Before I get down to fulfilling my obligation of updating the list of famous failed businesses and startups in India for 2021, here is what you must know – 2020 has been a year of disaster for small businesses and startups.
2020 will go down in history as the year when COVID-19 wreaked havoc in the life of entrepreneurs and small business owners.
The travel, tourism & hospitality industry were the worst hit, with companies like MakeMyTrip and some significant airlines forced to lay off employees because of little or no demand in their market segment.
The next to feel the brunt of this pandemic was the cinema and shared mobility space, including ola, uber, and other cab-hailing services. (source: economic times)
However, all was not dark and gloomy.
Startups and businesses in I.T. space, video conferencing, online teaching, and ecommerce grew exponentially during the pandemic.
Their growth is one reason that when I got down to publish our updated list of India’s successful young entrepreneurs in 2021, most founders were from the online space.
I can write a full blog on the ups and downs of the year 2020.
But for the sake of not wandering off the topic, let me quickly get down to following a ritual that I have religiously followed for the last four years.
List of Failed Startups and Business-2020
SMAAASH, launched in 2012, was one of India’s acclaimed gaming and entertainment centers with a perfect combination of sports, virtual reality, music, and dining into an advanced, collaborative and revolutionary social experience for ranges of user categories.
Led by the creative founder Shripal Morakhia, SMAAASH established itself in sports simulation technology and proprietary gamification technologies with enlisted unique twilight bowling zone, motor racing and bike racing simulators, and the go-karting tracks.
In-house research and production capabilities were the main contributors to the succession of this virtual reality led entertainment gaming center, with games such as Walk the Plank, Finger Coaster, and Cockpit 360 gaining cult followership because of Head-mounted displays.
SMAAASH at the time of closure was spread at 32 centers across 16 cities across India.
Recently, SMAAASH forayed into the USA market with its Mall of America launch. (Source: SMAAASH)
Reason for failure
The continued lockdown due to the non-improving Covid-19 spread was the prominent reason for the closure of SMAASH. ( Source: Mumbai Mirror)
As per the email sent to all employees dated 15 September 2020 by the founder Shripal Morakhia, “I am sorry that despite my best efforts, I have failed in my efforts to save the company from its premature death.”
“But it just did not materialize when it came to real funding; I am saddened that a dream called Smaaash would have ended in this way.” (Source: Live Mint)
He further added that though the investors had given the company their “word” to “fund” the company, ultimately, it did not result in the capital infusion, which led to the company collapsing.
As I mentioned at the start of the blog, COVID has led to the collapse of the retail, hospitality, and hotel industry.
However, the loss of a brick and motor store running on-premise games has been a boon for online games provider.
While businesses like SMAASH shut shops, online sports channels such as Dream 11 and rival Mobile Premier League took the opportunities to invest as advertisers and sponsors during the Indian Premier League’s latest edition.
Dream11, the championship sponsor of the profitable IPL tournament, disclosed that it was able to secure US$225 million in its recent funding round.
(Source: Next Big Brand)
Reid & Taylor
Reid & Taylor, known for custom-made compelling first-class suits of top-quality exclusive materials, was a Scottish company that had set shop in India and had established a name for itself across the country in the last few years.
In 1998, S. Kumars obtained ownership of India’s brand to manufacture and market for Reid & Taylor. The deal led to a start of a luxury suiting plant at Mysore in 1998. The brand has been endorsed by India’s notable film actor, Amitabh Bachchan.
In 2008, 24.5% stake of Reid & Taylor with a valuation of US$121 million was acquired by an affiliate of GIC Special Investments.
Reason for failure
Reid & Taylor (TIL) recently closed its factory near Mysore, causing their clients to stop sending sales orders, leaving hundreds of employees jobless. As per reports, The company is liquidated under the National Company Law Tribunal (NCLT) for bearing high non-payment loans.
As per online news, the company did not have any working capital to keep the operations going, resulting in the factory’s closure and relieved all its employees from services. (Source: Fashion Network)
Ravi Sankar Devarakonda, the liquidator for RTIL, mentioned in a notice of discharge to the employees that the meeting held on 5 May discussed the stakeholders’ challenges.
Discussion led to the conclusion that no option but to permanently close down the plant’s operations and dismiss all production employees is the only viable option for the Organisation.
He later added the company currently had no sale orders to execute, which led to continuous losses. The losses led to a lack of working capital to keep the operations active.
Though the company had survived for 14 months since the commencement of the liquidation, a lack of progress in business terms during that period led to further losses and, finally, the closure of the famous brand name in India.
(Source: Business Line)
Now before I write about H-D’s departure from India, here is a question from our outgoing USA president ‘WTF! Was all that noise about H-D being mistreated in India with all the taxes and all the B.S?’ – Sir India is not a market for carts that are expensive than bikes.
We love our vehicle’s fuel efficiency and the amount of fuel H-D consumes in an hour. I can very well fund the fuel of my bike for a year with that money.
Over to Harley Davidson. For short, Harley-Davidson, or H-D, is an American motorcycle manufacturer that began making motorcycles in Milwaukee in 1903. The company manufactures heavyweight motorcycles that are designed for cruising on the highway Harleys.
Harley-Davidson is one of two established motorcycle manufacturing U.S. companies that survived the Great Depression in 1953.
