Why Startup failures don’t tell the full jobs story in India

Critics often argue that startups chase valuation over sustainability, raising funds quickly and collapsing just as fast. While some data support this view, it is equally true that startups have created millions of jobs in India over the past decade. Their role in shaping employment opportunities and career paths is therefore worth closer examination.

Globally, 80–90% of startups fail, with nearly 10% shutting down in the very first year. Most collapse within five years due to poor product‑market fit, cash‑flow challenges, weak strategy, or competitive pressures. These failures are largely the result of structural business challenges and market dynamics rather than entrepreneurial intent.

Although comprehensive global data on job creation is scarce, experts broadly agree that new jobs created by startups outweigh job losses from closures. Surviving and scaling ventures continue to play a significant role in employment creation, even if failures attract more headlines. The narrative of “failure” often overshadows the fact that startups remain powerful engines of innovation and job growth.

India mirrors these global trends but with clearer evidence. Under the Startup India programme, 1.97 lakh enterprises were registered by October 2025, creating over 21 lakh direct jobs despite 6,385 closures. This demonstrates that net job creation in the ecosystem is substantially positive.

Encouragingly, the Avendus Wealth Hurun India Uth series 2025 highlighted 79 entrepreneurs under 30, who collectively raised USD 5.2 billion and generated 64,000 jobs. Sectoral contributions are also noteworthy: IT services added 2.04 lakh jobs, life sciences 1.47 lakh, and education over 90,000. These figures align with the rise of the sunshine industries, which continue to attract talent and investment.

Management perspective

One striking trend is the declining lifespan of companies. After averaging 75 years over the last century, the duration has declined to approximately 15 years today and is expected to shrink further. This turbulence is driven by several factors:

Technological disruption: Artificial intelligence, e‑commerce, and digital platforms have rendered many traditional business models obsolete.

Changing consumer preferences: Informed consumers demand better products and services, shortening product life cycles and forcing constant innovation.

Globalisation and competition: India’s market size and GDP growth attract global brands, intensifying competition that local startups often struggle to withstand.

Management failures: Poor strategy, weak leadership, lack of innovation, and neglect of branding accelerate decline.

Short‑term focus: Investor pressure drives promoters to chase revenue and valuation, over long‑term profitability, undermining sustainability.

These factors highlight the importance of strong management practices. Startups must balance agility with foresight, ensuring that short‑term gains do not compromise long‑term viability.

The forward outlook

Startup India envisions transforming India from a nation of “job seekers to job creators.” While startups are net job creators, unemployment remains around 5%. The challenge lies in building a balanced ecosystem that sustains employment and reduces failures. Key priorities include:

Sustainable entrepreneurship: Encourage startups to shift focus from valuation to profitability and longevity.

Policy and funding support: Provide soft loans linked to job creation, along with mentorship and incubation, to mitigate early‑stage pitfalls.

Employment stability: Promote professional HR practices, reskilling, redeployment, and contingency planning.

Leveraging returning talent: Global developments are driving skilled professionals back to India. Their expertise and resources can strengthen startups and entrepreneurial ventures.

Regulatory and legal Support: Startups often struggle to navigate complex legal frameworks, taxation policies, and compliance requirements. We should establish accessible guidance and resources that help entrepreneurs manage these challenges with confidence.

In developed economies, job creation from new businesses barely outpaces losses from closures. In India, however, startups have generated substantial employment and career opportunities, far exceeding losses. Yet, high failure rates remain a serious concern that policymakers, investors, and entrepreneurs must address collectively.

In the meantime, students seeking employment with startups should exercise caution by evaluating the business’s viability and the promoters’ backgrounds and credibility. This is particularly important, as career stability in young ventures often depends on the strength of leadership and the clarity of business models.

Finally, the real startup story is not only about whether they create jobs—which they certainly do—but whether they can sustain businesses over the long term and contribute meaningfully to India’s growth trajectory.

(The author is a management and career consultant)