While 2025 was celebrated for blockbuster IPOs and strong public market debuts, it was a tough year for many once-celebrated Indian startups. According to Traxon data, 729 startups closed in 2025, although this number is lower than the record closures in 2024. The closures reflect a deeper restructuring taking place in the startup ecosystem as investors shift away from a “growth” mindset and start demanding profitability, governance and sustainable business models.
Funding restructuring and increasing pressure
Startups in enterprise applications, retail and edtech faced the highest number of closures. Low funding, delayed fund raising and strict investor vetting forced many companies to exit. As weak unit economics and governance gaps quickly became the focus of attention, even unicorns valued at over $1 billion couldn’t escape.
BlueSmart: Governance failures
The shutdown of BlueSmart was one of the biggest shocks of the year. The company, once considered a pioneer in electric mobility, collapsed after a Rs 260 crore financial scandal involving its subsidiary Gensol Engineering. Regulators reported fraudulent activities, including misuse of loan funds intended for electric vehicle purchases and questionable related transactions. Ride bookings were suspended in major cities and bankruptcy proceedings were subsequently initiated. BluSmart became a cautionary tale about how poor governance and promoter misconduct can ruin even the best startups.
Good Glam Group: Aggressive expansion backfires
Good Glam Group’s downfall marked the end of its intended “house of brands” strategy. Backed by major investors like Accel and Process, the company pursued a rapid acquisition spree at high valuations. Many of these brands failed to scale, forcing asset sales at steep discounts. With mounting losses, stalled fundraising and investor exits from the board, lenders eventually took their toll on the assets and broke the company. The collapse highlighted the risks of excessive acquisitions without strong integration or cash flow discipline.
Dunzo: A crowded market
Once synonymous with hyperlocal delivery, Dunzo struggled after turning to quick commerce. High operating costs, limited scale and fierce competition from well-funded rivals eroded its position. Despite a large investment from Reliance Industries, losses mounted, payrolls were delayed, and businesses were shuttered one by one. By early 2025, Dunzo’s app went offline, marking the end of a startup that couldn’t sustainably adapt to market changes.
Hike: Policy changes changed everything
Hike’s shutdown showed how regulatory risk can derail even a successful pivot. After shifting from messaging to real-money gaming, the company generated strong revenue and user traction. However, a government ban on real-money gaming platforms in 2025 killed its core business overnight. Although Hike explored international expansion, the founders ultimately decided that a full global relaunch wasn’t feasible and opted to shut down instead.
Ottipi: Quick Commerce
Ottipi, a farm-to-fork grocery subscription platform, couldn’t survive the rapid rise of Quick Commerce. A failure to close a major funding round, growing competition, and investor disinterest in subscription grocery models led to payroll delays and layoffs. Despite raising more than $44 million since its launch, the startup shut down in 2025, underscoring how business models can quickly become obsolete in fast-moving markets.
Beyond these high-profile names, several other startups that reflected consolidation in mobility, D2C, agritech, and hyperlocal delivery quietly exited in 2025. Together, these closures send a clear message: In today's market, strong governance, centralized execution, and clear profitability paths are more important than valuations or hype. For India's startup ecosystem, 2025 was not a year of growth - but a year of reckoning.
