Startup Debt Trap, Evera Expands B2C Game, and Nazara’s Stock Split

In India’s startup ecosystem, the word “debt” was once whispered with suspicion, a signal of weakness in a world built on equity fuel. But the funding winter of 2022 flipped the script. With equity taps tightening - seed funding down 44%, early-stage down 16%, and late-stage down 27% by mid-2025 - founders desperate for survival reached for venture debt as a lifeline. In theory, it was rational. Debt is non-dilutive. It preserves founder ownership. It bridges the gap between rounds. In practice, for many, it became a financial noose.

Take Byju’s. The edtech giant wasn’t short on capital, having raised billions in equity. But in 2021 it layered on a $1.2 billion Term Loan B to fuel a hyper-aggressive acquisition spree. Cheap at first glance, with a 5.5% interest over LIBOR, it morphed into a crippling burden when U.S. rates surged and LIBOR touched 5%, doubling borrowing costs overnight. Add breached covenants, allegations of misused proceeds, and opaque governance, and the debt became the accelerant that set the house on fire. Stayzilla, on the other hand, collapsed under the weight of short-term vendor debts, proving that death by debt doesn’t always come from billion-dollar loans. Sometimes it’s a failure of cash-flow discipline, where high burn and poor liquidity turn even small obligations into fatal wounds.

Debt-fueled missteps aren’t confined to these two names. PharmEasy borrowed aggressively from Goldman Sachs to finance its Thyrocare acquisition; the ₹30 crore quarterly servicing costs became unsustainable, triggering a desperate rights issue at a 90% discount. Dunzo leaned on multiple investor loans to keep its quick commerce engine running, but mounting losses and high-cost debt forced Reliance to write off ₹1,645 crore. Trell’s mix of equity and debt fell apart amid governance issues, while Zilingo’s financial irregularities and debt overhang accelerated its downfall. Abroad, WeWork’s spiral was hastened by billions in lease obligations - debt in all but name - locked in against a collapsing business model. The pattern repeats: when leverage fuels experiments without a clear repayment engine, startups discover that debt amplifies fragility, not growth.

Contrast that with Everest Fleet and PMI Electro, who show what “good debt” looks like. Everest used structured loans to expand its EV fleet - capital tied to revenue-generating assets. PMI financed electric buses with predictable cash flows. Both matched the instrument to the goal, turning leverage into growth instead of collapse. Globally too, startups like Airbnb leaned on convertible notes in early stages - hybrid instruments that delayed valuation calls while giving founders breathing space. The lesson is clear: debt isn’t the villain. Misapplied debt is.

The bigger story here is cultural. For too long, India’s startup playbook was “growth at all costs.” Debt was deployed as if it were equity, spent on speculative expansion or covering operational burn with no plan for repayment. The new reality is less forgiving. Investors now care about unit economics, not vanity metrics. A high burn rate is a red flag, not a badge of ambition. New metrics like EBITCAC - earnings before interest, taxes, and customer acquisition costs - are starting to replace EBITDA, reflecting the harsh truth that growth bought entirely through marketing spend isn’t sustainable.

The near-term outlook is a forked path. In one scenario, Indian founders and lenders mature, adopting structured, asset-backed models and embedding financial discipline into governance. Debt then becomes a real tool for growth, fueling capital-heavy sectors like EVs, SaaS receivables, and infra-tech. In the darker scenario, a second wave of defaults looms as startups that borrowed heavily in 2023–24 hit repayment cliffs without fresh equity or profits to service them. Either way, the lesson is etched in bold: debt is not free money. It is a fixed claim on an uncertain business, and it magnifies whatever lies beneath - sound strategy or fragile illusion.

For founders, the takeaway is brutally simple: match the instrument to the purpose. Use debt when assets or revenue can service it. Don’t borrow to paper over broken unit economics. Bring in real CFOs, not glorified accountants. And remember that governance failures, not just bad market cycles, kill companies. In today’s market, optimism won’t repay interest, and hope doesn’t reduce covenants. Discipline does.

Let’s go through what else is happening in Indian startup world - Grab your simmering cup of StartupChai.in and unwind with our hand-brewed memes.

“O Eco-Friendly, Nature Ke Rakshak”: Evera Expands B2C Portfolio, Launches Hourly Rental Service

EV startup Evera is taking its B2C game up a notch by rolling out flexible hourly rentals for everything from quick point-to-point hops to full-day use. Until now, the brand was known mainly for airport transfers, but this move widens the everyday use case for clean mobility.

With its B2B roots in safe, trackable corporate rides, Evera now seems ready to woo the urban commuter looking for greener travel options.

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“Kaddu Katega, Sab Mein Batega”: Nazara Gets Shareholders’ Nod for Stock Split, Bonus Issue

Nazara has got the green light from shareholders for a stock split and a 1:1 bonus issue, doubling the number of shares in play.

The record date is September 26, with bonus shares set to be allotted just three days later. Interestingly, this marks the gaming company’s second bonus issue in just over two years, following its June 2022 move.

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“Never Gonna Give You Up”: Centre Looking To Launch Satcom Services By Jan 2026

India could be gearing up for satellite-based communication services as early as January 2026, with the Centre pushing to fast-track the rollout.

The Digital Communication Commission is set to iron out policies, licenses, and regulations needed to make it happen. If all goes to plan, satcom could soon complement terrestrial networks, widening digital access across the country.

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1. PharmEasy is set to raise INR 1,700 Cr through non-convertible debentures by pledging shares of its listed arm Thyrocare. The funds will help pare down existing debt, even as the healthtech major grapples with profitability pressures and leadership churn.
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2. Consumer electronics startup Indkal Technologies has raised $20M in a Series B bridge round to fuel the growth of its brand Wobble Displays. The funds will go into R&D, service network upgrades, and expanding the product portfolio with new display categories.
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3. BeyondSquare Solutions has raised $4M in Series A funding from Avant Global to scale its financial reporting platform FinAlyzer. The funds will be used to boost automation, compliance features, and platform scalability.
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