2016 was a tough year for startups in India. Competition got a lot harder with multinational giants opening their deep, distortionary pockets and funding declined by almost 30% across the board. Even bellwethers like Flipkart and Ola saw their valuations repeatedly slashed. However, while the big boys have somehow managed to keep the ship afloat for another year, hundreds of others have simply fallen by the wayside.
Here’s a quick look at some of the companies that will soon be figuring in MBA case studies on how not to do things.
India’s third largest grocery delivery service, PepperTap, shut down this year. The company branded it a ‘pivoting exercise’, claiming they would shift focus to backend logistics, but the writing on the wall was clear. The 17-month old startup, which had raised over $50 million in venture capital funding, was haemorrhaging money through a combination of unsustainable discounts, rapid expansion and weak technology. Its demise is a clear sign that unseating India’s mom and pop retail network is a herculean task.
Originally launched as a classifieds portal, AskMe stuck its fingers in as many pots as it could find – groceries, furniture and digital payments among them – before its investors got tired and chopped the limb off entirely. After raising a total of nearly $120 million in funding, the company left a trail of unpaid vendors and employees in its wake. The diagnosis of its ailments was familiar: unplanned expansion, a tendency to lurch from one business to another and the complete absence of a roadmap to profitability.
In yet another case of a shiny tech-enabled startup getting schooled by the informal sector, laundry services company Doormint closed down this year, unable to improve upon the services that have been offered by the neighbourhood dhobi for centuries. The company was part of the first batch of Google’s Launchpad startup accelerator and raised close to $4 million and a lot of expectations, but in the end, flattered to deceive.
It was easy to see the end coming for food delivery startup TinyOwl when employees at its Pune office who had just been laid off took the co-founder Gaurav Chaudhary hostage over the payment of outstanding salary dues back in November 2015. Throughout its brief existence, the company had used its near $24 million endowment of venture capital funds to subsidise the eating habits of its customers. Like many of its competitors, it found that discounts depleted cash reserves and without the discounts, orders plummeted.
The dating service Cogxio began as a college project that went viral. Originally built as a website for IITians looking for a date, the service was an instant hit. However, it took roughly five years for that website to evolve into a full-service dating app for the general public. By then, Tinder had arrived in India, not to mention the mushrooming of a number of homegrown companies like Woo, Wee and TrulyMadly. Deprived of the deep pockets of its VC-funded competitors, the bootstrapped startup simply could not stay alive long enough to make a mark.