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Time of India
29-07-2025
- Business
- Time of India
The AI startup dilemma: To pivot or perish
Academy Empower your mind, elevate your skills In the last few weeks, four Indian AI startups have announced that they are shutting in the face of challenges such as scaling up, raising funds and pivoting as technology shifts rapidly. This includes two Y-Combinator companies Wuri and CodeParrot as well as and This is not unusual in the world of startups. According to the US Bureau of Labor Statistics, more than 50% of the startups fail within five unlike the previous cycles, beyond operational challenges, these closures are coming amid rapid technological development in artificial intelligence.'Startups are shutting down quicker compared to before,' said a Bengaluru-based investor. Unlike previous technology cycles during which founders could continue running businesses for longer until they found the right fit, many now realize it's better to shut down and start afresh than burn money. AI startups for instance are being rendered obsolete, Tencent Investments managing partner Jeffrey Li told a recent in point, the sheer number of AI tools that are going out of the market. AI tool aggregation platform said that of the 4,956 added, 1,301 have been terminated. In 2025, 227 AI tools ceased operations. In order to win in the age of AI, startups should pivot fast as the technology becomes more commoditised, experts said. While technology is important, it's key to focus on the problem that's to be solved.'Right now is a very difficult time to be a founder because the developments are happening at such a rapid pace,' said Akshay Megharaj, founder of Wuri. People always seek inspiration from past experience, which is not possible due to the sheer nature of how the technology is developing, he said.'As much as artificial intelligence has made it easy to build products, the rapidly evolving technology is also making it challenging for startups to have a right to win,' said Naman Maheshwari, co-founder, Tune AI, an orchestration platform that closed recently. This means that companies need to pivot and fast, to stay more than anything, is a primary moat in the world of AI, said Sanjay Nath, co-founder and partner, Blume Ventures. He explained that even if a startup has a great product, if they don't keep pace with technology, they will be left behind by competitors, who may have 20% inferior product but execute 50% said, 'A large percentage of companies that we back at seed end up pivoting, and the ones that are agile and keep evolving are the ones that are likely to succeed in this crazy, fast-flowing environment.'The key is to find the right problem to build enduring companies, startups need to solve fundamental issues in the areas of healthcare, climate and sustainability, Google country manager Preeti Lobana said at the recently concluded Google I/O event in Bengaluru. A Bengaluru-based investor said, 'For most startups, AI is mostly an add-on. They need to ask themselves this question — are you solving a problem even if you take AI out of the equation.'
Entrepreneur
19-07-2025
- Business
- Entrepreneur
YC-Backed AI Startup CodeParrot Shuts Down After Struggles With Growth
You're reading Entrepreneur India, an international franchise of Entrepreneur Media. CodeParrot, a Y Combinator Winter 2023 startup that aimed to simplify frontend development using AI, has officially ceased operations. The India-US based company, co-founded by Vedant Agarwala and Royal Jain in 2022, built tools that turned Figma designs and screenshots into production-ready code using large language models (LLMs). Despite early traction, including a VS Code extension and support for React, Flutter, and HTML, the team faced ongoing challenges in scaling the product. The shutdown was announced by Agarwala on LinkedIn, who reflected on the two-and-a-half-year journey marked by pivots and product iterations. The startup had raised USD 500,000 in seed funding but struggled to achieve sustainable growth, peaking at just USD 1,500 in monthly recurring revenue after its final pivot. Agarwala admitted that the team never managed to raise funds during Y Combinator's Demo Day and found themselves "stuck in pivot hell" in the months that followed. CodeParrot's experience underscores the difficulty many AI startups face in commercialising promising technology in a rapidly evolving market. "We hired and, painfully, had to let go of both the engineers," Agarwala shared, pointing to the tough decisions small teams often have to make. In his note, Agarwala recalled milestones such as being accepted into Y Combinator and generating the first bits of revenue — moments that briefly offered encouragement amid uncertainty. He also stressed a key technical lesson from working with LLMs: the value of strong evaluation systems over pure prompt engineering. "Good prompts get you 90 per cent there, but good evals are what really matter," he noted. Now on a sabbatical, Agarwala expressed continued interest in AI, with plans to assist other YC startups in building AI products and to explore new ideas with potential cofounders. CodeParrot joins a growing list of early-stage AI startups unable to transition from prototype to profitability. Recently, founder Vishnu Ramesh also announced his company's closure, reflecting the broader volatility in the generative AI space, where technical innovation doesn't always guarantee commercial success.
New Indian Express
18-07-2025
- Business
- New Indian Express
Biting the dust: Only 1 out of 50 start-ups secures Series A funding within 18 months
BENGALURU: In just one week, two start-ups -- quick fashion delivery platform Blip and AI start-up CodeParrot -- have shut down citing various reasons including funding crunch. Though it is not easy to raise funds, especially after securing seed money, what bothers the start-up ecosystem is excessive cash burn and the pressure to grow fast. TNIE spoke to many venture capitalists and investors who said lack of clear planning and in some cases even poor legal and structural hygiene are some of the reasons for start-ups shutting operations. According to data sourced from market intelligence firm Tracxn, 65,906 companies were shut down in India from January 2023 till date while a total of 7,484 start-ups were shut down from July 1, 2024 to July 18, 2025 alone. Start-ups such as Koo and Zerodha's Nithin Kamath-backed Stoa School have shut down in recent times. "Start-up shutdowns are not unusual; they are part of how a young ecosystem matures. What we're seeing now is a period of correction, brought on by a mix of internal and external challenges," said Roma Priya, founder of Burgeon Law. One major reason is the lack of product–market fit. Many start-ups go to market without fully testing whether their product solves a real and scalable problem. Founders also often face co-founder conflicts or team misalignment early on, which can slow momentum. Another common issue is limited access to funding, especially now that investors are being more selective. In addition to these, several start-ups face difficulties due to poor legal and structural hygiene, for example, unclear company structures, weak documentation, or non-compliance with regulatory norms, Priya added. Vedant Agarwala, co-founder of CodeParrot, said in a LinkedIn post that they hired and painfully had to let go of both the engineers. "We burned through the $500k we'd raised — and when we hit $1,500 MRR (monthly recurring revenue) with our final pivot (Figma-to-code using LLMs), we couldn't break through. Instead of running more experiments with a dwindling runway, we decided it was time to shut shop," he said. The co-founder also said that start-ups are brutally hard — and pivot hell is the worst part by far.
