2015 was a hot year for some startups in Asia. Venture capital flowed into China, India and South Korea in previously unheard of amounts. Southeast Asia saw a record exit with iProperty Group’s US $534 million acquisition.
Yet raising gargantuan rounds of financing is no guarantee for future success, and it’s in the risky nature of entrepreneurship that some companies emerge as winners while others bite the dust.
Here are 20 startups from Asia that were forced to shut down this year.
We clustered them by country and in no particular order. These 20 are by no means the only ones to cease operations in 2015. We picked them because we learned something from their story.
Melotic was a digital assets exchange based on bitcoin. Its goal was to facilitate exchange between alternative digital currencies and various app-specific coins. Its headquarters was in Hong Kong. Melotic had just closed a US$1.18 million seed round in October 2014, from investors including 500 Startups. That, however, wasn’t enough to build a product people wanted. By May 2015, the team gave up, saying it “did not experience enough growth in this product to justify the ongoing costs of development, maintenance, and support.“
In 2015, China saw the closure of not just one, but seven online-to-offline car wash services. You read that right: in a niche as specific as on-demand car washing, multiple players were competing for the lead. That’s how diversified the Chinese startup ecosystem is.
It looks like one company, Guagua Xiche, has emerged as the winner, for now. A company called eXiche was perhaps the most spectacular failure out of the lot. It raised a series A round worth US$20 million in March and discontinued its service by October. Its landing page claims it’s restructuring and not dead.
In the heat of the competition, it looks like many of these car washing services were burning money offering cheap promotions to do something that’s already cheap. It wasn’t sustainable.
3. DoneByNone (Netcraft Retail Solutions)
Despite it being an overall successful year for ecommerce in India, some startups could not survive. Among them is Gurgaon-based web-only women’s fashion brand DoneByNone. It reportedly had problems with customer satisfaction in late 2014, then one of its co-founders jumped ship. By early 2015, the website was no longer available.
Lumos was a “smart home” startup founded by a team of first-time entrepreneurs straight out of college. Building a hardware startup was a lot harder than they had expected. “We had underestimated the work that goes into making a market-ready hardware product. We had overestimated the demand and utility of our product,” the co-founders write in a long blog post. The team had the grace to document their decision making process and subsequent demise with much detail, and it’s a great read for those who consider building a hardware product.
Despite raising seed investment in October 2014 and acquiring a fellow recruiting platform on the way, TalentPad joined the deadpool less than a year later. Its site offered a unique online recruitment fair where employers would compete for top talent. “We failed to figure out a scalable business for a big enough market,” the team said in a note to its users.
The food delivery business got hit hard in India this year. Some companies managed to attract investment and grow bigger, while many others stumbled. Among the latter is Dazo. This was reportedly India’s first app-based meal delivery service and had attracted seed investment from high-profile investors including Google and Amazon executives.
In an analysis of the demise of food startups in India, Inc42 writes:
The rapid growth rate [of startups in this space] also indicates the fact that funded companies tend to indulge in cash burn to acquire customers without creating a product differentiation.
7. Valyoo Tech (Bagskart, Jewelskart, Watchkart)
Valyoo Tech operated a suite of premium ecommerce sites, one for bags, one for jewellery, one for watches, and one for eyewear and contact lenses. As early as the beginning of 2014, it reportedly already mulled selling everything but the LensKart business to focus on the site that performed best. It took until early 2015 for that plan to materialize. Valyoo Tech managed to raise fresh funds for LensKart but shut down the other three, apparently not able to find buyers.
Mobile marketplace Kleora is not exactly dead, its founders say. But the brand, along with its website, has been discontinued, because the team felt its female branding had become too limiting and the platform’s backend and features needed a major overhaul. The team made drastic changes, and stayed together to launch a new product called Prelo. This marketplace focuses on second-hand branded goods.
9. Beauty Treats
Beauty Treats started out on the monthly cosmetics box subscription model – similar to Lolabox, which failed in 2014. Beauty Treats had pivoted to avoid a similar fate by becoming a general cosmetics estore in 2013, but that didn’t pan out either. Earlier this year, Daily Social reported that the site had gone down. Beauty Treats co-founder Romeo Reijman is now trying to build online pawn broker startup Pinjam.