Harleys have their own unique distinguish look and sound. Even the latest Harleys, except the V-Rods, are made to look like original Harleys.
Harley-Davidson also charges fees for companies that request to put Harley-Davidson’s logos on the things they make, contributing substantially to their profit apart from selling motorcycles.
Harley-Davidson manufacturing plants are located in York, Pennsylvania; Milwaukee, Wisconsin; Kansas City, Missouri (closed May 2019); Manaus, Brazil; and Bawal, India.
The company established a subsidiary, namely Harley-Davidson India, located in Gurgaon, Delhi, in 2011.
In 2009, Harley-Davidson announced their strategies to establish a subsidiary planned to be located in Gurgaon, near Delhi. However, their plans to enter the Indian market faced several years due to high tariffs and emissions regulations.
The pollution regulations were changed recently, but the tariff issue yet does not find any solution.
The Indian subsidiary of H-D had 11 models during their early years sold across 29 dealership facilities across India.
In 2011, The company established an assembly unit at Bawal, its only manufacturing facility outside of the U.S.
The company also organized an annual tour across the country in collaboration with India H.O.G. Rally taken Goa as the event host. Harley Rock Riders, a yearly music tour started in 2009, was also organized by Harley-Davidson India.
Timothy J. Roemer, appointed as The United States ambassador to India, made his appearance during the opening ceremonies for H-D India’s Gurgaon headquarters on 6 May 2010.
(Source: Simple Wikipedia)
Reason for failure
Harley-Davidson has put an end to operations in India as part of the ‘Rewire’ strategy that follows a new strategic plan called The Hardwire for 2021-2025.
The company reported its first quarterly loss to happen between April to June 2020 by the value of US$96 million.
Although the brand itself becoming a local trend, the company faced financial constraints for a certain period.
Thus, the motorcycle manufacturer implemented the ‘Rewire’ strategy to focus on profitable markets across North America, Europe, and selected parts of Asia, which meant winding up operations from low profitability markets, including India.
Harley-Davidson managed to sell off 103 units of motorcycles in India in July 2020 and 176 companies in the later month based on SIAM figures (Society of Indian Automobile Manufacturers).
On 24 September 2020, Harley Davidson announced that it would cease its sales and manufacturing operations in India due to lack of demand and sales. The move involves US$75 million in restructuring costs, 70 layoffs, and the closure of its Bawal manufacturing plant.
There were few predictions on Harley-Davidson’s next moves.
After Triumph and KTM’s tie-up with Bajaj Auto, rumours suggested that Harley-Davidson was considering collaborating with an Indian company to share the country’s financial liability and localize production.
The company has shut down shutters in India, but you never know when they would be back.
Also, Harley-Davidson announced to shut down the manufacturing facility in Bawal and drastically reduce its sales office capacity in Gurgaon.
Harley’s owner starts to wonder what the after-sales service would be.
The company’s dealer network will maintain to serve customers under contract term and remain functional until further announcement. Few internet sources also predicted collaboration with major local two-wheeler distributors to support India’s motorcycle market segment.
ATLAS CYCLES (HARYANA) LIMITED
About Atlas Cycles
Started by Janki Das Kapoor, Atlas Cycles (Haryana) Ltd., previously known as Atlas Cycle Industries (ACIL), begin its operation with bicycle saddles in 1951 and later produced its first bicycle in 1952.
The brand is named after the Greek Titan Atlas, mythically known for being condemned to hold up the sky for eternity.
From a humble beginning of 120 cycles per day, the company had come a long way to progress as India’s second-largest cycle manufacturer.
At the time of Atlas’s business peak, Its combined manufacturing capacity stood at a substantial 3.1 million cycles per annum. Atlas was also the largest exporter of bicycles from India, where the majority of its export was to Myanmar and South Africa.
In addition to bicycles, the company exported components, bicycles, and mopeds. It also ventured into the fitness equipment market overseas.
At the peak of its success, Atlas awarded its shareholders six bonus issues between 1966 and 1994.
(Source: Business Standard)
Reason for failure
While the rest of the world celebrated Bicycle Day on 3 June, Atlas Cycle (Haryana) Limited put its employees into temporary dismissals by merely pasting a notice outside its production plant in Sahibabad, Haryana.
Over 700 employees suddenly went home without jobs on Wednesday.
Atlas Cycles – a name that became a synonym for bicycles in India – has shut its last manufacturing unit in Sahibabad, just outside the national capital, citing a lack of funds to run the factory.
Earlier, the company planned to sell their portion of land to get the business going.
However, the company’s spokesperson confirmed that they have been surviving unstable financial states since 2014 to the extent they were out of the capital to purchase raw material.
The Sahibabad plant, capable of manufacturing four million bicycles a year, was working at less than 50 percent of its capacity.
The closure notice was declared so suddenly and secretively, caught everyone by surprise that the workers’ union had little time to react.
However, the decline was not sudden. Between, 2014 and 2018, the company shut down two of its manufacturing plants. First – the Malanpur unit in Madhya Pradesh announced its closure and then, later, the Sonipat unit in 2018.
One of the critical reasons for Atlas’s failure was the availability of new cheaper parts exporters from Bangladesh and Sri Lanka.
These affordable parts ate in the Atlas’s share in their biggest market – India as it allowed smaller players to manufacture cost-effective bicycles.
