A pessimistic funding environment, senseless expansion, tough competition and massive customer acquisition costs are cited to be reasons for the collapse
2016 could easily be termed as the year of shut-downs and distress when it comes to startups in India. While 2015 was a grant year with a number of startups raising jaw-dropping amounts of investments from VCs and strategic investors, 2016 got off to a weak start with a many companies shutting down, and still continues the tough run. Almost 20 startups have closed their shutters as of June.
Startups started sending distress signals from the end of 2015 itself. Many leading startups, mostly foodtech such as foodpanda, Zomato and TinyOwl, bit the bullet and axed a massive number of jobs, while many others disappeared into oblivion.
Many reasons are being cited for the collapse of these startups: impending economic slow-down, pessimistic funding environment, senseless expansion, investor pressure to scale fast, mindless hiring and massive customer acquisition cost.
Here, we list 10 high-profile startups in India that completely vanished from the market in 2016:
This hyperlocal delivery startup could be the highlight of 2016. Founded by Navneet Singh and Milind Sharma just two years ago, the startup raised its first major investment in April 2015 — a US$10 million from SAIF Partners and Sequoia Capital. Then in September, it got a whopping US$36 million in Series B led by e-commerce giant Snapdeal. This was followed by a US$4 million debt funding from InnoVen Capital. On the way, it became the third most-heavily funded grocery delivery company after biggies BigBasket and Grofers.
Also Read: This one-and-half-year-old startup scaled fast, got US$50M from large VCs, acquired a rival, and now shut down
The huge funding helped PepperTap scale fast — from just one city in 2014, the company grew to almost 17 in October 2015, covering all the major cities in India. In December, it acquired Bangalore-based grocery delivery startup Jiffstore for an undisclosed sum, and was in talks to raise another US$11 million.
PepperTap averaged 20,000 orders delivered daily. It was improving sales by an average of 30-40 per cent and with its mobile-first approach, geographic expansion was fairly easy for the startup.
All of the sudden, the company crashed. Founder cited the huge pessimistic funding environment globally and huge customer acquisition cost for its failure.
Intelligent Interfaces was started by Rahul Yadav, Co-founder and former CEO of leading realty portal Housing. The company, founded immediately after his unceremonious exit from Housing, started with an aim to provide intelligent data aggregation and visualisation solutions to the Government of India, to make governance efficient.
Barely weeks after the company’s launch, it raised around US$500,000 in funding from YouWeCan Ventures and Flipkart Co-founders Sachin and Binny Bansal.
Also Read: Deal with it, Rahul. Quitting isn’t an option. Emulate Steve Jobs and also learn media relations
However, the curtain was pulled on the business as Intelligent Interfaces for Government was not working out.
Bangalore-based Fashionara was an online fashion and lifestyle store. Started in 2012, the company listed products from popular brands such as Adidas, Reebok, Benetton, Sisley, Nautica, Guess, Lee, Wrangler and Vans. In May last year, it also forayed into home-furnishing.
In the fashion segment, it competed with Myntra (acquired by Flipkart) and Rocket Internet-backed Jabong.
The company had secured over US$7 million from the likes of Helion Venture Partners and Lightspeed Venture Partners.
It appears that the pessimistic funding environment hit Fashionara as well. The co-founder have joined other companies since its shut-down.
Founded in September 2013, Purple Squirrel Eduventures (PSQ) was an online marketplace for supplementary education in India. The startup aimed to make practical- and industry- driven education accessible to all. The startup facilitated industry visits, workshops and hands-on training for students in engineering, arts, science and commerce.
In April last year, PSQ had secured an undisclosed amount of funding led by Matrix Partners, with participation from existing investor India Quotient.
The company shut down operations due to continuous dip in sales and huge cash burn.
Founded in 2014, Frankly.me was a mobile app that facilitated conversation between the masses, public figures and celebrities through questions and video selfies. The platform stood for frank conversations with public figures such as politicians, authors, singers, directors, social activists, actors, sportsmen, officers or even entrepreneurs.
The basic idea behind the app was to expand the horizon of conversations and spark a two-way dialogue as opposed to a one-way broadcast through videos.
Also Read: Ask celebs anything and they’ll answer via video selfies: Frankly.me
Last year, the app secured an investment worth US$600,000 from Matrix Partners.
The startup wound up its services due to lack of funds and tough competition.
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