The Indian startup ecosystem is overflowing with ideas. A good idea is the foundation of any successful startup, but having a good idea isn't always enough.
Despite the best intentions of founders and investors, the lack of scalable ideas causes 9 out of 10 Indian startups to fail like lead balloons.
While failure is a painful pill to swallow, it is also an excellent teacher. There is no greater disappointment for a startup founder than seeing their hard work go to waste. However, there's also a positive side: if you never fail, you will never know what works.
The team at Hello Meets decided to research 50+ Indian startups and analyze reason behind unsuccessful startups in india.
We'll be covering failed startups from the following Industry segments:
- Grocery/Food Delivery 🥕
- EdTech 🧑🏻🎓
- Used Car Marketplace 🚗
- Fintech 💳
- HealthTech 🩺
- On-Demand Service 👕
- E-Commerce 👗
- Social Networking & Dating 🧑🏻🤝🧑🏻
- Logistic 🚚
- Transportation 🚖
- AgriTech 🧑🏻🌾
- Media & Entertainment 🎥
- IT Software/Service 💻
- Travel 🧳
- Job Marketplace 🧑🏻💼
Without further a do, Let's dive in!
Grocery/Food Delivery 🥕
1. Pepper Tap
Founded by Milind Sharma and Navneet Singh, Pepper tap is a marketplace for people to order groceries online at a cheaper price. Moreover, The brand promises to get the order delivered within 2 hours at the customer's doorstep.
The company raised massive funding of $ 51.2 million over 4 rounds. Only because the idea of PepperTap was so promising, they went all in.
Unfortunately, In April 2016, PepperTap announced that they were pulling its shutters down.
Why did PepperTap fail?
- PepperTap spent a hefty amount to acquire customers. Their uncontrolled marketing budget was the biggest reason for PepperTap.
- The company was losing money on every order due to heavy discounts (as high as 70%) with no signs of profitability in future.
- Another reason for the shutdown was Pepper Tap "zero inventory owned" model. They only collated inventories from grocery stores and then updated their offerings.
- Pepper Tap wants grocery stores to share their updated inventory with them continuously. And if stores didn’t have digital inventory systems, the Pepper Tap team would get them updated manually.
- Due to uncontrollable supply, the product faced inventory glitches and a lot of orders had to be cancelled.
Founded in 2015, Doodhwala is a subscription-based service that delivers milk, fresh dairy products, groceries and other daily essentials directly at consumer's doorstep.
Despite having visionary founders and funding, why did Doodhwala fail to takeoff?
- According to Apptopia, the startup monthly downloads were at 34,146 with a month-on-month (M-o-M) fall of 34.28% as of October 1, 2019.
- They were operating on low margins, with excessive usage of cashback and discounts.
- Faced intense competition from BigBasket and Grofers with no differentiating factor or competitive advantage.
After shutdown, Sellers documented an FIR against Doodhwala founders Aakash Agarwal and Ebrahim Akbari. They claimed that the company owed them numerous crores as pending salary.
Moroever, the company marketing head Radha Krishna had documented a protest against the founders. He asserted that founder owed Rs 2.88 lakh to him.
3. Local Banya
Founded by trip Amit Naik, Karan Mehrotra & Rashi Choudhary, Local Banya was Mumbai’s first online convenience store.
The platform delivers a wide array of categories that include fruits and vegetables, exotic vegetables, groceries, personal care, household supplies, detergents, kitchen ware, breakfast, snacks, etc.
After achieving a fund of $5 million, the company started to offer great deals and bargain prices to attract customer.
Why did Local Banya fail?
- Local Banya decided against an inventory-based model, held a very small inventory and forge tie-ups with local wholesalers and retailer.
- Heavy relieving on local vendors resulted in a gap in delivering the required no. of products to the customers.
- The customer had several complaints against the ordered products and their quality. Poor grievance redressal mechanism.
- Retailing food & groceries need a constant flow of funds because margins are miniscule. The company failed to seek fresh funds.