The coffin’s final nail was the duty-free import from Bangladesh and Srilanka under the Agreement on South Asia Free Trade Area (SAFTA).
The move led to an influx of cheaper bicycles into the Indian market from the two countries.
But the game was never fair for Atlas as Bangladesh and Srilanka have protectionist policies that levied heavy import duty on products coming from India.
So, while the Indian market was flooded with export from the two countries, prominent Indian players like Atlas could not export to the two countries. It thereby led to substantial losses.
The company blamed the government for being neglected by the lopsided policies.
About HuffPost, India
Started as Huffington Post in 2005, the website found its niche during the George W Bush administration’s ending period in the United States.
HuffPost started in India its 13th international edition in late 2014, under Times Group’s management, which owns India’s Times.
In 2014, Huffington Post media group and the Times of India group launched HuffPost India. Three years later, in 2017, HuffPost India separated from the times group and relaunched its operation as a separate entity.
The India team of HuffPost India constituted of 12 team member.
(Source: Best Media Info)
Reason for failure
This was the last goodbye tweet from HuffPost India:
“Today’s last day. Pound for pound, story for story, reporter for reporter, this is the greatest newsroom I have worked for; (and I still can’t quite believe I had the privilege to lead). Thank you, everyone, for reading our stories and supporting our journalism.”
The website had the following message for the visitors:
“As of 24 November, HuffPost India will no longer be publishing content. For more great global content, please visit HuffPost.com. We thank you for your support and readership.”
HuffPost India’s news has been closed “with immediate effect,” confirmed by a spokesperson at Verizon Media, which owns the website.
“We would like to thank the HuffPost India team for their hard work and contribution to the organisation,”
Avid followers of HuffPost India were utterly surprised with the India version of HuffPost, a digital news and lifestyle website closed down.
It was believed another success when Buzzfeed acquired HuffPost, which witnessed the merger of the two most high-profile digital media companies. Upon visiting the website, it merely displayed a text: ‘As of 24 November, HuffPost India will no longer be publishing content’.
(Source: National Herald)
The decision to end the website’s operation was influenced by the new FDI policy that limited the foreign investment in news and media websites. HuffPost India was the first affected news website because of the further ‘restriction.’ Its shutdown was a strategic decision taken upon the BuzzFeed-HuffPost merger.
Vigo Video (Formerly Hypstar) was a social network application using which you could create short videos.
The app inspired its users to capture their best moments daily, share and discover more people with the same interests.
Owned by ByteDance, the video app was launched as Huoshan in China in mid-2017 and later on in the international market. The app expanded to the rest of Asia and then to the United States of America and Brazil.
Vigo Video users had actively posted around 80 million posts in the app, channeling to more than 200,000 posts per day during its first year in India.
Few months after the app made itself available to download, Vigo Video topped the free app chart on Google Play India.
Reasons for failure
In June 2020, the Government of India suspended Vigo Video’s operation alongside 58 other Chinese-based apps due to data and privacy issues. The border conflicts in 2020 between India and China may also influence the factor of the suspension. (Source: APKPure)
Bytedance, the TikTok parent company is directing millions of users in the country for both Vigo Video and Vigo Lite app to download TikTok instead. Vigo was set to shutdown service this year in October.
The message shown to users notes,
“By 31 October 2020, Vigo Video will shut down in India while has already shut operations in Brazil and the Middle East. Until then, users and creators are being given time to manage the transition. Users can export their content on to TikTok and continue with their creativity with a seamless experience on India’s leading short video sharing platform, giving them vast exposure and interactivity with a larger user base.”
As the name suggests, the Vigo Lite is a simplified version of the Vigo app suitable for devices with low operating capacity and storage. Brazil and the Middle East followed India and banned Vigo Video and Vigo Lite.
However, the app is shutting down reportedly due to incapability on the expectations that were set by TikTok, a famous social media platform owned by ByteDance.
Unfortunately, lesser user base when compared to TikTok, Vigo has around 4 million monthly active users, and Vigo Lite has 1.5 million monthly active users. (Source: Indian Express)
Thomas Cook (India) Ltd
About Thomas Cook
Thomas Cook (India) Ltd. (TCIL) was the leading integrated travel services company.
Thomas cook offered an extensive spectrum of services comprising Foreign Exchange, Corporate Travel, MICE, Leisure Travel, Value Added Services, Visa & Passport services, and E-Business.
The company’s first branch in India was opened in 1881 by founder Thomas Cook, the defunct British brand Thomas Cook & Son.
The Thomas Cook India Group spanning 25 countries across five continents, a team of over eight thousand employees, and Rs’ combined revenue. 6948.3 Cr. (over US$ 0.93 billion) for the financial year ending 31 March 2020, operated leading B2C and B2B brands. In India, the company eventually expanded to over 233 locations in 94 cities across India, Sri Lanka, and Mauritius.
The Group once become the largest travel service provider network headquartered in the Asia-Pacific region. The company received multiple prestigious awards in its category.
Through its wholly-owned subsidiary, Thomas Cook (India) Limited is endorsed by Fairfax Financial Holdings Limited, Fairbridge Capital (Mauritius) Limited, holding 65.60%.
