What went wrong for India’s high-profile startups in 2025

New Delhi: In 2025, some of India’s most recognisable startup brands ran into insurmountable roadblocks, leading to stalled operations, fire-sale exits, large-scale layoffs, or complete shutdowns. Though each company’s challenges were different, the underlying issues pointed to deeper cracks in financial planning, governance structures, regulatory preparedness, and long-term capital strategy.

BluSmart: A Rs 260 crore scandal

India’s electric ride-hailing challenger BluSmart shut down this year following a financial scandal involving Rs 260 crore. The controversy centred on its closely linked affiliate, Gensol Engineering, and quickly became a case study in weak governance and questionable related-party transactions.

Founded in 2019 by Punit Goyal and Anmol Jaggi, BluSmart positioned itself as a pioneer in electric mobility. However, by mid-April 2025, the company abruptly stopped accepting new ride bookings in its key markets of Bengaluru and Delhi-NCR.

Gensol Engineering, a listed firm specialising in engineering and solar consultancy, played a critical role in BluSmart’s operations. While it did not hold equity in the startup, it leased most of the electric vehicles used in BluSmart’s fleet. Between 2022 and 2023, Gensol secured loans worth Rs 978 crore from government-backed lenders such as IREDA and PFC. Of this, Rs 663.89 crore was earmarked for purchasing 6,400 electric vehicles for BluSmart, with total deployment expected to reach around Rs 830 crore. Instead, only 4,704 EVs were acquired for Rs 567.73 crore, leaving Rs 262.13 crore unaccounted for.

Subsequently, market regulator SEBI flagged multiple instances of what it termed “fraudulent” conduct, including falsified documents, dubious related-party dealings, and diversion of funds to relatives and personal expenses, such as property purchases in DLF and high-end golf equipment.

In July, the National Company Law Tribunal admitted a plea to initiate insolvency proceedings against BluSmart, a month after Gensol Engineering itself entered insolvency.

Good Glamm Group: An acquisition-led model met financial reality

The Good Glamm Group’s journey as a content-to-commerce house of brands came to an end this year after lenders enforced their charge over individual assets, effectively breaking up the company.

This followed months of mounting financial stress marked by stalled fundraising, discounted asset sales, and an escalating liquidity crunch that left salaries and vendor payments unpaid.

Backed by Warburg Pincus, Prosus Ventures, Bessemer Venture Partners, and Accel, the Thrasio-style company pursued an aggressive acquisition strategy, often paying premium valuations for digital media and consumer brands meant to deliver marketing and distribution synergies. Many of these acquisitions failed to scale and were later sold at steep losses.

Warning signs surfaced in March 2024, when Good Glamm raised $30 million at a flat valuation of $1.25 billion to meet working capital requirements. The situation worsened in early 2025 after Accel, Prosus Ventures, and Bessemer resigned from the board in January.

In February, the company sold Sirona back to its founders for approximately Rs 150 crore, well below the Rs 450 crore paid to acquire it. Later that month, ScoopWhoop was sold to WLDD for around Rs 20 crore, compared to its Rs 100 crore acquisition price in 2021. MissMalini was subsequently offloaded to Creativefuel in May.

By July, CEO Darpan Sanghvi acknowledged that restructuring and refinancing efforts had failed. The remaining brands will now be sold or run independently, bringing an end to the house-of-brands vision. Sanghvi also stated that if asset sales fail to clear outstanding employee dues, he would personally allocate 25% of his future post-tax earnings and equity gains to repay affected staff.

Dunzo: Hyperlocal pioneer that ran out of runway

Founded in 2014 as a WhatsApp-based pickup-and-drop service, Dunzo became synonymous with hyperlocal delivery in India. Under CEO Kabeer Biswas, the company later expanded into grocery deliveries through a network of neighbourhood stores.

With the rise of quick commerce in 2020, Dunzo launched Dunzo Daily, operating dark stores to offer rapid deliveries. However, the venture struggled with high operating costs, limited product range, and intense competition from players like Swiggy, Zepto, and Blinkit.

In 2022, Dunzo received a $200 million investment from Reliance Industries, making the conglomerate its largest shareholder. This partnership added complexity, as Dunzo began providing backend and delivery services for Reliance’s ecommerce platform, JioMart.

As competition intensified, losses mounted and Dunzo lost focus on its original hyperlocal strengths. By 2023, issues such as salary delays, unpaid vendors, operational inefficiencies, and multiple rounds of layoffs became evident. The company shut its grocery delivery business that year but continued running Dunzo for Business, a B2B courier service. By August 2024, operations were sustained by a skeletal team of around 50 employees as funding dried up.

The end came in January 2025, when Dunzo’s app and website went offline following Biswas’s exit. He briefly joined Flipkart’s quick commerce venture Minutes, before exiting that role as well.

Otipy: A farm-to-table model squeezed by quick commerce

Subscription-based grocery startup Otipy ceased operations this year amid intense competition from quick commerce players and worsening cash constraints.

Operating under Crofarm Agriproducts, Otipy enabled community-led group buying, aiming to deliver fresh produce at competitive prices by connecting farmers directly with urban consumers.

Trouble began when a critical $10 million funding round collapsed after the lead investor, the Hero family office, withdrew at the last moment. Other investors grew cautious as grocery subscriptions and kirana-led models struggled against the rapid rise of instant delivery platforms.

By May, the company faced delayed salaries, unpaid vendors, senior leadership exits, and reports of a shutdown affecting nearly 300 employees and gig workers.

Founded in 2020 by Varun Khurana, Otipy had raised $44.2 million across four funding rounds from investors including WestBridge Capital, Inflection Point Ventures, and SIG Venture Capital.

Hike: When gaming momentum met regulatory reality

Once positioned as India’s answer to WhatsApp and Facebook Messenger, Hike shut down this year after a 13-year run. Founded by Kavin Bharti Mittal, the platform initially catered to young users discovering digital communication. Hike evolved into a super-app featuring stickers, localised content, and a distinctive chat experience, reaching over 100 million users at its peak and achieving unicorn status.

In 2021, the company shut down its messaging app and pivoted to two new products, Vibe, a virtual social platform, and Rush, a real-money gaming app offering games such as Ludo and Carrom. The pivot proved financially successful, with Rush attracting over 10 million users and generating more than $500 million in gross revenue over four years.

However, in 2025, the Indian government introduced the Promotion and Regulation of Online Gaming Act, imposing a blanket ban on real-money gaming platforms. While several players attempted to pivot, Hike explored expanding its gaming business overseas, focusing on markets like the US, UK, Canada, and Australia.

Despite promising early traction in the US, the founders ultimately decided to shut down operations, concluding that a full global reset would demand more time and capital than justified post the India ban.