- The company could not withstand with immense competition from online companies like Groffers and Big Basket which were cash-rich due to the huge funding.
4. Tiny Owl
This food-tech startup aims to create value for all stakeholders in the food ecosystem that includes the restaurant owners, staff, suppliers and consumers.
Through Tiny ownl app, Consumers were able to view each dish with the chef’s profile and order the food from nearby restaurants.
As the business observed a rise in the number of orders per day, Tiny owl went on a hiring spree, and hired employees rapidly to achieve high growth targets such as reaching 50 cities in one and a half years.
However, the business didn’t grow accordingly. From a peak of about 1,100 employees, they went to just 200.
Unfortunately, Tiny owl shuts down in 2016 when it was acquired by Roadrunnr.
Why did Tiny owl fail?
- Hiring more people meant putting up organisational structures and hierarchies. However, when things are growing at a fast speed, it's difficult to form those structures accordingly.
- According to the founder Saurabh Goyal, Tiny owl was having 1,000 delivery boys while scaling delivery fleet. But they found out later that 1,000 delivery boys were not needed. That's where all the unit economics took a hit.
- Tiny owl founders weren't clear about of core metrics they want to first improve on before scaling.
- They spent lakhs of rupees Just in newspaper advertising and other marketing resources for customer acquisition.
- With such a considerable investment in their hands, founders thought the best way to use the fund would be by hiring more people and spending more money on marketing resources.
5. Bite Club
Bite club enables users to order meal from a dynamic changing menu through its Android app.
The idea was to bring food lovers and cooks together on one platform.
The company sources food from aggregate chefs like professional chefs, home cooks and then delivers it to consumers— lunch and dinner.
The business attracted investors pretty soon and received seed funding of 1.5 crore from prominent investors including Powai Lake Ventures.
Within a year, the gurugram startup served more than one lakh meals, averaging 274 meals a day.
Within a year of raising funds, the founders decided to shut down the operations after failing to make money in this operation heavy segment.
Why did Biteclub fail?
- Not able to standardized food quality for customers and maintaining it as it scales.
- Heavy cash burn on discounts offering meals at cheap price between Rs 100-Rs 300/person.
- The biggest competitor of Bite club was home kitchens. And the company failed to change the behaviour of users who like to eat home cooked meal.
Founded by Monica Rahtogi & Shashank Sekhar Singhal, Dazo brings the customers great fresh meals at their doorstep from the best restaurants nearby.
The startup approach of only working with about 20 restaurants that offered different cuisines was based on the assumption that hungry customers had no patience for going through dozens of restaurants menus and reviews.
According to them, Customer only needed the best food delivered within minutes at an affordable price.
Why did Dazo fail?
- The high competition in the sector led the company to slash prices, decreasing profitability.
- Dazo struggled to find necessary funds and the company opted for ceasing its operations.
Yummist enabled customers to place an orders in a few taps and a steamy, fresh meal is sent to them within 30 mins.
Yumist partnered with Zomato and Swiggy for delivering pocket friendly homely meals. They carved a niche for themselves in certain regions but that was far from a permanent spot in the market.
Why did Yummist fail?
- The absence of a dedicated facility for food preparation led to the closure of its Bengaluru operations.
- Consequent losses in Bengaluru region due to increasing operating costs and decreasing profit margins.
- The company has not had sufficient funds to sustain its operations.
GorcShop was an online hybrid retail platform, completely focused on ensuring shopping for daily essentials & grocery brands. The
The customer can shop either from the comfort of their homes/offices or on-the-go and get orders delivered in minimum hours.
GrocShop was selected for Microsoft's startup programme, BizSpark, which provides startups free software, support and visibility for three years.
In May 2015, GrocShop was among the 16 startups which were selected for the Google Launchpad programme.
Even the company pivoted to an asset-light model and laid off 45 people in the process. It also started outsourcing logistics to Roadrunnr and Grab.
In spite all these notable recognition and efforts to make business model work, the company shut down its operations in 2016.
