India startups are trying to create their position in this growing economy. Most of the stakeholders of the startup community in the country is busy celebrating funding success and growth with even no profits. There are many investors who has seen portfolio startup fail but the confidence and hope for disruption keep them going for newer startups as well as those who have managed to survive the Valley of Death.
It is a fact that million dollar fundings and years of strategic planning have also not able to save several startups from dying a premature death. Dearth of funding was a reason cited in 2016 for the closure of startups, in 2017 it was lack of market demand, in 2018 it was lack of originality and failure to raise follow-on funding and in 2019, it is a combined reason.
Listing below are few Indian startups that have failed to cross troubled waters in 2019.
Wooplr, a platform provider which helps social sellers to open their online store, add products from the Wooplr catalogue and start selling in less than a minute through social media platforms, had shut down its operations in April 2019 because of failed merger. From investors like Helion Ventures, Sistema Asia Fund, Deep Kalra etc., the company raised a fund of $16 Mn.
As of October 2018, the company had over 1 lakh products from over 300 brands and was reporting a staggering growth rate of 20% M-o-M.
Buttercups is one of the early players in online lingerie industry in the country. It faced competition from players like Zivame, Clovia, PrettySecrets etc. From around July 2019, the company’s website was shut down and in September, the founder Arpita Ganesh took it to LinkedIn to announce that she is closing the Bengaluru-based online lingerie startup.
Buttercups has raised $1 Mn from investors such as Anand Chandrasekaran, Rajan Anandan, Kanwaljit Singh, Manoj Varghese, Angie Mahtaney and others. But in FY 2019, it reported a loss net loss of Rs 1.94 Cr, and at the time, its current liabilities exceeded its total assets by INR 28.4 Lakh. The auditors had noted that this indicated a “material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern.”
The founder later claimed that the brand will be relaunched soon in a new avatar. But the year is ending and the update is that Buttercups’ products are now available on Amazon.
It was a surprise for customers of Doodhwala that in October 2019 they got messages about being redirected to FreshToHome Daily. The company’s website showed that its existing customers can transfer their active subscriptions and wallet balance to the FTHDaily app.
In a report by Inc42 it is said that Doodhwala employees as well as vendors had claimed that Doodhwala founders are “absconding” and even filed FIR to get back unpaid dues. There had been speculation that FTHDaily has acquired Doodhwala, but its founders reiterated a number of times to its employees that there was no such deal and if they had money, they would pay back dues. Still the police are investigating the case and the employees and vendors still have unpaid dues.
Koinex, a Mumbai based multi-cryptocurrency exchange and trading platform has shut down its shop in 2019. Based on a peer-to-peer exchange model, the platform was into real-time trading of multiple cryptocurrencies like Bitcoin, Ethereum, Ripple, Bitcoin Cash and Litecoin. In just four months of its operations, Koinex recorded $265 Mn in trading volume and 40,000 new users in 24 hours, was at the pinnacle in December 2018. It had claimed over 100K users at its peak. But due to regulatory hurdles the company could not stand around anymore.
In similar lines, Cryptokart announced a closure in July 2019.
The company’s cofounder Gaurang Poddar said in a LinkedIn post, “While its difficult, given the hard work we’ve put in, it’s been a great experience and I’m glad to have gotten to work with such a talented and passionate team, and proud of the platform we’ve built.”
Another crypto exchange company Coinome, backed by Billdesk, ceased its operations which was effective from May 15. The company had reportedly informed its customers saying, “India is currently going through uncertainty on crypto guidelines and regulations. The government of India has not yet taken a decision on the regulatory framework for crypto exchanges or wallets. Further, the supreme court is yet to act upon the public interest litigation (PIL) on (the) regulation of crypto assets.”
The first blow for crypto startups in India came in April 2018 when the Reserve Bank of India issued a circular instructing all regulated financial services entities to exit relationships with companies and individuals dealing in virtual currencies and block all such crypto-related transactions. The RBI circular has been challenged in the Supreme Court of India, but not much has changed. India’s inter-ministerial committee recently recommended a blanket ban on cryptocurrency trading. The government had been working on draft of the Banning of Cryptocurrency and Regulation of Official Digital Currency 2019.
The task management startup, RUSSSH has shut down its operations in June 2019. The company was facing issues in managing capital against competitors and offering a similar discounts. Before the closure, the company completed 5Lakh tasks and also had more than 50K clients.
company shuts down because it did not get the right team on board. It also failed to raise funds which kept it limited to Mumbai.
The medical device startup, Doctalk has shut down its operations in the beginning of this year. This happened after cofounder and CEO Akshat Goenka resigned from his role last year in November. The reason behind the shut down is due to the failure in the company’s attempt to pivot. The reports claimed that the “planned transition into the electronic medical record solution (EMR) business from the existing business model didn’t yield the acceleration that it needed.” Hence, the company had to shut down its healthtech business.
Bangalore based coliving startup founders Nikunj Bhatija, Jatin Mitruka and Aakash Verma are on a run along with tenants’ money (nearly INR 20 Cr) thereby affecting a large number of tenants residing in more than 100 of its leased properties across Bengaluru.
Inc42’s interactions with the Homigo employees revealed that the founders have also allegedly swindled money from its employees. In April 2019, Homigo’s fraud cases, registered at various police stations across Bengaluru including Mico Layout and BTM Layout police stations, were transferred to the CCB Bengaluru at Commissioner of Police T Suneel’s order.
However, in July 2019, CCB was asked to drop the Homigo case and there has been no update on the case yet.
Tinmen has shut down its operations in December 2019. It took to its official website to inform its customers about the development. The reason behind its closure is it was unsuccessful to raise the capital for its survival.
Loanmeet
The fintech startup, Loanmeet has shut down its operations in May 2019. It failed to raise capital as its investors were reportedly wary of the overcrowded market is the reason attributed for its closure.
Zopnow was one of the early players in grocery business but has now shut down its shop. After a pivot from inventory model to marketplace in 2014, the company fulfilled grocery needs in 10 cities including Bengaluru, Delhi (NCR), Mumbai among others.
However, in 2019, the company started scaling down its operations and fully shut shop in March 2019. The company reportedly sold out its assets (software, proprietary tools etc.) to More Stores, which was acquired by Samara and Amazon in September 2018.
It was unable to raise more capital and hence shut down its shop.
Further, Gurugram-headquartered Soonicorn UrbanClap has narrowed down its operations to only two categories, beauty and home this year. The company planned to shut down its other non-core businesses, including wedding services and photography. UrbanClap cofounder Abhiraj Bhal reportedly said that the company is going to manage and monitor the quality of the service closely on its platform.
Experiments, pivots and eventually shut down, has been a norm in the Indian startup ecosystem which fuels innovation. As investors continue to support new ideas and entrepreneurs continue to innovate and disrupt, shutdowns also continue to be a part and parcel of the Indian startup ecosystem.
(This article is part of Inc42’s special year-end series and VARINDIA is re-publishing it by making some slight changes in its content)
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