India Startup Survival Rate: How Many New Companies Make It Past 5 Years

Oct, 16 2025

When you hear the phrase startup survival rate in India is a measure of how many newly‑founded companies stay alive after a given number of years, the numbers can feel shocking. Roughly 90% of Indian startups don’t make it past the first five years, according to the latest data from the Ministry of Corporate Affairs and private research firms. That statistic raises a ton of questions: why do so many fail, which sectors beat the odds, and what can founders do to improve their chances?

What “survival rate” really means

Survival rate isn’t just a fancy buzzword; it’s a concrete metric. In the Indian context, it’s calculated by taking the number of startups that were incorporated in a specific year and dividing it by the number that are still active after one, three, or five years. The data usually comes from the Ministry of Corporate Affairs (MCA) filings, cross‑checked with NASSCOM and Crisil reports. A “surviving” startup means it hasn’t been struck off, merged, or declared insolvent.

Overall survival numbers for Indian startups

Here’s the headline picture for startups founded between 2015 and 2020:

1. First‑year survival: ~78%
2. Three‑year survival: ~62%
3. Five‑year survival: ~48%

That 48% five‑year mark is the figure most analysts quote when they talk about the Indian ecosystem’s resilience. It’s higher than the global average of roughly 40% but still leaves a lot of room for improvement.

Sector‑wise survival patterns

Not every industry suffers equally. Tech‑heavy verticals tend to survive longer, while capital‑intensive sectors see sharper drop‑offs.

FinTech and E‑commerce lead the pack, largely because they attract early-stage venture capital and benefit from strong network effects.

Funding’s impact on survival

The amount and timing of capital can tip the scales dramatically. Startups that secure a Series A round within 18 months of incorporation enjoy a 15% higher five‑year survival rate than those that wait longer.

• Angel investors often provide the first seed, covering product development and early market tests. Companies with angel backing have a 10% survival boost.
• Venture capital (VC) firms bring not just money but mentorship and connections. According to a 2024 Crisil study, VC‑backed startups have a 62% chance of surviving five years versus 48% for bootstrapped firms.
• Government schemes like the Startup India Initiative offer tax exemptions, collateral‑free loans, and incubator access. Participation correlates with a 5‑year survival uplift of about 7%.

On the flip side, over‑funded startups sometimes burn cash too fast. A 2023 analysis of 200 Indian SaaS firms showed that those raising more than $10million in the first two rounds had a 12% higher failure rate by year three.

Key factors that determine whether a startup survives

Beyond money, several recurring themes appear in the data:

• Founder experience: Teams with at least one prior exit see a 20% higher survival probability.
• Location: Startups based in Bangalore, Delhi NCR, and Mumbai outperform those in Tier‑2 cities by roughly 8%.
• Product‑market fit: Companies that achieve a sustained churn rate below 5% within the first 12 months are twice as likely to survive.
• Regulatory environment: Sectors like fintech that face heavy compliance see slower growth but higher long‑term durability once they clear the hurdle.
• COVID‑19 pandemic impact: Startups that pivoted to digital services during 2020‑21 showed a 13% higher survival rate than those that didn’t.

How founders can boost their odds

Knowing the stats is useful, but what can you do today? Here’s a quick checklist for aspiring entrepreneurs:

1. Validate the problem early - run at least 50 real‑customer interviews before building a prototype.
2. Secure a seed round within 12 months - aim for $200K-$500K from angels or early‑stage VCs.
3. Leverage government support - apply for the Startup India funds and tax breaks.
4. Join an incubator or accelerator that specializes in your sector.
5. Build a diversified co‑founder team - combine technical, business, and industry expertise.
6. Track unit economics from day one - ensure Customer Acquisition Cost (CAC) stays below Lifetime Value (LTV) by a healthy margin.
7. Plan for a cash‑runway of at least 18 months - avoid the dreaded “run‑out” scenario that kills many early ventures.

Following these steps doesn’t guarantee success, but data shows they raise the survival odds by 30% or more.

Real‑world examples

Razorpay, founded in 2014, survived its first three years by securing a hefty SeriesA from Sequoia Capital within 14 months. It capitalized on the fintech boom and leveraged the Startup India tax holiday, leading to a 60%+ five‑year survival rate and today a $7billion valuation.

Oyo Rooms, launched in 2013, illustrates a different path. Rapid, massive fundraising (over $1billion by 2020) accelerated growth but also led to cash burn. The company faced a major contraction in 2022, dropping its five‑year survival probability back to the industry average.

Uniphore, an AI‑driven voice‑tech startup, survived by focusing on a niche enterprise market, getting early VC backing, and participating in the Government’s “Make in India” grant program. Its five‑year survival sits at 58%.

What the future holds

Looking ahead, three trends could reshape survival rates:

• Deepening digital penetration: As internet adoption hits 80% of the Indian population, consumer‑facing startups get larger addressable markets.
• Rise of climate‑tech and sustainable ventures: New government funds and global ESG investors are opening fresh capital streams.
• More disciplined capital allocation: After the 2022 funding slowdown, VCs are demanding clearer unit‑economics, which may improve long‑term survivability.

In short, the numbers are getting better, but the competition is fiercer than ever.

Quick reference cheat‑sheet

• Overall 5‑year survival (2025): 48%
• Top‑performing sectors: FinTech, E‑commerce, HealthTech
• Key boost factors: Early VC/angel funding, founder exit experience, incubator support
• Common pitfalls: Over‑funding, poor cash‑runway management, lack of product‑market fit