Why did GrocShop failed?
- The company could not bear high logistics and customer acquisitions costs and diminishing margins.
- Outsourcing of operational businesses incurred huge costs.
- With decreasing money flow and no sign of fresh funding led to company into huge cash crunch.
- Grocshop were late into the market where other companies had established customers and posed stiff competition.
9. Mr. Needs
The company helped to place and manage daily essentials and grocery through the subscriptions (Monthly, Weekly, Selected Dates, or as per the need) & daily orders through its mobile app.
Why did Mr. Needs failed?
- The reasons for failure is unclear, but intense competition in the segment from BigBasket and Grofers may have been one of the major reasons for their shutting down.
10. Monkey Box
Monkey Box offered nutritious and tasty meals for kids delivered to the school.
In December 2017, it acquired 75 In A Box, a corporate-focused healthy food delivery company. This acquisition marked an increase in the company offering to adult age group.
Before shutdown, Monkeybox was delivering around 10,000 meals to school kids every day.
An Interesting thing is that MonkeyBox was the second startup for co-founders Sanjay Rao, Sandeep Kannambadi and Vijay Bharadwaj which halted its operations.
Earlier, the trio had shutdown a sports analytics platform SportingMindz in 2006.
Why did Monkey Box failed?
- MonkeyBox failed to cope with the B2B model. The company had to face problems in meeting daily operation expenses in the given B2B system payment takes over 60 days to come in.
- Rapid expansion plan which further led to losses - expenses, including hiring temporary staff, increased the team size to 250 in two months and decentralizing kitchens across cities to maintain quality, had also become uncontrollable.
iProf delivers educational content, including videos, digitized notes, and practice questions on a seven-inch touch screen.
The product priced at Rs 14,990 & is positioned as a supplementary learning module which aids in giving the students a platform to revise what they’ve learnt at training.
Why did iProf failed?
- The reluctance of schools to accept their study material.
- A lot of free stuff is available on the internet.
- The final nail to the coffin was hit by the rival Byju's increasing popularity and market share.
12. Purple Squirrel
Purple Squirrel was a platform for students to tour industries, one-day workshops across the country on the basis of their curriculum.
The startup was incubated at IIT Bombay in September 2013. It was founded by Aditya Gandhi and Sahiba Dhandhania.
Their long term plan was to get students placed in these companies and get a commission for headhunting. But that was after it hit a critical mass.
Fast forwarding to April 2016, even after raising 16 crores the company filed to take off he company marking another failure in the ed-tech ecosystem.
Why did Purple Squirrel failed?
- They failed to achieve the promised target, which forced them to look for new investors.
- Lack of funding when it was needed was one of the biggest reasons for their failure.
- The startup was competing with travel agents. Most colleges usually tied up with travel agents for industrial visits with a cost structure in mind.
- These travel agents bought inventory in bulk from hotels in popular destinations. Purple Squirrel couldn’t do the same due to lack of volume.
- To stay competitive, Purple Squirrel burned its own cash. And their margin started to disappear.
Used Car Marketplace 🚗
The startup tried to bridge the gap of information asymmetry and provide peer-to-peer transactions of pre-owned cars.
Unlike other car portals, Zoomo did not open up their marketplace to car dealers. Instead, it decided to only list cars after thorough inspection.
The startup also succeed in grabbing attention investors and able to raise over $7 million through venture capital.
Why did Zoomo failed?
- They weren’t able to assign standardized prices to cars based on their conditions, model and features.
- For every 100 cars inspected they sold only 20, which would not be sustainable.
- The buy-and-sell automobile market was relatively young in India and would take more time to evolve.
- Customers, would often like a certain model but when they checked the price for a similar model on other marketplaces than Zoomo, they would discover that it would often be lower.
14. Loan Meet
Backed by lending startup KrazyBee's CEO Madhusudan E, Loan Meet finance capital requirement, cash credit line and channel financing in the range of Rs 5,000 to 5 lakh for short term period ranging from 15 days- 9 months.
