How Founders Can Navigate the New Reality?
The Indian startup ecosystem, celebrated as the world's third-largest, is facing a hard reality check. According to a recent report, over 28,000 startups have shut shop between 2023 and 2024, marking a 12-fold increase compared to the three years before. Data from intelligence platform Tracxn shows 15,921 shutdowns in 2023 alone, and 12,717 more closures expected in 2024.
The situation is stark when compared to the startup launch numbers — only 5,264 startups were launched in 2024, a sharp fall from over 9,600 startups launched annually between 2019 and 2022. Even more striking, in early 2025, just 125 startups have been founded so far.
Why the Surge in Shutdowns?
While some closures are due to bankruptcy, many have remained inactive or dormant for over a year. Sectors like Agritech, Fintech, Edtech, and Healthtech have been the worst hit. Experts attribute the rise in shutdowns to:
- The "delayed correction" of earlier exuberant valuations.
- Companies failing to find product-market fit (PMF).
- A tight funding environment, with investors becoming increasingly selective, preferring startups with healthy financials and a proven market fit.
Why IP Identification and Protection Are Critical for Startups
In today's highly competitive environment, identifying and protecting your Intellectual Property (IP) is not just an advantage — it’s a survival strategy.
Patents, trademarks, copyrights, and designs act as defensive shields and commercial assets, helping startups:
- Differentiate themselves in the market.
- Enhance valuation during funding rounds.
- Create revenue streams through licensing and franchising.
- Safeguard innovations from being copied by competitors.
Startups that fail to identify and protect their IP risk losing not only their competitive edge but also potential investor interest — investors increasingly prioritize startups with a strong, enforceable IP portfolio.
How the SIPP Scheme Can Help Startups
Understanding the financial constraints many startups face, the Government of India launched the Startups Intellectual Property Protection (SIPP) Scheme. Under this scheme:
- IP Facilitators (like registered Patent Agents, Trademark Agents, and Attorneys) assist startups in filing patents, trademarks, and designs at subsidized costs.
- The government bears the professional charges of the facilitators, while startups only pay the statutory filing fees.
- Startups receive priority handling of their IP applications through recognized facilitators.
This initiative significantly reduces the cost burden and ensures that startups receive expert guidance in securing their IP rights.
👉 For official SIPP scheme guidelines, you can visit:
https://ipindia.gov.in/writereaddata/Portal/News/717_1_Public_Notice_SIPP.pdf
The Solution: A Path Forward for Founders
Despite the grim headlines, this phase offers an opportunity for startups to recalibrate and build stronger, more sustainable businesses. Here’s how:
1. Prioritize Product-Market Fit (PMF) Early
Focus on solving real customer problems before scaling operations.
2. Adopt Capital Efficiency
Operate lean and avoid excessive burn rates.
3. Strengthen Financial Hygiene
Maintain clear, transparent, and auditable financial records.
4. Focus on Core Markets
Concentrate efforts on select markets where the startup can dominate.
5. Secure Intellectual Property (IP) Early
Leverage the SIPP Scheme to build a defensible and valuable IP portfolio right from the early stages.
Conclusion
The surge in startup shutdowns is a wake-up call, but not the end of the road. Founders who focus on solving real problems, protecting their innovations, managing their resources wisely, and securing strong IP protection can thrive — even in today's tougher environment.
By combining resilience, disciplined growth, and smart IP strategies, India’s startup community can turn today's challenges into tomorrow’s opportunities.
About the Author
Srinivas Maddipati is a registered Patent Agent and IP Consultant, passionate about innovation, technology, and startup ecosystems. As the founder of Eeva IP & IT Services Pvt. Ltd., he has helped numerous startups, MSMEs, and corporates secure and commercialize their intellectual property assets. Srinivas actively mentors entrepreneurs under various government innovation programs and is committed to building a strong IP culture in India.