Reasons for failure
When London-based Thomas Cook Group PLC collapsed under a pile of debt, investors went bearish on the shares of an unrelated company thousands of miles away in India, ignoring multiple clarifications that it isn’t in any way related to the U.K. firm.
This confusion played a vital role in the company shutting down the business. ( Source: Economic Times)
While Thomas Cook India pays an annual license fee of Rs 2 crore process of brand transition shall be initiated next year.
The London based principle confirmed that the Thomas Cook brand acquired by Fosun Tourism of China excludes India, Mauritius, and Sri Lanka, meaning the Indian entity retains the right to use the brand name till 2024. Thomas Cook India was carved out separately at the time of sale to Fairfax in 2012.
“With regards to recent media reports pertaining to the sale of the Thomas Cook global brand to Fosun of China, it is imperative to clarify that the reported sale of the global Thomas Cook brand to Fosun of China does not include the regions of India, Sri Lanka, and Mauritius,” said Thomas Cook India chairman Madhavan Menon.
The Chinese Group acquired Thomas Cook and its related brands for US$14.25 million, inclusive trademarks, domain names, software, and licenses of the British travel firm. The U.K. tour operator decided to shut down its operation in September after securing emergency funds.
Source: Business Standard
Net4 Network Services Limited is considered one of India’s leading Web Services and Network Services Provider, prioritized providing services to various scale of businesses and its offerings, including Enterprise Messaging & Hosting Solutions and Domain name registration.
At its peak, the company had 1000 SME customers for a wide range of Web Services, over 2000 Medium to Large businesses for Enterprise Services.
Net4 services were once considered the largest provider in the Asia Pacific region, offering mainly digital addresses such as hosted email, web hosting, and domain name registration.
The company’s renowned client base includes Airtel, CNBC TV18, Essar, Godrej, Hutch, ITC, L&T, NIIT, ONGC, Proctor & Gamble, Sahara, SBI, Siemens, and TCS. (Source: Money Control)
Net 4 India Ltd was incorporated on 29 November 1985 under the provisions of Companies ACT 1956. Mangla Chemicals Ltd registered as an internet service provider, which later changed to Trident Developers Ltd in 1994 and Amulet Developers Ltd in 1998.
The company received an investment of US$9 million in 2000, out of which US$2 million was spent to acquire firms with related business opportunities.
Finally, the company shifted its name as the current Net 4 India Ltd through a fresh certificate of incorporation dated February 2001.
Supported by 7 Internet Data Centres (IDCs) and 15 Network Points of Presence across India, Net4 is an ICANN.IN accredited Domain name registrar. Net4 manages a VoIP/ SIP infrastructure in India, the U.S., and Singapore.
Reasons for failure
The downfall of Net4India started a few years back when the company failed to repay loans and the government’s service tax. In 2013, the government arrested Net4Inda’s promoter for not depositing service tax collected from their clients.
Many customers have filed their dispute to ICANN, Indian Corporation for Assigned Names and Numbers, the body responsible for I.P. and TLD, and top-level domain management. ICANN has said that it is currently in discussion with the government regarding transferring the responsibility of domain and email registered on Net4India to any other potential company.
Source: Video Tape News
Jabong.com was an Indian fashion and lifestyle e-commerce portal founded by Praveen Sinha, Lakshmi Potluri, Arun Chandra Mohan, and Manu Kumar Jain. Rocket Ventures, Germany, founded the company.
Instead of keeping the inventory sold by enlisted vendors, Jabong.com acts as an online mall where the customer can access products sold by all the partners.
ComScore reported Jabong.com had the second-highest traffic on its website within a few months of its launch. In March 2013, Jabong.com ranked 44th in India by Alexa Traffic and 10th Google Zeitgeist India in 2012.
Jabong.com was glorified as the third-most visited digital shopping portal right after its rival-later-acquirer Myntra.com and Flipkart.com in India in less than 20 months.
In July 2016, Flipkart acquired Jabong through its unit Myntra for about US$70 million. In February 2020, Flipkart formally shut down Jabong to entirely focus on its premium clothing platform Myntra. The portal sold apparel, footwear, fashion accessories, beauty products, fragrances, home accessories, and other fashion and lifestyle products. The company headquarter was in Gurugram, NCR, India.
Reasons for failure
The decision from Walmart-owned Flipkart to formally shut down Jabong was taken to concentrate on its premium fashion marketplace, Myntra.
Jabong’s weblink is currently redirected to Myntra’s shopping window by Flipkart, which had acquired the fashion platform for around four years, according to a report in the Economic Times.
The move is a strategic move that will benefit Flipkart consolidate operations and make its marketing budget more efficient as the traffic to Jabong had been dropping over the years and the two brands, Myntra and Jabong, owned by the same parent company, Flipkart did not make any sense for the parent company.
Due to the unprofitable investment on Jabong.com, in November 2019, Walmart took a non-cash impairment charge of US$290 million equivalent for the value of the ‘Jabong’ trade name.
Source: Business Today
List of Failed Startups and Business 2019
Launched on 26 October 2015, Viu is a Hong Kong-based over-the-top (OTT) video streaming provider from PCCW Media, a subsidiary of PCCW.
Viu had reached 6 million monthly active users in March 2017 from 4 million monthly active users in November 2016, a 50% growth in about four months.
Viu, at present, has not shut operations in India, but they are soon going to wind up. Their top management has already left, and most of the employee strength is on notice.