The Bengaluru-based lending startup shut down it's operation after failing to raise capital since it's seed round in 2017.
Other reason of Loan Meet failure:
- LoanMeet's competitors included Capital Float, Loan Frame, and Happy Loan, all of which are aggressive in the SME loan segment and have larger loan books.
- LoanMeet had tried raising further investment. But, investors were not convinced as the lending enabling market has been overcrowded with several deep-pocket players.
Zebpay provided seamless mobile trading experience in cryptocurrencies like Bitcoin, Ripple, Ethereum and many more with the wallet that serves customers across the globe.
Why did Zebpay failed?
- RBI in its bi-monthly policy announced to issue a diktat to its regulated entities asking them to stop having a business relationship with entities dealing with virtual currencies.
- The regulation has put a curb on bank accounts of the exchange and customers affecting the ability to transact business meaningfully.
Koinex facilitates real-time trading of multiple cryptocurrencies on a single platform.
It's based on a peer-to-peer exchange model that enables potential buyers to place their bids and sellers to set 'asks' for the cryptocurrency they want to trade in.
Why did Koinex Failed?
- In 2018, RBI all government-regulated exchange platforms and banks to stop trading with organizations that dealt with cryptocurrency and block such transactions. This led to transactional work a daunting for the company and investors.
- The company also filed a case against the RBI directive, legal matters take away a lot of time. Under no significant improvement, the company had to shut down
17. Card Back
Founded by Nidhi Gurnani and Nikhil Wason, CardBack enables credit, debit, and prepaid card holders to see all offers and rewards on their cards without sharing any sensitive information.
The company had raised $170K during its five year journey. Backed by prominent angel investors such as Rajan Anandan, Sunil Kalra, and Alok Mittal, Cardback etc.
Why did Card Back failed?
- The Indian market was not mature enough in 2017 as most people in the country do not have multiple credit cards.
- The company needed deep pockets of investors ready to spend educating customers in safety and security of products.
- They even tried to move headquarters to Singapore, a country where multiple credit card culture exists. However, the plans failed due to a large investor falling out.
18. Doc Talk
DocTalk helped customers send messages to doctor, store medical files, get detailed prescriptions & save money on medications.
The company helped doctors write digital prescriptions & provide customized prescription templates. This saved doctor's time and makes operations easier for them by solving patients problems digitally.
Why did Doc Talk failed?
- Their planned transition (pivot) from a communications platform between doctors and patients into the EMR business didn’t yield the acceleration.
- Their new EMR solution costed much more than their communication software. And is being sold to doctors.
- Other applications like Practo, Mfine, Lybrate were also providing the service of electronic medical records and communication along with their original services.
- DocTalk was only providing communication services before the pivot that matched up to other health tech applications. Because of which Doc talk EMR offering lack differentiation from its competitors.
Baby berry provided services around child health and wellness with features like a digital vaccination, health records & diet management and doctor discovery.
Over the top, it offered personalized content from experts such as paediatricians, nutritionists and psychologists.
Why did BabyBerry failed?
- The company's revenue declined threefold and expenses increased. It lacked a proper revenue model and was just taken as free offerings.
On-Demand Service 👕
The company provided utility consumer services at doorstep. Their services included on-demand electrician, plumber, carpenter, electronics appliance repair, and pest control.
Later in 2015, they restricted the services to on-demand laundry and use to provide dry cleaning, washing and iron, wash and fold, steam ironing, express service, etc.
Why did Doormint Failed?
- Huge operational costs were involved in processing, pick and drop, and packaging the clothes. Doormint was not able to make good profits.
- The company even set up our own processing unit to cover the last leg in the value chain. It indeed helped in quality control but costs remained almost the same.
- They were unable to address the unit economics and the cash burn became unmanageable.
- The company could not manage to raise another round of funding. As a result, they found scaling up their operations difficult.
21. Task bob
Task bob offered instant, high-quality home services for customers, while driving higher productivity for servicemen.
