainable unit economics, and the ability to adapt without losing focus now define survival.

India’s startup ecosystem may be maturing—but as these stories show, the road to durability remains unforgiving.