India is home to over 127,000 recognized startups as of 2024, making it one of the most dynamic and rapidly growing startup ecosystems globally. Yet, the journey of a startup is fraught with challenges, and many of these ventures do not survive beyond the initial years. This article explores how many startups fail in India, the primary reasons behind these failures, and what budding entrepreneurs can do to improve their chances of success.
How Many Startups Fail in India?
Approximately 90% of startups in India fail within the first five years. This figure aligns with global statistics, where the majority of startups do not survive beyond their initial stages. The high failure rate is attributed to a combination of internal and external factors, each playing a significant role in the fate of these ventures.
1. Peppertap
- Industry: Grocery Delivery
- Founded: 2014
- Headquarters: Gurgaon, Haryana, India
- Founders: Navneet Singh, Milind Sharma
- Reason for Failure: Overexpansion, operational inefficiencies, and inability to sustain the rapid growth.
2. Dazo
- Industry: Food-Tech
- Founded: 2014
- Headquarters: Bangalore, Karnataka, India
- Founders: Shashaank Singh, Pronto Networks
- Reason for Failure: Intense competition and lack of differentiation in a crowded food delivery market.
3. Stayzilla
- Industry: Hospitality (Budget Accommodations)
- Founded: 2005
- Headquarters: Chennai, Tamil Nadu, India
- Founders: Yogendra Vasupal, Rupal Yogendra, Sachit Singhi
- Reason for Failure: Financial mismanagement, operational inefficiencies, and inability to compete with bigger players like OYO.
4. TinyOwl
- Industry: Food Delivery
- Founded: 2014
- Headquarters: Mumbai, Maharashtra, India
- Founders: Harshvardhan Mandad, Saurabh Goyal, Gaurav Choudhary, Shubham Khandelwal, Kaushik Roy
- Reason for Failure: High operational costs, cash flow issues, and internal management problems.
5. AskMe
- Industry: E-commerce and Classifieds
- Founded: 2010
- Headquarters: Noida, Uttar Pradesh, India
- Founders: Sanjiv Gupta, Leo Burnett (as an initiative)
- Reason for Failure: Cash flow problems, poor management, and disputes between investors and management.
6. Zopper
- Industry: Hyperlocal Mobile Marketplace
- Founded: 2011
- Headquarters: Noida, Uttar Pradesh, India
- Founders: Neeraj Jain, Surjendu Kuila
- Reason for Failure: Low margins, high customer acquisition costs, and intense competition.
7. Faasos
- Industry: Food-Tech (Quick-Service Restaurant Chain)
- Founded: 2011 (rebranded later)
- Headquarters: Pune, Maharashtra, India
- Founders: Jaydeep Barman, Kallol Banerjee
- Reason for Failure: High operational costs and an unsustainable business model.
8. Frankly.me
- Industry: Social Media (Video Q&A Platform)
- Founded: 2014
- Headquarters: Noida, Uttar Pradesh, India
- Founders: Nikunj Jain, Abhishek Gupta
- Reason for Failure: Limited user base, difficulty in monetization, and lack of scalability.
9. Yumist
- Industry: Food Delivery
- Founded: 2014
- Headquarters: Gurgaon, Haryana, India
- Founders: Alok Jain, Abhishek Verma
- Reason for Failure: High operational costs, low profit margins, and tough competition.
10. TaxiForSure
- Industry: Ride-Hailing Service
- Founded: 2011
- Headquarters: Bangalore, Karnataka, India
- Founders: Aprameya Radhakrishna, Raghunandan G
- Reason for Failure: Intense competition from Uber and Ola, leading to high customer acquisition costs and unsustainable pricing strategies.
11. Ringing Bells
- Industry: Consumer Electronics (Smartphones)
- Founded: 2015
- Headquarters: Noida, Uttar Pradesh, India
- Founders: Mohit Goel
- Reason for Failure: Unrealistic pricing strategies, logistical challenges, and accusations of being a scam. The company couldn’t deliver on its promises.