Reasons for failure
The top-level exits, downsizing of the team, rejection of new ideas or concepts were all hints to the shaky future of Viu India.
The primary reason for the startup’s failure was the budget constraints. There was no way they were to compete with giants like Netflix and Amazon Prime.
“Netflix and Amazon are spending $5-10 million on one show in India, and we had a total content budget of $15 million. Even the marketing budget that was given to us was just $8 million. You cannot create a big OTT play with such a low budget,”.
An employee told E.T.
To summarize it all – The cut-throat competition forced Viu to shut its Indian operations.
Business Television India (BTVI) (earlier also known by Bloomberg TV India, Bloomberg UTV, and UTVi) was an English news channel in the Business domain. Business Broadcast News Pvt ran the Channel. Ltd (BBNPL).
On 1 August 2016, after a decision between Business Broadcast News and Bloomberg LP to not renew their 7-year-old licensing agreement in early January, the Channel was rechristened as BTVI from Bloomberg TV India.
However, On 31 August 2019, the Channel suspended broadcast without citing any reason.
Reason for failure
The Channel had been going through a deep financial crisis for months.
The management tried their best to rescue the situation but failed. BTVI was even in talks with a South India based businessman to raise funds but could not seal the deal due to liabilities and various other factors, following which promoters decided to shut down the operations.”
Bad Financial Management led to the closure of BTVI.
The company offered a wide range of products ranging from milk to fruits and delivered the products before 7 AM daily.
The company believed that its unit economics were robust.
By lowering their delivery cost to Rs.3, Doodhwala positioned itself uniquely in a very competitive market where other players were struggling.
“We have done a great job of maintaining a steady month-on-month growth rate while scoring an 85 percent-plus customer retention,”
The company failed even after raising a recent seed investment of $2.2 million from Omnivore, a venture capitalist firm, in a minority stake in the company.
The new funding came less than a year after the company raised an undisclosed amount in another Pre Series A funding from Thomas Varkey, a partner at Stonehill Capital, USA.
Reasons for failure
Although Doodhwala’s initial funding was without many hindrances, it failed to raise subsequent financing.
One of the biggest challenges facing Doodhwala was prominent players like BigBasket, who were absorbing smaller players in the given segment.
BigBasket had consumed Pune-based RainCan and Bengaluru-based Morningcart for its micro-delivery service BBDaily.
Thereby making it difficult for brands like Doodhwala to sustain themselves on their own.
Furthermore, similar players like Milkbasket and Dailyninja are other players in the market to raise funds, which made the market cluttered.
Swiggy had a presence in subscription commerce through its portfolio company SuprDaily.
Many experts believe that apart from the top three metros (Bengaluru, Mumbai, and NCR), micro delivery platforms aren’t scalable and justified.
The competition forced Doodhwala to shut shop.
In 2012, Russsh was an on-demand delivery service offering first mile and last mile solutions to individuals and businesses.
The founder further mentions, “We’re a single-founder company, and investors are always wary of funding such startups. We went through the market-not-accepting-us phase. Now, I think we’ve reached a self-sustaining model and need funds to expand our technology, talent, and operations.”
RUSSSH claims to have completed 300,000 tasks to date. Its delivery fleet consists of 60-80 executives at any given time.
About 150 tasks were processed daily, and that number went up to 200-odd during the festival season.
The average task fee was Rs 300 and could go up to Rs 1,500 depending on the location, travel time, value of content to be delivered, etc.
(source – https://yourstory.com/2019/06/startup-mumbai-task-management-service-russsh-shutdown)
Reasons for failure
Self-funded Russsh lacked the capital to take on bigger competitors in the space.
Since it lacked the capital, it couldn’t offer great discounts like other emergent players—a prerequisite to succeed in the discount-driven Indian Market.
As per Koinex’s site, over a million registered users, over 3 Billion Dollars of Trade volume, and over 20 million orders were executed before closing.
Reasons for failure
In an emotional blog post published on Medium, Koinex co-founder Rahul Raj said that the last 14 months had been tough to operate a digital assets trading business in India, on account of the closure of bank accounts holding user deposits.
Raj also mentioned that their operations were regularly disrupted due to government agencies’ delays in clarifying cryptocurrencies’ regulatory framework.
The crypto exchange had been facing denials in payment services from payment gateways and blocking transactions for the trading of digital assets.
“Multiple delays by the government agencies in clarifying the regulatory framework for cryptocurrencies despite our pending writ petition in the Supreme Court of India, coupled with regular disruption in our operations, the final decision has been taken after duly considering all the latest developments in the crypto and blockchain industry in India,”
Koinex co-founder Rahul Raj
In August 2016, Doctalk was started as an app for Doctors with patients.
Through Doctalk, you could send messages to your doctor, store medical files, get detailed prescriptions, save your medications, etc.
In India, healthcare is still offline, and Doctors faced constant patient follow-up and calls.
To make this process seamless, Krishna Chaitanya Aluru came up with the idea of Doctalk.
It built an electronic medical record (EMR) solution, which helped doctors write prescriptions digitally and provide customized prescription templates.
Doctalk had raised roughly $5 million from Matrix Partners and Khosla Ventures and was also backed by Y Combinator, Vy Capital, Liquid2Ventures, Venture Highway, Altair Capital, and some angel investors.
