Startups are the heartbeat of economic growth, innovation, and job creation. Yet, behind the excitement of entrepreneurship lies a sobering reality—most startups don’t survive. The numbers for 2025 and the preceding years paint a stark picture of widespread failure. So, what’s causing this, and what do the latest statistics reveal?
The Failure Rates: What the Data Says
- Globally, up to 90% of startups fail at some stage.
- About 10% fail within the first year.
- By year five, 45-50% are out of business.
- In India alone, more than 11,220 startups shut down in 2025—a significant jump considering only 867 closed in 2021.
- Over the past three years (2023–2025), India recorded nearly 40,000 startup closures.
Industry-specific data is equally revealing:
- Technology startups: 63% failure rate within five years.
- Fintech: 75% fail.
- E-commerce and retail: Around 53% fail.
- Manufacturing and construction: Over 50% fail within ten years.
Top Reasons Startups Fail
- Poor Product-Market Fit: A staggering 29% of startups fail because there’s no actual market need for their product or service.
- Running Out of Money: Another 29% simply run out of funds before reaching profitability.
- Weak Teams: 23% cite problems with the founding team or staff as a core reason for failure.
- Intense Competition: 19% are beaten by competitors.
- Customer Neglect: 14% don’t focus enough on what customers want or maintain relationships.
Indian Case Studies & Trends
India is now the third-largest startup ecosystem globally, but 90% of Indian startups fail within their first five years. High-profile failures in 2025 included companies like Hike and Beepkart, which once attracted significant investment but collapsed due to financial mismanagement, poor planning, or over-expansion.
Other Major Factors
- Changing regulations and compliance hurdles
- Lack of sustainable business models
- Scaling too fast before establishing a strong foundation
- Inadequate research and planning
What Can Be Done?
- Deeper market research before launch
- Careful management of runway and cash flow
- Building resilient, skilled teams
- Focusing on sustainable growth rather than chasing quick scale
- Listening to customers and being ready to pivot
The startup world will always be risky, and not every idea can be a unicorn. However, understanding these hard numbers and learning from failed ventures can help aspiring founders improve their odds of success in this fiercely competitive environment.