New Delhi: India’s startup ecosystem showed clear signs of stabilization in 2025 as shutdowns fell to the lowest level in five years, reflecting improved resilience among early-stage firms and a potential easing of the funding winter that gripped the sector post-2021.
Data from startup intelligence platform Tracxn reveals that only 733 startups shut down in 2025, a dramatic 81% decline from the 3,903 closures in 2024. This represents the lowest annual shutdown count since 2020 and suggests that startups are increasingly focused on sustainable business models and survival strategies.
The startup shutdown trend has shown notable improvement over recent years: 6,494 closures in 2021, 5,281 in 2022, 2,190 in 2023, and 3,903 in 2024. The sharp fall to 733 in 2025 underscores a renewed ability of companies to withstand market pressures, possibly aided by more prudent capital deployment and tighter investor scrutiny.
Industry experts attribute the decline partly to surviving startups pivoting their business models, cutting costs, and focusing on unit economics rather than unchecked growth. There are also signs that funding momentum has stabilised, with startups raising $38.7 billion across 2,420 rounds in 2025, slightly up from $37.6 billion in 2024, though the number of deals remains lower than peak levels.
While capital deployment has shown modest recovery, a significant reduction in the number of funding rounds — falling from nearly 5,000 in 2021-22 to 2,420 in 2025 — reflects a more selective investor approach. Venture capitalists are increasingly concentrating on companies with strong fundamentals, clear pathways to profitability, and defensible market positions.
This shift is widely interpreted as part of the ecosystem’s maturation — moving away from the high-growth-at-all-cost philosophy dominant during the funding boom years toward disciplined investing that prioritises long-term viability.
Despite the overall improvement in shutdown metrics, certain sectors experienced pronounced stress. Enterprise applications, retail, edtech, healthtech and media & entertainment accounted for the majority of shutdowns over the past three years, though closures in these segments have also tapered in 2025 relative to previous peaks.
Meanwhile, even industry stalwarts have faced challenges: notable exits and wind-downs in 2025 included well-known names highlighting that brand recognition and funding history alone are no guarantees of survival.
Although the sharp drop in shutdowns points to a healthier startup ecosystem, analysts caution that challenges remain. Funding levels, while stable, are still below the heady peaks of the early 2020s, and investor selectivity could tighten further in response to macroeconomic uncertainties. Nonetheless, the current trajectory suggests that India’s startup landscape is transitioning into a more resilient phase, with survival rates improving and capital gradually flowing back into high-potential ventures.