One of the most spectacular startup failures this year was Ensogo, a network of ecommerce sites operating across Southeast Asia and Hong Kong.
In May merchants began complaining they weren’t receiving the money for the products they’d sold through the site.
It all went south from there. Ensogo was blaming delayed payments to merchants on reduced manpower after it cut its team size. Customer complaints piled up.
Various factors contributed to Ensogo’s collapse, but the most obvious one was that its concept, which relied heavily on discounts, deals, and flash sales, failed to generate loyal customers.
A lot happened in the Rocket Internet universe this year. Its Southeast Asian ecommerce site Lazada was sold off to Alibaba and its online food delivery service Foodpanda folded into competitor Delivery Hero. Other operations were downsized or restructured.
Rocket Internet also counted some complete losses, for example, its carpooling app Tripda. It covered 13 markets, six of which were in Asia.
Rocket Internet claimed the app had “healthy user adoption,” but the main reason for its shutdown was the immense competition in transportation. “We confirm the decision to discontinue the operations of Tripda due to long-term monetization concerns and emerging competitive pressures,” the firm said.
Tripda wasn’t the only service to go. Rocket Internet also quietly said goodbye to Sparklist, a mobile classifieds app.
It had launched in Pakistan in November last year and expanded to the Philippines soon after, but by May this year the app was no longer accessible. Rocket Internet never confirmed the closure.
4. Passport Asia
In Singapore, Classpass-like fitness startup Passport Asia bit the dust in March. It offered unlimited access to gyms and fitness classes for a fixed monthly fee.
When the firm shut down, it sent its remaining members to rival startup KFit – which itself is struggling to make the unlimited-classes model work and appears to be getting into ecommerce with the acqusition of Groupon Indonesia and Malaysia.
The team behind Passport Asia insisted the closure of its gym membership plan doesn’t mean the company itself is dead. Part of the founding team has gone on to founding Kiddet, a marketplace for kids’ activities.
Also in Singapore, Novelsys, a hardware startup developing wireless chargers for phones ceased operations in January. It did ship 600 units of its product after a successful Kickstarter campaign.
We developed a product we *thought* people wanted.
However, issues remained. “We failed to build a scalable business,” co-founder Kenneth Lou concluded in a blog post. “We failed to find a product-market fit.” Kenneth said a big problem was that they’d developed a product they thought people wanted, not one that solved real and existing problems.
6. TMI news portal
In Malaysia, a very different kind of shutdown happened. News media portal The Malaysian Insider (TMI) went offline in March, after providing independent news coverage for eight years.
The news portal was part of The Edge Malaysia media group, which also operates business and property news sites. The Edge Group CEO cited financial issues as the main concern. News sites all over the world are struggling to find sustainable business models.
But TMI was in an especially difficult situation. The Malaysian government had blocked the site in February after it published a controversial article on corruption investigations into Prime Minister Najib Razak. No wonder it was having trouble to monetize.
All of TMI’s 59 staff will be let go with a severance package, the Group CEO told media.
In the Philippines, nightlife app Partyphile – backed by 500 Startups – decided to shut down in November after tragic events some months earlier.
Partyphile had pivoted from a guestlisting app to ticket sales for big music festivals. Growth was promising, according to founder Ron Baetiong. But then “shit hit the fan hard,” Ron wrote in a blog post, in which he tries to come to terms with what happened.
Shit hit the fan hard.
A key member of his team, a co-founder and investor, passed away during a music festival Partyphile was partnering with.
The company wasn’t able to recover from this blow. It was in the middle of fundraising and still lacked a clear path to profitability. Ron says he’s not giving up on entrepreneurship though and plans to get back on his feet.
Indonesia saw a series of smaller startup closures this year. One of them was HaloDiana, a virtual assistant like Magic. It was started by the founders of freelance job portal Sribulancer.
Other startups with similar concepts also weren’t able to generate enough traction and efficiency to make it work at scale.
Rival YesBoss, for example, reinvented itsef as a chatbot platform. HaloDiana chose to call it quits and founder Ryan turned his attention back to Sribulancer.
Indonesia’s Shopious shut down in April. It was an aggregator for Instagram-based fashion stores.
