Chennai based hyper-local delivery startup, Genie is halting its operations and will be delivering the last order on March 31.
Genie decided to shut shop as it failed to raise the funds to sustain operations and for growth.
The company made the announcement on Facebook mentioning, “Genie will be delivering its last delight on the 31st of March. We’ve been trying very hard to raise a round of funding to sustain operations and for growth. Over time, we courted a lot of investors who made a lot of promises, but none of them materialised. Even though everyone liked the business and loved the team, they were skeptical because of a few big shutdowns in the sector. It is with a heavy heart and teary eyes that we bid you a final adieu and wish you great luck.”
Genie was founded by Sreekesh Krishnan, Rakesh Mani, Parth Shah in 2015. The startup banked on exclusive tie-ups with restaurants and charged convenience fee for deliveries.
In October 2015, the startup bagged funding from Wayne Burt Group, a Singapore based group that invests in oil and gas, aerospace and petrochemicals.
In November 2016, Genie launched Genie Night Service where it promised the patrons to deliver food till 03:00 am on Friday, Saturday and Sunday.
For consumers, Genie is known for offering a user friendly chat-based platform with no minimum order or distance restrictions. On the business end, Genie helped expand a business’s logistical reach in the city, helping them with planning and executing their deliveries according to their ticket size, average distance, order scheduling and many other parameters.
Genie is not the only tech-based startup which has shut operations. Other startups that have been hard hit by market realities include PepperTap, ZupperMeal, AskMe, Local Banya, Dazo and Spoon Joy to name a few.
READ MORE: 5 startups that shut shop in 2016
Though, initially touted to be worth US $50 billion the food tech startups cumulatively saw investments of a whopping US $74 million in the first half of 2015 alone. The picture started looking a little bleak in the latter half of last year with the funding dipping to US $19 million. The funding in the later rounds and with newer startups dropped further between US $1 and US $3 million. But what went wrong?
–Delivery Costs: Delivery cost is a big component in making the home delivery model work. And it doesn’t come cheap. Companies have been delivering food to customers at higher costs in the hope that they will form a habit of ordering food, and volumes will eventually make enough business sense for them in the long run. However, this premise has not proved right and has gone against food-tech startups.
–Unique Product Offerings: Another problem area is that today, nobody is talking about unique product offerings coupled with consistent quality/taste and variety, which would bring stickiness. Most of the startups, which got funded, focused more on building a me-too copycat model than working on providing unique offerings that would have helped them survive in a long run.
–Discounts: Discounts and cash back schemes have proved to be suicidal. Companies bear various costs like data, servers, call centers, employee salaries and online marketing costs. Startups, which own the entire chain from kitchen to delivery, have to spend on petrol, bikes, uniforms, and packaging to keep the food warm. Thus, keeping extra funds for discounts and cash backs is next to impossible.
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