Failed Startups in India
Analysis of Indian startup failures from Byju's ($22B collapse) to smaller D2C and fintech failures. The world's 3rd largest startup ecosystem.
2+
Cases
$25B
Lost
90%
Fail Rate
Startup Ecosystem Overview
India is the world's 3rd largest startup ecosystem with 100+ unicorns. Bangalore, Mumbai, Delhi-NCR, and Hyderabad are key hubs. The ecosystem exploded in 2020-2022 with massive global VC inflows, but a correction began in 2023 as many high-profile startups struggled with profitability and governance.
Failures by Industry
Cultural & Regulatory Factors
Growth-at-All-Costs Culture
Indian startups adopted Silicon Valley's blitzscaling playbook but in a price-sensitive market. Deep discounting to acquire users destroyed unit economics across sectors.
Global VC Dependency
Indian startups relied heavily on foreign VCs (Tiger Global, SoftBank, Sequoia India). When global funding dried up in 2022-2023, many couldn't survive.
Governance Gaps
Byju's, Zilingo, and others exposed governance failures. Family-run cultures sometimes clashed with VC expectations for transparency and accountability.
Failed Startups (2)
Byju's
Unsustainable Growth & Governance · Aggressive acquisition-driven growth funded by debt is fragile. Transparency wit…
$5.5B
2011–2024
OYO Rooms
Aggressive Expansion & Quality Issues · SoftBank poured $2B+ into a budget hotel chain that expanded to 80 countries bef…
$3.2B
2013–2024
Lessons for India Founders
- ✓Build for Indian unit economics from day one — US pricing models don't work in India
- ✓Focus on profitability before raising large rounds from foreign VCs
- ✓Implement strong governance early — board independence, proper accounting, transparent reporting
- ✓Leverage India's massive digital infrastructure (UPI, Aadhaar, ONDC) for distribution advantages
Frequently Asked Questions
What is the startup failure rate in India?
Approximately 90% of Indian startups fail, higher than the global average. The combination of price-sensitive consumers, intense competition, governance challenges, and dependency on foreign capital contributes to the higher rate.
What is the biggest Indian startup failure?
Byju's is the largest — valued at $22B at its peak, the edtech giant raised $5.5B but collapsed due to aggressive acquisitions, accounting controversies, and post-pandemic demand decline. It became India's most spectacular startup failure.
Why do Indian startups struggle with profitability?
India's price-sensitive market means customers expect low prices. The average revenue per user in India is 5-10x lower than US equivalents, but operating costs (talent, infrastructure) are only 2-3x lower, creating margin pressure.
Is the Indian startup ecosystem recovering in 2025-2026?
Yes, with a focus on profitability. The "funding winter" of 2023-2024 forced Indian startups to become leaner. Profitable companies like Zerodha, PhonePe, and Meesho are becoming the new role models over growth-at-all-costs unicorns.