They were trying to solve three most painful points of any home utility service: Time efficiency, The quality of work done and The transparency of the prices.
The Mumbai-headquartered company ran 3 funding rounds in April 2015, February 2016, and May 2016 respectively raising a total of $ 5.8 million.
After funding, the company also moved towards acquisitions in order to grow stronger. They acquired Zepper, a Bangalore-based company that had a similar service agenda as Taskbob.
In 2017, the company eventually shutdown it's operations.
Why did Task Bob failed?
- The company charged a small commission on orders resulting in low profit margins
- Unsatisfied customers with poor quality services, decreasing order frequencies.
- The company required funding to sustain the venture and fresh funding was not forthcoming.
GetNow was founded in 2014 by Jayesh Bagde. The startup offered users to search, discover and order products like electronics, mobiles, computers, home and office supplies from their trusted local retailers.
They company was only active in Nagpur & had tied up with 400 retailers, offering more than 45,000 products of different categories through its Android application and website.
Why did GetNow failed?
- Faced poor unit economics due to which scaling was a big problem.
- Heavy cash burned on discounts and offers to acquire customers.
Flashdoor brings the laundry services to the doorstep at the tap of a button. It connects delivery agents, service providers and customers on a common platform.
Why did Flashdoor failed?
- High operational costs, delivery charges made it difficult to break even.
- Poor unit economics
- Profitability could only realized when company reaches large scale business.
- Scaling up was not an option under fund crunch.
The company offered short distance delivery and task management service.
Founded by Bharat Ahirwar in 2012 in mumbai, Russsh was earlier called Get My Peon. They have taken the tasks via phone & emails to complete.
Later in 2015, they changed their name to RUSSSH & raised seed investment $250,000 from angel investors in the same year.
The company completed 150-200 tasks per day and around 10,00,000 tasks in total before shutdown in june.
Why did Russsh failed?
- The startup was bootstrapped & was not able to cope with its well-funded competitors who intensely worked sales promotion by providing consistent discounts and rebates.
- Another reason of failure was not being able to get the right team on board. The inability to raise any kind of funding resisted it's scaling.
Jabong was an online mall where the customer can access products ranging from footwear to apparel sold by their partners at affordable rates.
Earlier, Flipkart had acquired Jabong from Global Fashion Group in a fire sale worth $70 million in 2016.
However in June 2020, Flipkart decided to shut down the operations of Jabong to empower its premium fashion marketplace Myntra.
Why did Jabong Failed?
- In Jan 2020, Jabong’s daily active users dropped by 10.61% with app downloads getting reduced by 12.71%. This leads to a decrease in their sales as well.
- Another reason was that Jabong had begun losing out to Myntra, which was flush with funds from its parent Flipkart.
- Myntra products were cheaper than Jabong because it has access to funds to cover negative margins.
Bengaluru-based online lingerie startup Buttercups was founded by Arpita Ganesh in 2014. They offered exclusive lingerie buying experience to its customers through its online platform.
Before it's shutdown, The online lingerie brand had managed to raise $1 million in funding as well.
Why did Buttercups failed?
- With cut-throat competition from prominent players in the lingerie industry, including companies like Clovis, Zivame and Pretty Secrets.
- Year-on-year ailing revenues made Buttercups shut down its operations. No clears reasons are known behind the downgrading revenues.
Wooply helped people to discover and recognize trends in fashion, food & decor based on interest, location & social circle.
Sellers can open online stores on wooplr and sell items from wooplr catalogue through social media.
Why did Wooplr failed?
- They failed since it couldn’t find the right fund to back itself in the later stage. Even the critical investors were not ready to back the company again.
- The startup also reached out to commerce platforms Limeroad, Snapdeal, and Club Factory for an exit. Unfortunately, These deals didn’t come through.
Klozee offered pre-owned branded and designer apparel and renting garments at one-tenth of the retail price.
The rental start-up shut shop within six months of raising its maiden round of funding.
