It has been a tough year for e-commerce companies, which have been hard hit by market realities this year, their fund-raising game drastically lowered. Where 2015 led to a jump in registering startup-preneurs, 2016 proved to be a U-turn of sorts as far as many niche ventures were concerned. Despite grand schemes to enter the Indian marketplace with a bang, a number of startups failed on both management and execution grounds, this year, leading to them shutting shop.
One of the primary reasons behind these collapsed startups has been their inability to raise funds. However, the entrepreneurs behind these companies have not given up hope, stating that they will be back soon – and this time with ample funding.
Here’s a lowdown on the startups that couldn’t fly off the ground this year…
Despite being the third largest online grocery company in India, PepperTap shut its operations in April 2016 due to competitive pressure from rivals including BigBasket and Grofers, which raised substantial funding. It began with $1.2 mn seed round funding from Sequoia in November 2014 and Series A of $10 million from SAIF Partners and existing investors. In December, the company absorbed $36 million in Series B round led by e-commerce major Snapdeal, amongst others, clocking 20,000 transactions a day. Due to lack of demand and poor unit economics PepperTap had to back out from the business. The decision to shut operations resulted in 150 job loses.
The company will now focus on expanding the logistics business. According to Navneet Singh, CEO of PepperTap, “We are already working with many e-commerce firms and have a strong reverse logistics operations. In the next few months, we will focus on strengthening our forward logistics.”
Bangalore based fashion e-commerce portal Fashionara, innated 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.
The company’s net sales jumped five-fold to Rs 32.86 crore in the financial year 2014-15. But its net loss widened to Rs 32.13 crore from Rs 21.11 crore in 2013-14.
Reportedly Fashionara was unable to raise money and find buyers which led to its dissolvement. Also, Co-founder Darpan Munjal had left the company in January this year, as confirmed by him. He is now operating Squadhelp.com, a crowdsourcing platform.
Founded in 2015 by Pallavi Saxena, Balasubramanian Anantha Narayanan and Prabhakar Banerjee, Mumbai based food delivery startup ZuperMeal raised $2 million in seed funding from celebrity chef Sanjeev Kapoor.
ZuperMeal claimed to have 150 homemakers on its platform to cook 60 to 70 meals a day, at a net margin of 15 per cent.
ZuperMeal froze operations without announcing the reason for closure. But as per the reports, the ZuperMeal app, when downloaded, was showing an error message and gradually the website also stopped working.
One of the co-founders, Balasubramanian Anantha Narayanan reportedly joined logistics startup LogiNext as a Vice President.
Online grocery startup Localbanya has temporarily halted operations, citing the upgradation of its back end. “We are temporarily suspending services due to maintenance and upgrade purposes,” the company said on its website. “No orders will be processed at this time”.
“Our current team is well structured and the organisation continues to attract talent by virtue of the strong brand that we have built,” said founder Karan Mehrotra. Two suppliers of Localbanya said they had been told that there was a shortage of funds.
Founders Mehrotra, Rashi Choudhary and Amit Naik had been seeking to raise $15-20 million and had plans to raise another $35-40 million by the end of this fiscal.
“Fundraising is a regular activity in the category and we are receiving support from our existing investors while continuing discussions at an advanced stage with potential investors, both domestic and Asian,” Mehrotra had said earlier.
“Localbanya has been faltering on deliveries in the past few weeks due to paucity of funds. The company is trying to revive with fresh funds,” said an executive. The company’s Facebook page had several consumer complaints posted recently about orders not delivered.
AskMe was launched in 2010 as a classified portal. In 2012, it came out with Askmebazaar as an online shopping portal focusing on small and medium enterprises. In 2013, Getit acquired AskMe from Network18. Astro acquired a 50 per cent stake in Getit Infomedia for around $20 million in 2010.
Founded by VSS Mani has shut down its operations laying off the remaining staffs owing to the severe cash crunch. They have not been able to pay salaries, or fund their day-to-day operations, leading to the shutdown. The word was that the group plans to curtail operations due to a shortage of funds surfaced in media.
AskMe was till date being funded by Astro Holdings with $119 Mn (Rs 800 crore).