Investors in the startup space got increasingly picky in 2023, which had serious ramifications for a lot of firms. Of the 100,000 registered firms in India, 34,848 faced closure or were close to it, a significant rise from 18,049 in 2022.

Unexpectedly, even businesses with millions from well-known investors had to close. The reasons were many and included financial misconduct, economic difficulties, and a constantly shifting regulatory environment in addition to market fit issues.

ZestMoney, which was originally estimated to be worth $450 million, was slated to close in 2023. Their demise was caused by an acquisition deal that fell through, even though they had raised nearly $130 million. Their turnaround strategy, ZestMoney 2.0, did not materialize because the Reserve Bank of India (RBI) was monitoring buy now pay later (BNPL) businesses more closely.

When the abrupt 28% Goods and Services Tax (GST) hit online real money gaming in September, gaming startups too had difficulties. Businesses including Fantok, Quizy, and Striker—which is supported by the MPL—closed and laid off employees. Pillow, a cryptocurrency investment platform, closed because of difficult regulatory obstacles.

Accel and Elevation-backed B2B company Anar closed its doors in November as a result of low customer retention and ongoing adjustments to its business plan. When the edtech company FrontRow realized their business plan wasn’t working as planned, they gave investors their unused money back.

Despite having over $50 million in funding, GoMechanic failed as a result of mismanaged funds and inflated income. The business acknowledged making mistakes in its financial reporting and judgment. Investors demanded more stringent due diligence procedures as a result of this episode. Similar circumstances befell Mojocare, another healthcare firm, which overstated sales in order to satisfy growth ambitions and provoked demands for returns from investors.

Investors anticipate more company closures in 2024, but as funding becomes more scarce, it is hoped that company quality will rise.