10. Abraresto / Abratable
Abratable and Abraresto were a restaurant booking and review site operating in Singapore and Indonesia. The startup failed because it took a number of risky decisions, including taking on investment in the form of debt instead of venture capital. It failed to raise follow-on funding at a time when it needed it to survive.
The ecommerce site Alikolo was created by Danny Taniwan, a first-time entrepreneur from Medan. He blames his lack of experience for the demise. He had also made the fatal mistake to concede a majority stake in the company to his angel investors, who were even less experienced in this line of business than he was. The founder has since moved on to create a new ecommerce platform, which has yet to launch.
Valadoo was a site for tour packages to Indonesian destinations. It shut down in May 2015. Its founders say the company stumbled because it focused too much on growth, neglecting the need to build a sustainable business model around the product. Then, a merger with another company turned out to be more complicated than anticipated on the technical level. The merger eventually broke Valadoo’s back. It ran out of cash, unable to raise a new round during the transformation phase.
In October, one of Indonesia’s more established ecommerce players, Paraplou, appeared to have shut down. The firm posted a farewell message on its homepage, citing reasons of market immaturity, uncertain financial conditions, and a difficult funding environment as the primary reasons for its closure. The site of the company’s ecommerce fulfillment arm, Paraplou Group, is still up, but the sites of its major clients are in temporary suspension. Paraplou was headed by two former Rocket Internet managing directors who worked at Lazada Indonesia.
Just a few days ago, we noticed Kirim quietly ceased operations. Kirim was a last-mile delivery service, claiming to have been in operation for seven years. It didn’t state the reason for its decision to close shop. It’s likely the expansion of well-funded on-demand transportation businesses like Go-Jek and GrabBike into instant deliveries made it impossible for niche players to keep up.
Israel’s Everything.me was one of the more high-profile failures this year on the Asian continent. It built an app that added additional contextual features to Android phones. Despite raking in US$35 million in financing and claiming 15 million app downloads, the company decided to call it quits at the end of October. The team said it was “unable to find a suitable business model” for its free app.
In Singapore, KotaGames’ browser-based gaming site shut down in March. It had been around since 2008. It’s possible its mistake was relying on feature phones for monetization. TMG, KotaGames’ parent company, was seemingly unable to adapt its business model to the rapid rise of smartphone gaming.
Lamido was part of the family of Rocket Internet-backed companies that spans Southeast Asia. Headquartered in Singapore, it was an ecommerce marketplace, but it did not perform very well and had strong local competitors. In addition, Rocket Internet sister site Lazada had itself adopted some marketplace features.
According to Lazada Group CEO Maximilian Bittner, Lamido’s dissolution was actually a merger with Lazada. “With the rapid growth of both Lazada and Lamido marketplaces, we have experienced an increasing overlap between the customer and seller bases across the two platforms. Given the many synergies between the Lazada and Lamido brands, it is thus a natural step to combine their offerings,” he argued.
Earlier this year, Singapore’s national telco SingTel shut down its daily deals site SuperDeals. This is perhaps no big surprise because the daily deals model has been suffering pretty much all across the globe. Groupon led the explosive growth of such startups a few years ago, but then couldn’t attract sufficient user demand.
Asians are supposedly obsessed with taking photos of themselves and posting them online. Molome wanted to be the app that makes photos funnier by adding all sorts of stickers and text to the original image. Its founders joined the JFDI accelerator in 2014 and at that time claimed to have 40,000 daily active users, uploading over 15,000 photos per day.
But all that wasn’t enough to compete with the major photo-sharing rivals Instagram and Snapchat. In mid-November, the founders decided to pull the plug. A goodbye message on their site reads:
It’s with sadness to let you know that Molo decided to hibernate in the jungle starting from this winter. Photo sharing platform is not cheap, and without funding we could not continue our journey.
In Vietnam, the death of Beyeu, an ecommerce site for baby products, caused pessimism. The company was backed by Project Lana, a major Vietnamese internet company that operates an online community for women. It could have been the tough competitive landscape or lack of ecommerce experience on the part of the creators, that led to Beyeu’s closure.
Whatever the reason, it must have been bitter for Beyeu’s team. It reportedly left the following doomsday note on its site after the shutdown:
Ecommerce requires lots of money. Many companies will decide to stop burning. Good luck to the rest who are still trying.
That note, however, is now gone. The landing page is entirely blank.
This post 20 failed startups in Asia in 2015 and lessons learned appeared first on Tech in Asia.
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