Reasons for failure
The reason for the company’s shutdown was its inability to pivot.
This meant it did not have a plan B if its initial business model failed.
The planned transition into the electronic medical record solution (EMR) business from the existing business model didn’t yield the acceleration that is needed,” said one of the people. “Subsequently, the company has shuttered the entire health-tech concept and laid off a majority of its employees,” said another person.
In 2015, Sunil Kumar co-founded Loanmeet after realizing that a large section of borrowers could not get personal and business loans from banks and other financial institutions due to lack of credit history, insufficient documentation, or other reasons.
When capital is to be deployed by financial institutions, the firm’s size plays a considerable role. In such a scenario, Loanmeet attempted to revolutionize banking at the grass-root level.
LoanMeet financed working capital requirement, B2B marketplace financing, cash credit line, and channel financing in the range of Rs 5,000 to 5 lakh for short term period ranging from 15 days to 9 months.
It raised an undisclosed amount of seed funding from Chinese investors and entrepreneurs Cao Yibin and Huang Wei, and Madhusudan, CEO of KrazyBee.
Until Jan 2017, Loanmeet was growing well at about 50% month over month.
Reasons for failure
The lending market is an overcrowded market dominated by established players, and Loanmeet couldn’t sustain the competition.
As a result, it failed to raise further investment.
“LoanMeet had tried raising further investment. However, investors were not convinced as the lending enabling market has been overcrowded with several deep-pocket players,” said two sources. The company also laid off about 15 people in the past couple of months.
One of the prominent reasons for failure in the lending space is that most lending companies are good at solving credit access problems. However, they don’t do in-depth research beyond collecting information from customers where customers’ deep root cause is not getting funded by banks.
List of Failed Startups and Business 2018
Well! This wasn’t exactly a shutdown. Instead, it was more of acquisition and then shut down for business strategy reasons. Yeah! I know the big words 😊” acquisition,” “business strategy” blah-2).
Bottom Line – eBay is no more active in India.
eBay launched its India operations in 2005 but announced its closure on 15 August 2018.
The US-based company sold its India business to Flipkart in 2017 for a cost of $211 million. Not to be left behind in the race to be a part of one of the fastest-growing ecommerce markets globally, eBay invested $514 million in Flipkart to get a 5.4% stake in the home-grown online marketplace.
And they intend to profit from their investment in the future by selling their stake for a whopping 1.1 billion dollars.
(By the way, how many zeros are there in a billion? Don’t bother – I only count till 1000 – my current pay scale 🙂 ).
Reason for shutdown or exiting the Indian market:
eBay forayed into the Indian market by acquiring Baazee.com for $50 million.
The acquisition allowed them to get their foot in the door, but they were never invincible in India (like the U.S.).
Soon they lost business to the native competitors, including – Flipkart, Snapdeal, and ShopClues.
Their auction business model’s failure to attract Indian customers led to the company after the tried and tested ecommerce model and competing with existing competitors.
Eventually, they invested in a local company – Flipkart.
Well! As they say, if you cannot compete with them, buy them.
After Flipkart said it would shut down eBay India, eBay India declared in May that they would opt out Flipkart and focus on building a cross-border trade platform.
eBay still hopes and sees India as a growing and potential country for e-commerce and will soon launch its new business model.
Source : Financial Express
Zebpay, launched in Singapore and Ahmedabad, was a cryptocurrency startup helping users in cryptocurrency trading.
It was a popular platform for buying and selling cryptocurrencies, including Bitcoin Cash, Ripple, Ethereum, and Litecoin. It also sold airtime and gift cards.
Zebpay was forced to shut due to RBI’s financial policy to prevent cryptocurrency from entering the market.
Now – that’s a bummer!
At the time of closure (around September 2018), the company had over 3 million users.
Reasons for failure
They were the unlucky ones. After RBI’s announcement to restrict banks and finance companies from doing business with crypto exchanges and wallets on 5 April of 2018, it gave three months to close the deals and accounts.
At the time of closure, Zebpay owners said, they could not find a reasonable way to conduct the cryptocurrency exchange business with RBI restrictions. Hence, leading to the closure of the company.
As per an official statement made by the company, “However, the recent past has been extremely difficult. The curb on bank accounts has crippled our, and our customer’s ability to transact business meaningfully. At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business,”
Nevertheless, the crypto exchange is kept alive to allow the users to their wallets.
Many crypto exchangers appealed against the RBI order in the Supreme Court but to no avail.
Rather than helping them sail through tough times, the government became stricter with crypto exchangers.
Unocoin owners were arrested in October 2018 in Bengaluru on the charges of installing a Bitcoin ATM.
After Zebpay, many other crypto exchanges, including Coinsecure, BTCXIndia, MoneyTrade, Bitconnect, also closed their ventures in 2018.
Source : Business Today
Sanjay Rao and Sandeep Kannambadi came together in 2015 to form Monkeybox, a consumer service company operating in Bengaluru. The company started by offering Recommended Dietary Allowance (RDA) approved vegetarian meals to school.
Starting with a few schools, it soon added 85 schools to its service list. In July 2017, Monkeybox provided meals for over 1,500 kids of age group 3-18 per/day.
After adding 2K subscribers to its website, it acquired food businesses – 75 In A Box and RawKing.
