In October, Niro—a once-promising fintech startup in India—shut down completely. Not a pivot or a quiet acqui-hire. Just gone.

Its founder, Aditya Kumar, shared the news in a candid LinkedIn post: “$20 million in funding, $200 million in loan disbursements, 30 partnerships and 4.5 years later—we’ve had to shut down Niro.”

Kumar wasn’t a first-timer. He’d already sold his previous company, Qbera, to InCred. Niro had credible backers: Kunal Shah from CRED, Elevar Equity, and others. At its peak, the company powered lending access to 170 million users through partners like Snapdeal (large Indian e-commerce marketplace, similar to eBay) and ShareChat (India-focused social network).

And yet… it wasn’t enough.

So let’s talk about why. Because this story? It’s a masterclass in how even smart founders with good ideas and real traction can still get absolutely crushed by forces outside their control.

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What Niro Actually Did

First, let me explain what Niro was trying to build, because “embedded lending” sounds like fintech jargon soup.

You’ve probably seen this before: when you’re checking out on Amazon and see an option to “pay in 3” with Affirm or Klarna, or when you’re booking a flight and can instantly add travel insurance, or when you’re browsing Zillow and get pre-qualified for a mortgage on the spot. That’s embedded finance—financial products built directly into the digital platforms you already use.

Niro was the behind-the-scenes infrastructure making that possible in India.

Here’s how it worked. Consumer platforms like Snapdeal (India’s equivalent of eBay) or ShareChat (a major regional social app) wanted to offer loans to their users but weren’t licensed lenders. Meanwhile, banks and NBFCs (Non-Banking Financial Companies—regulated lenders that aren’t full banks) had the capital but struggled to reach digital audiences efficiently.

Niro sat in the middle. They connected these platforms with financial institutions, handled all the tech, managed credit underwriting, and made the process seamless. The platform earned a new revenue stream, the bank gained new customers, and Niro took a small cut from each transaction.

Elegant, right?

They focused on unsecured personal loans—typically between ₹50,000 and ₹7 lakh (about $600 to $8,300). No collateral required, just a credit score and basic documentation.

Within two years, Niro had built $100 million in assets under management and disbursed $200 million in loans across more than 200 Indian cities—serious traction by any standard.

So what went wrong?

The Perfect Storm (And I Mean Perfect)

Kumar called it a “perfect storm” of three things hitting all at once. Let me break them down, because each one alone would’ve been rough. Together? Devastating.

Storm #1: The RBI Said “Nope”

In November 2023, the Reserve Bank of India (India’s central bank) dropped a bomb: they increased the “risk weights” on unsecured personal loans from 100% to 125%.

Now, if your eyes just glazed over at “risk weights,” stay with me. This is important.

Basically, the RBI told banks and NBFCs (non-banking financial companies, or regulated lenders that operate like banks but without full banking licenses): “For every unsecured loan you make, you now need to set aside 25% more capital as a safety buffer.” This made unsecured lending way more expensive and way less attractive.

Why’d they do this? Because unsecured loans had gone from 18% of all bank credit in 2016 to 25.3% by 2024. The RBI was worried about a bubble. People were borrowing too much without putting up any collateral, and if a bunch of those loans went bad, it could crash the system.

The result? Personal loan growth dropped from 28.4% in December 2023 to just 12% by December 2024. Banks basically pumped the brakes hard.

Then in May 2025, the RBI released comprehensive “Digital Lending Directions” that made everything even more complicated. Now you needed:

For a company like Niro—whose entire business was digital unsecured lending through third-party platforms—this was like the referee changing the rules mid-game and also making the field smaller.

Storm #2: The Money Dried Up

Meanwhile, the funding environment went from “easy mode” to “nightmare difficulty.”

Indian fintech funding collapsed: $5.6 billion in 2022, down to $2.8 billion in 2023, and then $1.9 billion in 2024. That’s a 66% drop in two years.

And here’s the kicker: late-stage funding got massacred—dropping from $1.9 billion in 2023 to $1.1 billion in 2024. That’s the money companies like Niro would’ve needed to scale up or weather the storm.

Niro raised its last major round (Series A, $11 million) in May 2023. Then they got $4.3 million in debt in April 2024. After that? Nothing.

Kumar was honest about it: “Despite scouring the globe for capital and the country for suitors—I wasn’t able to bring this one home.”

Translation: They pitched everywhere. Nobody bit. The music had stopped, and there weren’t enough chairs.

Storm #3: The Loans Started Going Bad

Here’s the uncomfortable truth about unsecured lending: it’s risky as hell.

