10 Well funded startups which shut down in 2016
While 2015 saw launch of three to four startups a day, the second quarter of 2016 witnessed a lot of layoffs and shutdowns. Lack of funds, plummeting sales and rising competition were the major reasons for the shutdowns. 2016 was deadly mainly for food startups such as TinyOwl, Dazo, ZuperMeal and lot more. Companies such as Flipkart, Paytm, Pepperfry posted huge losses in FY16, indicating a mad rush among online majors to achieve volume-based growth.
The demonetisation drive by Modi government in the second half of 2016 has also took a toll and the startup graveyard is also expected to see some new graves during first half of 2017.
Here are top 10 startup shutdowns which made news during the year:
The Astro funded ecommerce startup AskMeBazaar laid off about 4,000 employees in the biggest startup shutdowns of the year. The company probably took the decision due to severe cash crunch and its management claimed that the investors had failed to provide adequate funding and the case was dragged to courts. A variety of reasons, from weak technology to aggressive acquisitions, are said to be responsible for the online retailer’s failure.
Founded: 2010 by VSS Mani
Funding: Till d ate Astro Holdings has invested $119 Mn (INR 800 Cr).
Shut Down: August 2016
Food-ordering firm TinyOwl shut down its operations in May in all 11 cities where it was operational, except Mumbai. The move was, however, said to be temporary as the company wanted to re-brand itself and return with a better product. The company had fired almost 600 employees in a six month period. Started by a bunch of IIT-Bombay graduates in their twenties, the company aggregated restaurants on its platform and took online deliveries from customers. Over and on top, it offered huge cash discounts which exacerbated its burn rate. The company shutdown and few of the top managers joined hyperlocal logistics player Runnr.
Funding: USD 27.7 million
Founded : 2014
Founder: Harshvardhan Mandad
Shutdown : May 2016
An online marketplace to connect chefs and consumers, BiteClub had a daily changing menu that customers could order from via mobile or the web app. The food was prepared by a curated community of home chefs, amateur chefs, and professional chefs. Within eight months of raising an undisclosed amount in pre-Series A funding from GrowX Venture management, the startup founders decided to halt the operations.
Founded In: 2014
Founders: Prateek Agarwal, Aushim Krishan, Siddharth Sharma
Funding: $500K from investors like growX ventures, others
Shut down: May 2016
E-grocer PepperTap closed down its business operations in April, 2016. They started rolling back from various cities across India from 2015 due to non-acceptance of the concept in the market. Lack of demand and poor unit economics forced PepperTap to back out from the business. Also the move to shut down its operations came due to pressure from rivals including Grofers and Bigbasket, which raised substantial funding.
Funding: USD 51.2 million
Founder: Navneet Singh and Milind Sharma
Key investors: Snapdeal, SAIF Partners, Sequoia Capital, InnoVen Capital and others.
Shutdown: April 2016
The micro-blogging website, Frankly.Me was one of the kind of social networking platform which was based on video-audio communication. Frankly.me laid down the 40% of its employees in 2015. Currently, the company has shutdown all its operations and the reason is still unknown to everyone. Despite the fact that it has been a well funded company, it failed to capture the market attention and closed down all operations in February 2016.
Funding: USD 600K
Founder :Nikunj Jain
Founded: April 2014
Key investors: Matrix Partners India, Wisecalvin, RB Investments
Shutdown: February 2016
Home food delivery startup, ZuperMeal provided home-cooked meals. Just after raising its Seed round of funding, the startup closed down its operations.The startup’s app shows error while downloading, and its website is also not working. Though the founder did not clear the reasons for shut down, Balasubramanian has reportedly joined logistics startup LogiNext as a VP.
Founded: October 2015
Founder: Pallavi Saxena, Balasubramanian Anantha Narayanan, and Prabhakar Banerjee.
Funding: $2 Mn Seed funding raised led by celebrity chef Sanjeev Kapoor, Ravi Saxena, and two unnamed foreign investors.
Shutdown: May 2016
Bangalore-based Fashionara, which was launched by former Reliance Trends CEO Arun Sirdeshmukh and former Times Internet Chief Technology Officer Darpan Munjal in 2012 closed its business in May 2016. The startup did not clarify the reason for shutting down its operations. However its rumored that the startup could not sustain discounted competition from its fashion ecommerce rivals Jabong, Amazon and Myntra.
Funding: USD 8 million
Key investors: Helion Venture Partners, Lightspeed China Partners
Founder: Arun Sirdeshmukh and Darpan Munjal
Shutdown : May 2016
Started in 2013, Bangalore-based meal service provider delivered tiffins based on defined calorie count requirement. In the first year of operations, it served more than one lakh meals. It clocked a revenue of close to Rs 3 crore in 2014. It raised seed funding from a large Indian family office and angel funding from cricketer Robin Uthappa. However the problems in food tech model and reduced funding for the sector made the startup shut down.
Funding: USD 1 million
Key investors: Robin Uthappa and others
Founded : 2013
Founder : Das and Fernando
Shutdown: March 2016
Backed by world’s largest startup incubator 500Startups, Mumbai based Tushky was an online marketplace for discovering and connecting travelers with tour operators for leisure activities. The startup has quietly stopped operations after it failed to scale up and raise further funding. One of its co-founder joined OYO Rooms after the shutdown. The company was valued at US$1 million at its last round.
Funding: USD 263,000
Key investors: 500Startups, Vijay Shekhar Sharma, Dinesh Chandra Agarwal, Anupam Mittal, Naveen Tiwari, etc.
10. Purple Squirrel
Startup was shut down soon it received Rs 12 crore investment from Matrix but had to achieve a target of Rs 30 crore by 2015-16. Prior to this, it had raised an undisclosed amount of funding from Mumbai-based venture capital investor India Quotient.
Founded: September 2013
Founders: Aditya Gandhi and Sahiba Dhandhania.
Key investors: Matrix Partners India, India Quotient
Shutdown: May 2016