The Role of Unit Economics and Corporate Governance in Indian Startup Collapses

Abstract: Over the past decade, India has experienced a rapid expansion of its startup ecosystem, supported by increasing venture capital inflows, digital penetration, and policy support. Alongside this growth, however, the ecosystem has also witnessed a growing number of high-profile startup failures, including firms that once achieved unicorn status. This paper examines the role of unit economics and corporate governance in the collapse of Indian startups. Using a qualitative multiple case study approach, the study analyzes selected Indian startups that scaled rapidly but later experienced financial distress or shutdown. The findings indicate that persistent negative unit economics, when combined with weak corporate governance mechanisms, significantly increase the likelihood of startup failure. The study contributes to entrepreneurship and management literature by providing India-specific insights and highlights practical implications for founders, investors, and policymakers

Keywords: Indian startups; unit economics; corporate governance; startup failure; venture capital; emerging markets