Why did Klozee failed?
- Stress in the pre-owned apparel sale and rental market segment.
- With vehemently low demand and sales the startup failed to gain scale.
29. Just Buy Live
Just Buy Live provided access to a very wide range of Brands with simpliﬁed technology enhancing the buying experience of customers.
In January 2016, the company raised $20 million in a Series A funding round from Alpha Capital. Followed by $100 million n a Series B funding round from firm Ali Cloud Investment.
In spite of heavy funding rounds into a B2B e-commerce entity, they shutdown operations nine months after $100 mn raise.
Why did Just buy Live failed?
- Traditional B2B supply model is credit based. Following to which the company forayed Religare to provide retailers with non-secured credit on 30 days return policy to retailers to order items through their online platform.
- The company provided retailers a time frame of 30 days for payment but had to pay the manufacturers on the same day.
- Hit by demonetization many retailers did not pay back to Religare and Just Buy had to pay the outstanding dues.This lead to huge out of pocket expenses.
- The company hired representatives to attract big retail stores. But it was quite difficult get them onboarded. Such stores demanded physical presence of representatives. This increased company's expenses.
- Company burnt their funds on marketing and same day delivery. Rather working on building strong relationships with sellers.
Shopo provides an platform to buy contemporary and traditional Indian designer and handmade stuff.
The startup was founded by Theyagarajan as a zero-commission platform for all small sellers or buyers from across all over India where buyer and seller could freely chat, buy, and sell.
Snapdeal acquired Shopo in May 2013 but relaunched it in 2015. In the same year, Snapdeal announced the investment of $100 Mn in Shopo over a period of two years.
Why did Shopo failed?
- A huge number of the buyers and sellers were not satisfied with Shopo’s operation and management.
- Poor delivery system, no customer care support, product quality was not up to the mark, problems in refunds.
- More investments in marketing & operations than actual revenue.
- The Shopo service was shut down in the wake of cutting costs and conserving cash by Snapdeal who itself was making huge losses.
The startup facilitates in buying electronic devices and appliances by providing with small-ticket loans.
Finomena helps students and young professionals with easy installments or financing options to borrowers to purchase phones, laptops, and other consumer electronics online.
Why did Finomena failed?
- High cash burn led to halting of operations
- Due to lack of money and the inability to raise the follow-on funding round.
Founded by ex-employee of Reliance Trends and Times Internet, Darpan Munjal, Fashionara Offers a range of premium merchandise in fashion and lifestyle.
The company gained momentum during the time of 2014 and 2015, but its fuel ran out in 2016.
Why did Fashionara failed?
- Declining business due to increased competition and fluctuating online fashion market.
- Amid cash crunch and lack of funding, the company retreated its operations.
Shotang offered an online business-to-business ( B2B) marketplace connecting consumer brands and distributors in the mobile accessories space.
It helped to transact and manage business and inventory online, facilitating retailers, distributors and manufacturers to access real time information and smart business forecasts.
Why did Shotang failed?
- The company stick to its B2B model whereas its rivals also started to operate in the B2C model.
- Shooting restricted itself to mobile handsets and apparel. It didn't work on product diversification.
- Founders were more focused on profit generation rather than on operations and business expansion planning.
- Well funded business rivals Amazon and Flipkart lured customers & distributors with a good deal of discounts, cashback and rebates.
- Severe cash crunch during Demonetisation, the inability of the company to pay its debt.
- The company was not able to raise new funds from investors and had to stop its operations.
Social Networking & Dating 🧑🏻🤝🧑🏻
34. Hike Messenger
India's own social networking platform Hike shut down its messaging service by shifting its focus to two new social products: Rush and Vibe.
Launched in Dec 2012, Hike targeted youth below age 30 offering instant messaging and file sharing.
By 2015 they company acquired more than 70 million users. Because of It's popularity, Hike kept cool smart features like free unlimited SMS called Hike Offline, in-app news, cricket scores, personalized stickers store unlike any other app over time.
