Prof. Tom Eisenmann from Harvard Business School wrote the global playbook on startup failure, plainly titled 'Why Startups Fail'. He found six patterns—False Starts (build-first), Speed Traps (premature scaling), Bad Bedfellows (bad investors), False Positives (fake traction), Help Wanted (skill gaps), and Cascading Miracles (chain risk)— recurring across hundreds of post-mortems. A CB Insights read of over 110 shutdown essays then puts a ruler to the problem: 42 per cent died for “no market need”, 29 per cent ran out of cash, 23 per cent imploded over team issues, and 19 per cent were out-gunned by a rival.
Scaling too soon magnifies the risk. A Wharton-HBR study shows blitz-scaling in the first 12 months raises failure odds by 20-40 per cent. And an MIT Sloan review warns that most founders “forget the discipline of process redesign” once product-market fit appears.
The through-line is clear: strategy, cash and execution, not code, decide survival.
India’s extra headwinds
• Capital Whiplash: Private equity and VC inflows rocketed to $69.8 billion in 2021, crashed to $9.5 billion in 2023, and bounced back to $43 billion in 2024. Startups built for endless burn suddenly found the ATM empty.
Here is the ten years of funding in one breath:
2015: $8 billion
2021: $69.8 billion
2023: $9.5 billion
2024: $43 billion
A full boom and bust now fits inside a single founder’s seed-to-Series-B journey.
• Innovation Gap: The latest India Skills Report pegs overall graduate employability at 53 per cent, while an ET analysis shows just one qualified Gen-AI engineer for every 10 open roles. Scarce deep-tech talent and thin R&D grants keep many founders in “copy-and-paste” mode.
• Sector + Regulatory Shake-out: Consumer-tech funding fell 55 per cent in 2022; ed-tech dropped 44 per cent. Industry trackers count 8,000 to 12,000 ed-tech layoffs since the peak, part of over 9,000 start-up job cuts in 2024. RBI’s clamp-down on Paytm Payments Bank wallets and the sudden 28 per cent GST on online gaming show how fast the rule-book can flip.
Yet the opportunity base is wider than ever: 157,706 DPIIT-recognised startups as of Dec 2024, up 35-fold since 2016.
AI: Accelerant, not antidote
Generative tools shrink experiment cycles - Sarvam AI’s $41 million raise to build Indic-language LLMs that founders can plug into prototypes. But hype money distorts reality: global Gen-AI deals hit $25 billion in 2023 and Microsoft-backed Builder.ai collapsed in May 2025 after inflating revenue claims. AI multiplies what’s already there: discipline speeds proof, hype speeds ruin.
Sector contrasts that matter
Quick Commerce: Mumbai-based Zepto cut discounts, they chased city-level unit economics and landed $665 million at a $3.6 billion valuation (Jun 2024).
Ed-tech Retreat: BYJU’S is shutting 120 offline tuition centres amid liquidity stress, the most visible sign of a sector reset.
Execution, not fortune, separates the two.
Five fixes founders often miss
• Validate First: Run five cheap interviews or landing-page tests before writing the first line of code; kill ideas that draw shrugs, not cheers. Early honesty is cheaper than late pivots.
• Track Burn Multiple: Divide net new cash burned by net new revenue each quarter; if every rupee of sales costs Rs 2 of cash—and the ratio isn’t trending down—hit the brakes and re-price your roadmap.
• Design For Policy: Budget 5-7 per cent of operating spend for licences, audits and a decent compliance stack. The bill is lighter than a sudden RBI order or a retrospective GST demand.
• Differentiate Early: File the provisional patent, seed a loyal user community, or lock in an exclusive distribution clause before the price war starts. Moats dug late rarely hold water.
• Govern Like Adults: Build a board that mixes capital with conscience, publish ESOP rules in plain language, and schedule quarterly red-team “what could kill us” drills. Clear governance neuters Bad Bedfellows long before they strike.
Successful founders often say that turning principles into ritual is the difference between knowing and doing. Schedule a first-Monday, 60-minute “survival stand-up”. Bring only three slides: (i) fresh customer evidence, (ii) a one-page cash dashboard - burn multiple, runway, gross margin, (iii) a compliance-and-moat tracker listing licences renewed, patents filed, and community growth. Any blank field sets the sprint focus.
This ritual keeps all five fixes equally visible, drags uncomfortable data into daylight, and gives investors a repeatable signal of discipline. Save each deck in a dated folder so trends surface before auditors, or fate, come knocking.
Closing note
More than 22,000 companies officially shuttered in FY 24 alone. India’s stage is huge, the spotlight fierce, and the script unforgiving. The era of “grow at any cost” has ended; the age of capital-efficient originality has arrived. Treat cash as oxygen, compliance as architecture and differentiation as life insurance, and you might survive the next plot twist.
Sources:
1) Tom Eisenmann: Why Startups Fail (HBR, 2021)
2) CB Insights: Top 12 Reasons Startups Fail
3) J.Daniel Kim: When Should Startups Scale? Harvard Business Review, 2024
4) MIT Sloan Management Review: The Missing Discipline Behind Failure to Scale, 2023
5) Bain & Company/IVCA: India Private Equity & VC Reports 2023-25
6) Business Standard: 22,044 Companies Shuttered in FY24 (MoCA data)
7) India Skills Report 2024: Economic Times “1 Gen-AI Engineer for 10 Roles”
8) Bain VC Report 2023: (55% consumer-tech funding drop)
9) Inc42: Funding Woes Hit Ed-tech - Investment Down 44%
10) Inc42: 9K+ Employees Lost Jobs in 2024
11) RBI Paytm Payments Bank KYC order: Economic Times, 2024
12) Reuters: India approves 28% GST on online gaming, 2023
13) Deccanhearlad.com: Stanford AI Index 2024 (US $25 bn Gen-AI funding)
14) Financial Times: Builder.ai Implodes after Revenue Inflation Claims, May 2025
15) TechCrunch: Sarvam AI Raises US $41 m, Dec 2023
16) TechCrunch, Zepto Raises US $665 m at US $3.6 bn Valuation, Jun 2024
17) Inc42, BYJU’S to Shut Nearly 120 Tuition Centres, Aug 2024
Sajju Jain is an entrepreneur, board member, and Harvard alumnus.
The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.
