startups closed in 2016

While 2015 was a year of big-ticket funding rounds, 2016 is a year of harsh reality for the country’s startup ecosystem: 212 startups have not survived to see 2017. And the number is 50% higher than last year, when about 140 startups were shut down, according to data analytics firm Tracxn.

The biggest casualty in 2016 was grocery delivery startup PepperTap, which was dubbed the biggest competition to BigBasket last year. It topped the list of startups that were closed down after having raised the highest funding from investors. The company, which started operations in 2014, had raised more than $51 million from a league of big investors, including Sequoia Capital, Saif Partners and e-commerce major Snapdeal. In April, its founder Navneet Mishra announced the decision to close the grocery business.

Seven out of top 10 startups that were shut down after raising sizeable funds were founded in or after 2014. These included online courier booking platform Parcelled, which wound up business in June 2016, and DoorMint, which shut its on-demand laundry service in September due to lack of funds.

“This is a natural progression,” “When you look at the ecosystem, not more than 20% of the startups succeed. Two to three years after a startup’s inception is a time when you see high mortality. There is too much competition, and only a few survive,” says Mohan Kumar, ED, Norwest Venture Partners India.

Since a lot of startups were founded during 2013, 2014 and 2015, it’s natural many have shut shop, Mohan Kumar adds.

The list also includes Buildzar, an e-commerce marketplace for construction material. It stopped services this month, just 11 months after raising $4 million from Puneet Dalmia, MD of Dalmia Bharat.

“There is a growing intolerance for companies which are not performing; and there is increasing pressure from investors who are closely seeing what works and what doesn’t. Investors know that there is credible capital that this country can’t afford to waste, so there is very little merit in allowing such companies to continue running,” says Ajay Hattangdi, CEO of venture debt provider InnoVen Capital.

The Temasek-backed InnoVen Capital, had lent $4 million to PepperTap last December. Hattangdi says the lender was supportive of PepperTap’s decision to shut down. The founders made sure the loan obligation was repaid in full.

“Entrepreneurs will try rebooting, bootstrapping and running the company with minimum expenses; but if there is strong case for it to shut down, then it doesn’t deserve life support,” he adds.

This article was originally published in Times of India

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’ especially for food startups such as TinyOwl, Dazo, ZuperMeal and many others.

Here are 9 leading startups that shut shops in 2016:

1. TinyOwl

Food-ordering firm TinyOwl shut down its operations in May in all 11 cities where it was operational, except Mumbai. Founded in 2014, the startup faced several financial problems and laid off more than 600 employees between September 2015 and January 2016. In June 2016, the company was acquired by Roadrunnr and rebranded as Runnr.

2. Dazo

Dazo, an app-based service that curated and delivered meals, shut down its operations in October this year -— barely a year after it was started. The startup was backed by bigwigs such as Google India chief Ranjan Anandan, TaxiForSure co-founder Aprameya Radhakrishna, and former Freecharge chief executive Alok Goel.

3. PepperTap

Gurgaon-based grocery-delivery startup PepperTap shut down its operations earlier this year after months of struggle to stay afloat. The company was facing tough competition from rivals including Grofers and Bigbasket. The startup was launched in November 2014 and had raised funding in four rounds from Sequoia Capital, SAIF Partners, Snapdeal and others. It had also acquired another budding hyperlocal grocery marketplace, Jiffstore.

4. Fashionara

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. It raised $4 million from Helion Venture Partners and Lightspeed Venture Partners and scaled business in apparel, accessories and footwear segment.

5. Purple Squirrel

Purple Squirrel, an EdTech financial startup, backed by Matrix, closed down business in May 2016. The Mumbai-based startup was launched to connect students with industry leaders and big companies for industrial exposure and training. However, it was forced to shut down due to continuously dipping sales and increasing cash burn.

6. AskMe

The consumer internet search platform AskMe shut down in August. The company is said to have been facing severe cash crunch. The shut down is said to have triggered due to the exit of its principal investor Astro Holdings. The shutdown left about 4,000 of its employees jobless. A variety of reason, from weak technology to aggressive acquisitions, are said to be responsible for the online retailer’s failure.

Related Post: Snapdeal shuts down Exclusively.com

7. Zupermeal

ZuperMeal, a home-delivery food venture backed by celebrity chef Sanjeev Kapoor, too shut down its operations this year. The startup shut shop in May, some eight months after it raised seed funding.

8. GrocShop

The Mumbai-based startup offered grocery shopping from the comfort of homes or offices at competitive costs. The startup was founded in November 2014 by IIT-Bombay alumni Rahul Kumar and Ayush Garg. It was a part of Microsoft’s startup programme, BizSpark, and also among the 16 startups which were selected for the Google Launchpad programme.

9. FranklyMe

Another name in the failed startups list is FranklyMe, a video micro-blogging website founded by Abhishek Gupta and Nikunj Jain in 2014. It has raised $600k seed funding from Matrix partners. In another round, it received an undisclosed amount from investors. 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.

This article was originally published in GadgetsNow.com

Tag: startups closed in 2016

Over 200 startups closed down in 2016

9 big Indian startups that shut shop in 2016