12. LocalBanya
- Industry: Online Grocery Delivery
- Founded: 2012
- Headquarters: Mumbai, Maharashtra, India
- Founders: Amit Naik, Saurabh Sengupta, and Anil Mathew
- Reason for Failure: LocalBanya struggled with operational inefficiencies, heavy competition, and unsustainable discounts that drained its finances. The entry of well-funded players like BigBasket and Grofers further intensified the competition, leading to its closure in 2015.
13. iProf
- Industry: EdTech
- Founded: 2009
- Headquarters: Noida, Uttar Pradesh, India
- Founders: Sanjay Purohit
- Reason for Failure: Despite being an early mover in the Indian EdTech space, iProf faced challenges with scaling its operations, high costs, and insufficient funding. The startup couldn’t compete with newer, better-funded entrants like Byju’s and eventually shut down.
15. Zeppery
- image credits: Tracxn
- Industry: Food Tech (Pre-Order & Dine-In)
- Founded: 2014
- Headquarters: Bangalore, Karnataka, India
- Founders: Rohit Verma, Saurabh Harlalka
- Reason for Failure: Zeppery provided a service for pre-ordering food at restaurants to avoid waiting times. However, the startup faced challenges in scaling its service and securing partnerships with restaurants. The niche appeal and operational challenges led to its shutdown.
16. Fella Homes
- Industry: Real Estate (Rental Housing)
- Founded: 2015
- Headquarters: Gurgaon, Haryana, India
- Founders: Lovejeet Alexander, Nitin Verma, Neeraj Bhatia, and Jagdeep Gupta
- Reason for Failure: Fella Homes aimed to provide managed rental homes but struggled with operational inefficiencies, high maintenance costs, and low margins. The company also faced stiff competition from players like NestAway, leading to its closure.
17. Overcart
- Industry: E-commerce (Refurbished Products)
- Founded: 2012
- Headquarters: Gurgaon, Haryana, India
- Founders: Saptarshi Nath, Rishi Vasudev
- Reason for Failure: Overcart specialized in selling refurbished and pre-owned electronics. The startup faced challenges with quality control, customer trust, and logistics. It couldn’t compete with other players in the refurbished market and eventually shut down.
18. Cardback
- Industry: FinTech
- Founded: 2012
- Headquarters: Delhi, India
- Founders: Amit Bhor, Kunal Varma
- Reason for Failure: Cardback was a platform that helped users optimize their credit and debit card usage by suggesting the best card to use for different transactions. The startup struggled with user acquisition, monetization issues, and faced competition from other financial services platforms, leading to its closure.
19. Shotang
- Industry: B2B E-commerce
- Founded: 2013
- Headquarters: Bangalore, Karnataka, India
- Founders: Anish Basu Roy, Sourjyendu Medda
- Reason for Failure: Shotang was a B2B marketplace connecting retailers with distributors. The startup struggled with scaling its operations, maintaining a healthy cash flow, and faced competition from larger, more established players in the B2B space.
20. Doormint
- Industry: Home Services (Laundry)
- Founded: 2014
- Headquarters: Mumbai, Maharashtra, India
- Founders: Abhinav Aggarwal, Piyush Ranjan, Anubhav Agarwal
- Reason for Failure: Doormint provided on-demand laundry services but faced high operational costs, low margins, and difficulties in scaling. The company couldn’t sustain its business model in the face of competition and operational challenges, leading to its shutdown.
Recommended:Top Startups in India: 2024 Edition
FAQs : How Many Startups Fail in India?
1. How many startups fail in India?
Approximately 90% of startups in India fail within the first five years. This high failure rate is similar to global statistics.
2. How many startups fail in India due to common reasons?
Common reasons for startup failures in India include operational inefficiencies, financial mismanagement, and intense competition in the market.
3. How many startups fail in India by industry?
Industries like food delivery, e-commerce, and hospitality often see high failure rates due to tough competition and high operational costs.
4. How many startups fail in India, and can any succeed?
Yes, despite how many startups fail in India, some succeed by finding a niche, managing finances well, and differentiating themselves from competitors.
5. How many startups fail in India, and what can entrepreneurs do to avoid it?
To avoid failure, entrepreneurs can focus on strong business planning, efficient operations, and understanding market needs, even with how many startups fail in India.