Reasons for closure
For its closure, the company only mentioned its services temporarily because it failed to meet its targets.
It pulled the plug on 23 March 2018.
As per an official statement from the company “Unfortunately we are at a point where we will not be able to fulfill our promise of delivering healthy and nutritious meal to the kids going forward due to constraints on our end and don’t want to falter on the quality of our services. Hence we are getting back to the drawing board and working to get back again to serve all the beloved kids in a way which will continue to uphold our vision.
Until we figure out a way to do that, we will have to shut down our services temporarily.”
Just Buy Live
In 2015, Just Buy Live was launched in Mumbai to offer retailers – a meaningful platform to buy directly from brands.
They even went a step ahead by offering unsecured credit lending for these businesses to help them buy directly from the brand (I know you are thinking – where were you when all this was happening?).
They also provided working capital to small retailers to buy branded products in all categories, from FMCG to Smartphones from ‘Just Buy Live.’
In August 2017, a Dubai based investment group, Ali Cloud Investments, invested a massive $100 million (INR 699.25 crore) Series B funding in Just Buy Live.
Alas! The funding proved insufficient.
Reasons for failure
I don’t know the full story behind its failure, as the founders are still hopeful of reviving the business and have not yet come out in the open to discuss their loss. As far as the internet tells me, the company failed because they had an Unscalable business model and a negative cash flow.
Other than the negative cash flow, a faulty business model too was attributed to the company’s failure
The founders are hopeful of the revival of the brand with the help of fresh funding.
MrNeeds was a startup based in Delhi/NCR in the grocery business catering to the NCR Region. The venture was started in 2016 by four young entrepreneurs – Hitashi Garg, Ravi Wadhwa, Ravi Verma, and Yogesh Garg.
The startup offered online subscription-based services in grocery items like milk, eggs, bread.
MrNeeds closed its operations despite the overwhelming response they received to their services.
Reasons for failure
According to its owners, the company was doing reasonably well but stopped abruptly without providing any specific reasons for its closure.
It is speculated that the failure of MrNeeds was because of the stiff competition offered by BigBasket and DailyNinja.
In 2014, Bengaluru saw a fleet of bikes running on its roads. Tazzo, the new kid in the startup world, offered point-to-point commuting on bikes at INR 5 per/km.
This easy, quick, convenient, and affordable commuting options – soon became the talk of the town.
Priyam Saraswat, Shivangi Shrivastava, Priyank Suthar, and Vikrant Gosain made a full proof plan to run the service.
They had a mobile application integrated with GPS technology for real-time tracking of their fleet.
Reasons for closure
Deepak Shahdapuri, MD of DSG Consumer Partners, gives the non-profitable nature as the biggest reason for its failure. Deepak invested $225K (INR 1.5 crore) in Tazzo in October 2016, but even this bailout package couldn’t support the business for a long time.
The project was capital intensive, but there was no profit model for the business.
Moreover, they had substantial operational activities on the online end and offline, which subsequently led to losses. They required too much capital to manage both ends of operations.
The Co-founder of Tazzo, Priyam Saraswat, spoke to TechCircle said the imbalance of internal and external factors led to shutting down.
The main reasons were capital intensive operations and the business couldn’t uphold raising follow-up funding from the investors.
It had to shut down before the funds dried up.
In 2013, Bengaluru-based Anter Virk and Anish Basu Roy started Shotang as a B2B platform for manufacturers, distributors, and retailers.
The idea was to offer an online trading platform and to earn a commission in financial transactions. They primarily worked for the mobile and apparel market.
According to VCCircle, Shotang was heavily funded by V.C.s. They received $5 million (INR 35.94 crore) by Exfinity Venture Partners in December 2015 and $864 thousand (INR 6.8 crore) by Patamar Capital in February 2018.
Just before the venture plummeted, its market valuation was $40 million (INR 279.7 crore).
Launched in 2013, it shut shop in 2018 under colossal pressure from competitors.
Reasons for failure
Shotang tried its best but failed miserably due to rising debts and funds crunch. According to Techcircle, they did the last fundraising to pay off debts – creditors, employees, and partners.
The real reason for the failure of shotang was – fierce competition from Flipkart, Amazon, and Paytm Mall, who, with their deep pockets, were Fastly wiping off competition.
As per CEO Dinesh Agarwal, “the decrease in sales and the effect of demonetization on the company are some of the reasons for the company’s shutdown.
List of failed Startups and business 2017
Startup year: 2006
Founders: Yogendra Vasupal (Yogi), Rupal Yogendra, Sachit Singhi
Stayzilla ventured into the profitable segment of hotel rentals, establishing a niche for itself.
The company raised USD 33.5 million with the support of marquee investors Matrix Partners and Nexus Venture Partners. After the funding, it became the largest homestay network in India.
Stayzilla’s closure was a big shock for the startup community.
The road to end started with the company failing to pay its vendors on time, leading to legal disputes.
There were allegations of non-payment of dues to the tune of Rs. 1.7 crore by Jigsaw Solutions, an advertising agency that handled all promotional activities of Stayzilla.
Jigsaw dragged Stayzilla to court for non-settlement of dues.
To survive all the legal troubles and pay off the past debts, the company filed for insolvency. Unfortunately, the insolvency proceedings were dismissed by Supreme Court.