The shutdown was a tough lesson for co-founders Aditya Herlambang, Billy Halim, and their team. They wanted to prove there was a niche for lean, bootstrapped startups in Indonesia’s ecommerce market. But it didn’t go that way.
High user acquisition costs were a problem, Aditya said. Out of principle, he wanted to refrain from taking on large amounts of venture capital. But prices for paid advertising had been driven up by big ecomemrce players with millions of dollars in funding.
Another challenge in Shopious’ business model was the quality of merchants. Many Instagram sellers turned out to be unreliable, Aditya said. Their customer service was unprofessional, and there simply weren’t enough quality products.
Aditya chronicled the reason for Shopious’ closure in a blog post.
Antar was one of them. It initially focused on on-demand motorcycle courier services, but later also added personal transportation. Failing to differentiate itself and faced with an unequal battle against big competitors, Antar quietly shut shop this year.
Zeemi, an Indonesia-based live streaming startup ceased its service in October. It was supposed to be a stage for local content creators to build video channels and interact with live audiences.
We’ve taken the tough decision now while we have money to make changes.
It failed to attract the fanbase required to make that work, said Tom Damek, Zeemi’s co-founder – formerly a CEO of ecommerce giant Lazada in Indonesia.
Tom maintains it’s a pivot and that he and parts of the Zeemi team will be back with a new product. “This was clearly a tough decision […] we have taken it now while we have money to make a number of changes,” he said. He didn’t specify what those changes are. For now, Zeemi’s website remains in hiatus mode.
The company had raised US$1 million in seed funding from Japanese DeNA’s venture arm and Silicon Valley VC firm 500 Startups.
Tulungin was another case where a “me-too” idea simply wasn’t enough.
Late last year, Calvin Ng Tjioe and his team wanted to launch a platform for service providers, like refrigerator maintenance, electricians, or plumbers. In Indonesia, Carijasa and Seekmi were already working on similar ideas. Others, like Sejasa were pressing into Indonesia from other countries in the region.
Tulungin never made it past a couple of hundred installs, and its founders have moved on to work at other startups.
Japan saw a peculiar startup shutdown this year. Despite having raised US$4 million in funding and millions of users in Japan and Taiwan, photo-enhancing app Snapeee shut down in May this year.
The company sent out a public statement on its closure, saying that it failed to find ways to monetize the app and couldn’t raise additional capital needed to grow it further.
It left behind a community of users who mourned the loss of an app they’d grown fond of over the years. Snapeee had been operating since 2011.
14. Contract Beast
Also in Japan, entrepreneur Tim Romero decided to quit developing his SaaS startup ContractBeast.
Sometimes it’s best to leave the money on the table.
He detailed the reasons for his decision in a widely shared blog post. He said it wasn’t the team or lack of investor interest. Even users loved the product, or at least the idea of it. But they weren’t using it.
“The fatal flaw jumped out at me,” Tim writes. “ContractBeast provided huge gains in accuracy and efficiency, but those gains came after months of use. It didn’t provide a significant immediate benefit.”
Despite the option of getting funding and thus increased runway to “pivot our way into solving these problems,” Tim chose to pull the plug. “Sometimes it’s best to leave the money on the table.”
It’s likely that hundreds of startups flourished and perished in China this year. In a market of that size, it’s impossible to keep track.
For the purposes of this list I’ve picked one spectacular case: the rise and fall of P2P lending company Ezubao.
Ezubao promised high interest rates on small loans, but it failed to deliver. The startup became a case for criminal investigation. Senior management at the company apparently admitted that as much as 95 percent of investment projects on Ezubao were fake.
Fake investment products lured new investors to place money on the site, which was then used to pay back older investors. It wasn’t much more than a Ponzi scheme.
With interest in online lending platforms growing across the region, Ezubao’s case throws a long shadow.
What about India?
India had a rollercoaster year and deserves its own list of startup failures. Watch out for it.
Also not included in this list are the stories of tech giants who had a tough year, exiting some markets, laying off staff, or making other significant operational adjustments. Rakuten, for example, comes to mind. We’ll collect these stories in a separate post later this month.
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