2023's Startup Exodus: 30,000 Ventures Fold, ZestMoney and GoMechanic Among the Fallen Giants


Apurva Dhamankar

1/17/20242 min read

The story of Indian startups is not new, it started in the 80s, when a few of trendsetting companies such as TCS, Infosys and Wipro made a firm foundation for India. These companies made huge investments in technology and benefited from the country’s young, working population to provide low-cost services in the field of technology to the people in need round the globe.

Although India provides breeding ground to the investors, the growth rate has slightly dampened and the prime reason for this is investors tightening their purse strings to the companies they funded in 2023. The consequence made thousands of companies, which depended on venture capital for their survival, had to shut. Some others had to shut down because of financial wrongdoing or an ever-evolving regulatory landscape. The number of startups that shutdown rose to 34,848 in 2023 in comparison to 18,045 in 2022.

ZestMoney, valued at $450 million in September 2021, was among the most notable shutdowns in 2023. The industry which promoted “buy now pay later” (BNPL) had raised over $130 million between 2015 and 2023. Things didn’t work after an acquisition deal with PhonePe. Zestmoney had to shut down its operations as the Reserve Bank of India (RBI) started gazing at BNPL businesses. ZestMoney saw its business models fail during a strict regulatory landscape.

Overestimation too resulted in failures of several companies. There were also some episodes of cheap money leading to failure. This was an outcome of low interest rates during the pandemic which resulted into the downfall of several startups. GoMechanic is one such example. The company had raised over $50 million from Peak XV Partners (formerly Sequoia Capital India), Tiger Global, Chiratae Ventures, and several others.

GoMechanics, which was into car repair and sold accessories, exaggerated its revenues and funds, as per reports. Their co-founder Amit Bhasin stated that they got carried away. As per him, they made errors in judgment while chasing growth at all costs even including their financial reporting. This thing caused them unprecedented trouble. Though the company regrets it now, the damages are beyond recovery. This episode pushed investors to demand for a stringent due diligence process to avoid such problems.

Other such startups that faced trouble are Quizy, MPL-backed Striker, Fantok, Pillow, Anar, Mojocare etc.

While investors think that startups will continue to fold up in 2024, the reasons will be numerous. As capital has become difficult to access, it will promote better companies with better plans. Although India has been a land of diverse problems; it has the greatest asset of all time which is its brainpower and resilience. By the optimal use of it will see a steady growth in startup culture.

Thank you.


Juhi Jaiswal,

Kautilya, IBS Mumbai.