Lessons from Failed Startups in India: What Indian Entrepreneurs Can Learn
India’s startup ecosystem is among the fastest-growing globally. For the past decade, thousands of entrepreneurs have launched innovative businesses in the hopes of one day building the next big success story. The bitter truth, however, is about 90% of startups die in the first five years. Just in 2024, more than 5,000 startups have shut down with Maharashtra at the top of the list.
The question is which is why are so many failed startups in india and what can we learn from them?
So to answer the question, let’s take a look at some major Failed Startups in India and try to derive insights that can make any startup successful in the future.
Byju’s — The Risks of Aggressive Expansion
What Happened?
Byju’s was, at one time, India’s largest and most successful edtech company. Started by Byju Raveendran, the company transformed the online learning landscape and had millions of students. Its popularity surged during the COVID-19 pandemic, when students relied on online education. Byju’s was valued at $22 billion at its peak, and its investors battered billions of dollars into the company.
After the pandemic, though, students moved back to offline learning, and Byju’s aggressive expansion strategy began to backfire. The company borrowed heavily, bought several companies (Aakash and WhiteHat Jr. among them), and burned cash at an unsustainable pace. As revenue stagnated, the financial stress was too much.”
Lessons for Entrepreneurs
- Expand sustainably, not aggressively. Such rapid expansion can lead to financial instability.
- Manage finances wisely. Do not over-borrow, and keep a positive cash flow.
- Stay transparent. Late reports and financial mismanagement can rattle investor confidence.
Hike Messenger – Fighting to Survive Against Giants
What Happened?
Hike Messenger was launched in 2012 by Kavin Bharti Mittal, Rupert Murdoch and the Bharti family as a contender for Whatsapp in India. It provided proprietary features, including stickers, privacy controls and offline messaging. It had protection from a deep pocket and even reached a valuation of $1.4 billion.
But even with 100 million registered users, Hike was no match for WhatsApp’s global ubiquity and reliability. WhatsApp’s no-frills interface, free messaging and end-to-end encryption made it the app of choice for Indian users. By 2021, Hike had to close its messaging service.
Lessons for Entrepreneurs
- Don’t go head-to-head with leviathans. Instead, give something valuable that large companies do not.
- Having a large user base doesn’t mean the platform will be successful. Monetization is key.
- Keep evolving. To be able to withstand the competition in it, constant innovation is required.
Plantix — The Focus Is Lost On Core Mission
What Happened?
Plantix started as a tech-driven solution for farmers. The app would use AI to recognize what diseases the plant is having and give suggestions for organic alternatives to the various pesticides.
Plantix already had a very strong social impact mission from the very beginning and was popular with farmers. But as the company faced pressure from investors to generate more revenue, it began to prioritize profits over sustainability. It aligned with pesticide manufacturers and began advertising chemical solutions — the very antithesis of its original purpose.
As a result, Plantix’s credibility plummeted, and tons of loyal users left the platform.
Lessons for Entrepreneurs
- Stay true to your mission. Which is do not compromise on core values for profit.
- Choose investors wisely. Partner with investors aligned to your long term vision.
- Customer trust is everything. Once you lose credibility, it is nearly impossible to regain it.
Why Do Startups Fail? Common Reasons
Aside from these case studies, however, the bulk of Failed Startups in India seem to fall into a handful of shared problems:
- Poor Market Research
Many Failed Startups in India have failed due to not having a good understanding of their customers’ needs. Make sure you research the market before starting a business and make sure your product is in demand.
- Lack of Financial Planning
Firm running out of money is the primary reasons for startup closures. Most founders end up burning money on sales or marketing or hiring ahead of the revenue curve.
- Weak Business Model
You need more than a good idea. Startups should have a clear and sustainable path to revenue generation. And if you can’t create profits, the business will crash, even if you have millions of users.
- Failure to Adapt
A lot happens in the business world in a short time. Startups that fail to adapt to customer needs or market trends don’t stay relevant for long.
- Management and Leadership Issues
A lot of startups die from infighting, bad decisions or the inexperience of the founder. Long term the presence of strong leadership counts.
How to Create a Startup That Works
It’s true that many startups fail, but others succeed and thrive by adhering to key principles of success.
- Take Small Steps and Scale Up
Rather than over-scaling, validation through a targeted audience is a better path that allows the business to iterate and grow gradually.
- Focus on Profitability
It’s great to attract funding, but a startup has to be somehow able to maintain themselves with actual sales and revenue.
- Solve a Real Problem
The best startups work on a product people actually need. Spot gaps in the market, and construct your business to fill them.
- Keep Learning and Adapting
Successful entrepreneurs evaluate, iterate and evolve based on customer feedback and industry trends.
- Build a Strong Support System
Inspire a strong mentoring and advising environment. The right people around you can be everything.
That said, it is worth noting that:
All entrepreneurs have challenges — but there’s no failure, only learning. Many of the most successful Indian entrepreneurs, such as Narayan Murthy (Infosys), Ritesh Agarwal (OYO), and Bhavish Aggarwal (Ola), experienced failure and setbacks before they gained success.
If you’re starting a business, learn from other people’s failures, make a plan and ruthlessly execute it. With the proper mindset, your startup can navigate the many pitfalls and blossom into something great.
Looking for more insights like this? Explore our latest blogs on Startup Stories, Marketing Trends, and Leadership and Management Tips to stay ahead in the game. Whether you’re a budding entrepreneur or a seasoned pro, The Daily News Point is your go-to platform for fresh ideas, expert tips, and real-world success stories.