When the economy’s good and people have jobs, unsecured loans perform great. When things get shaky? They’re the first to go bad.

India’s household debt-to-GDP ratio hit 42.9% by June 2024—up significantly from previous years. People were overleveraged. And here’s the scary part: nearly 50% of people with unsecured loans already had other big loans like home loans or car loans.

One default triggers another. Miss your personal loan payment, and suddenly your other lenders start panicking. It cascades.

While overall bank NPAs (non-performing assets, aka bad loans) were at a 13-year low, unsecured loans were showing stress. And Niro was right in the middle of that.

Look at their financials:

Revenue collapsing while losses are growing? That’s not a company that’s pivoting to profitability. That’s a company in freefall.

The Deeper Problem: Being a Middleman Sucks

But honestly? Even if the storms hadn’t hit, Niro faced a structural problem.

They were a middleman. And middlemen have it rough.

Kumar himself identified this in his shutdown post: “Financial institutions lack proprietary distribution and differentiate data for underwriting… Consumer Internet platforms have reach but lack financial domain expertise.”

That gap—that’s where Niro lived. The space between banks that have money but can’t reach customers, and platforms that have customers but can’t lend money.

Here’s why that’s tough:

This is the embedded finance conundrum. Despite its promise, embedded finance faces challenges including data privacy concerns, regulatory complexities, limited awareness, and lack of trust between parties.

It’s like trying to be a wedding planner where both the bride and groom keep threatening to call off the wedding, and you still need to make enough money to pay your team.

The “Oh Shit” Numbers

Let’s talk unit economics for a second, because this is where the math just stops working.

By FY24, Niro was burning ₹48.7 crore ($6 million) annually on revenue of ₹7.86 crore ($950K). That’s a 6.2x burn multiple.

Put differently: for every rupee they made, they lost six more.

At that rate? They had maybe 3-4 months of runway. And remember—this was after they’d already raised nearly $20 million total and had supposedly “successfully” pivoted their business model multiple times.

When your revenue is falling 59% year-over-year and you’re burning cash faster than ever, you’re not building toward something. You’re circling the drain.

The only way out is raising more money. But investors in 2024 weren’t writing checks to companies losing 6x what they make. They wanted profitability or at least a clear path to it.

Niro had neither.

They’re Not Alone

Here’s where it gets really interesting (or depressing, depending on your perspective).

Niro isn’t an outlier. It’s part of a massive wave of shutdowns sweeping through India’s startup ecosystem.

Between 2023 and 2024, over 28,000 Indian startups shut down—a 12x increase from the previous few years.

Let me repeat that: 28,000 startups. In two years.

Some recent casualties:

What’s happening?

The 2020-2021 period was a frenzy. COVID hit, everyone went digital, VCs threw money at anything with an app. Valuations went crazy. Growth at all costs.

But by 2023-2024, reality set in. Investors started asking uncomfortable questions like “When will you be profitable?” and “What are your actual unit economics?”

Turns out, a lot of startups didn’t have good answers.

The funding winter hit fintech especially hard because fintech is:

Okay, so what do we take away from all this? Because Niro’s story isn’t just “startup fails, sad times.” There are real lessons here.

Embedded finance isn’t dead in India. It can’t be—the opportunity is too big. But Niro’s failure proves it’s way harder than the pitch decks make it look.

The companies that’ll win are probably:

But the pure-play middleman model that Niro tried? That’s looking pretty tough right now.

Twenty million dollars. Four and a half years. Hundreds of employees. Millions of users.

All gone.

That’s the thing about startups that nobody tells you: you can do everything mostly right and still lose. Niro had execution, traction, smart founders, good investors. They built a real product that real people used.

But they launched at the wrong time, in a brutally regulated industry, with a business model that got squeezed from both sides, just as a funding winter hit and credit markets tightened.

Sometimes the game is just rigged against you.

Kumar will be fine. Second-time founders always land on their feet. Maybe he’ll build something new. Maybe he’ll become an investor. Maybe he’ll write a book.

But for the 289 people who lost their jobs at Niro? For the investors who lost their money? For the other embedded finance startups watching nervously?

This one stings.

The lesson isn’t “don’t build in fintech” or “don’t try embedded finance.” It’s something harder to swallow: even when you’re good, sometimes good isn’t enough. You need good + timing + luck + favorable conditions.

Niro had good. They just ran out of everything else.

P.S. If you’re building in embedded finance or fintech in India, I’d love to hear your take on this. Reply to this email—let’s chat.

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