Legal issues. Financial Troubles. Inability to raise more funds and Non-payment of vendors were some of Stayzilla’s founders’ issues, thereby leading to the failure of one of the most famous startups in India
Startup year: 2014
Founders: Amit Gupta
Overcart started as an online marketplace of pre-owned, refurbished, and unboxed goods. The company started on a promising note, receiving a USD 3 million capital funding in series A funding from JSW Ventures and Omidyar Network.
Unluckily, the company could not build upon the initial hype.
A company that dealt in all kinds of orders turned into a company that only started accepting bulk orders.
The source that first reported the company’s shutdown tried reaching out to the company, but all its emails and messages have not received a response from the company.
One of the prominent reasons attributed to the failure of Overcart was the inability to grow their demand and supply, business model. A typical complex business model adopted by all marketplaces.
Other factors contributing to the failure were business model issues like maintaining the quality of pre-owned goods and finding standard pricing for refurbished products.
The business’s complexity and inability to raise further funds ultimately led to the closure of a business.
Startup year: 2014
Founders: Nidhi Agarwal
Kaaryah was backed by none other than the most famous business person in the country – Ratan Tata. It also received funding from Infosys veteran Mohandas Pai and the Saha Fund in 2015.
As per the founder of Kaaryah, Nidhi Agarwal – the company had plans to touch a 100-crore turnover within five years.
The promising startup had to close in 2017 due to a lack of funds to grow further.
As per Nidhi, “It was not sudden. We have been trying to raise funds for the last 18 months. We had broken even twice in 30 months.”
Kaaryah Lifestyle Solutions Pvt. Ltd. reported a loss of Rs. 4 crores in 2015-16. The company waited for another 18 months to raise more funds before laying off all 60 employees and announcing the business’s shutdown in 2017.
Startup year: 2015
Founders: Abhishek Garg and Ridhi Mittal
Finomena offered quick loans to people who lacked access to traditional loans.
For some reason, I never heard about them 😉 . I have a long list of people who are willing to take loans without any possibility of returning the loans (my friend Nirav was one of them. I rue the missed opportunity of connecting him to Finomena)
The company worked on a unique algorithm backed system that checked the creditworthiness of buyers.
The company caught everyone’s attention when it was selected for the International Innovator of the Year award by LendIt USA 2017.
Finomena received USD 1.7 million in funding from Matrix Partners and ten angel investors, including Abhay Singhal, co-founder of InMobi.
The owners of the company were featured in the 2016 Forbes 30 under 30 lists.
The company had what you call the perfect opening at the box office for a movie.
Unluckily, the company lost all its steam within a few years. High Cash burn left them with little money to survive, and no investor invested money in them at a later stage.
The attempts to sell the company went futile because of the higher cost of acquisition.
Dial A Celeb
Startup year: 2016
Founders: Gaurav Chopra and Ranjan Agarwal
Dial A Celeb was a short-lived but exciting business idea.
Dial A Celeb offered video chat with celebrities, booking celebs for events like weddings, anniversaries.
The company also gave fans opportunities to have birthdays and celebrity signed products like teddy bears and diaries.
Not much information is available about Dial A Celeb as it closed operations within a year of starting.
Today DialACeleb.com is available for sale. The website is inactive, and the last update on the Facebook page was made on 1 May 2017.
The reason for the closure of the service is changing trends in celebrity service.
The celebrities in India started making their apps, which put a huge dent in its revenue model.
List of Failed Startup and Business 2016
The Sequoia and Matrix partner backed company shut shop in 2016.
Reasons for Tiny owl’s failure were:
a.) The uncoördinated hiring, and later retrenchment.
c.) Fewer orders and not giving discounts.
d.) No artificial intelligence was used. There was no data analytics when ordering from the app.
e.) Astronomical salaries paid to employees: They hired a Chief technology officer (CTO) at Rs 1.5 Cr./annum with Rs 50 lakh’s joining bonus.
In Nov 2014, Navneet Singh, an IIM Ahmedabad graduate, founded PepperTap.
It was built to deliver groceries from local stores to neighborhood customers within two hours.
The main reasons for peppertap’s failure were:
a.) Lacking technological resources
b.) Too many stores opened online far too quickly.
c.) Customers were unable to view all items for sale.
d.) Unable to conserve funds to keep the company financially solvent.
On 19 August 2016, AskMe, a Gurugram-based e-commerce company, decided to shut show. The move left about 4000 of its employees jobless.
AskMe’s principal investor Astro Holding said it would appoint a forensic auditor to check the books of the startup’s parent firm Getit.
The reasons for AskmeBazaar’s failure were:
a.) Non- payment issue from Astro.
b.) Owing to mismanagement and lack of corporate governance.
c.) Considerable Investments in celebrities to endorse the brand.
d.) AskMe also saw resignation from more than 650 of its employees.
The Mumbai-based startup offered grocery shopping from the comfort of homes or offices at competitive costs.
GrocShop was a part of Microsoft’s startup program, BizSpark, and among the 16 startups selected for the Google Launchpad program.
It reportedly failed to find a profitable growth model in a segment that was otherwise attracting investors in droves.
Reasons for Franklyme’s failure:
a.)Not able to meet sustainable product-market fit.
b.)They tried to solve a lot of use cases at the same time.
c.)Shortage or Non-availability of funds.