Moreover, the company was being hailed as the youngest startup to get a unicorn title in India, with a valuation of over 1 Billion within just 4 yrs of launch.
Despite all this, on January 6, 2021, Hike informed its users that it will be shutting down its messaging platform.
Why did Hike messenger failed?
- In early days, the hike app was too complex to use, had too many features, used a lot of data. The message feature was not instant and had glitches.
- On the other hand applications like Whatsapp had an effective messaging feature, easy to install and with less data load.
- Hike lost its way in recent years as it tried and failed to become a WeChat-like super app for India. During this time, WhatsApp’s scale became too big to match.
- Backed by internet giant Facebook, Whatsapp removed a monetary charge from its customers, added more features like emojis, call options, posting status and increased networking.
- Hike lacked strong networking effect unlike it's competitors.
35. COGXIO (formerly known as Date-IITians)
An online dating platform that enables people to discover folks with similar interest & helps them to meet and interact in real life.
Founded by Kinshuk Bairagi & Layak Singh started working on DateIITians in 2011. The site claimed to have reached five million hits within three months and 10,000+ of verified users.
But they failed to raise funds and scale things up. Then the duo decided to launch Cogxio. The idea was to use location intelligence to enable online connections to become real dates.
Within a year of launch, Cogxio had only around 12,000 registered users. Despite which the starup shutdown in 2016.
Why did COGXIO failed?
- Online dating was unheard of in India and the novelty gave DateIITians a boost. But that could not be translated into a viable business.
- Cogxio didn’t get the reception DateIITians did at its launch as there were several others in the online dating space.
- Competing with well funded rivals such as Truly madly, Woo & Vee which wasn’t easy for an bootstrapped startup like COGXIO.
- The fundamental issue was to gain the trust of users and overcome cultural barriers.
- It took too long for the platform to go mobile with an Android app which affected user experience.
- The company did not focus much on marketing as its rivals.
- The company spent crores in the sector to build the product and executed to the market but the expectations did not match in terms of growth.
Parcelled was an On-demand online logistic and shipping services.
The startup offers benefits like fast pickup, same day delivery, efficient live tracking system and many more at half the cost of courier service providers such as DHL, DTDC or Blue Dart.
Parcelled was catering to individuals, small e-commerce sellers, and SMBs in 13 cities when it announced to shutdown of its operations in 2016.
Why did Parcelled failed?
- Discounted shipping prices i.e. half the cost charged by established companies. Additional benefits like Free Packing of the shipments.
- The cost of delivering parcels on its own became too high at the unit level due to the high cost of fuel and thereby, the business became unsustainable.
- The company had been trying to raise funds since January 2016 to sustain its operations. However, it failed to do so.
The startup helped to connect carriers, shippers and equipment manufacturers in the real time and facilitating them on-transportation for all.
They enabled logistics companies to track mileage, expenses, fuel, truck details and load information to help compare prices between carriers in a transparent manner and get real time knowledge of the movement of their goods and warehouse space management.
Why did Ezytruck failed?
- The company lacked necessary follow up funds after seed investment. This prevented them from scaling & ultimately its shut down its operations.
Truckmandi offered online truck booking solution, which simplifies the task of inter-city bulk transport.
Their notable features involves a real-time tracking option, facilitated through constant updates via calls, emails and SMS, for its users to learn the location of their goods.
The truck owners gets proper data recording mechanism, less idle truck time and reduced empty returns.
In 2015, TruckMandi raised under $2 million in pre-Series A funding from JustEat India founder Ritesh Dwivedy and other investors.
Despite having a problem to solve, good technology & funding the startup shutdown its operation.
Why did Truckmandi failed?
- The fragmentation of the Indian logistics sector and the inability of technology alone to resolve the brick and mortar business.
- The logistic business is credit-driven; Amid a fund crunch, the company was unable to pay for 35 days of credit even. The company found it difficult to scale up under such conditions.
- The dull market performance and not able to scale up are also reasons for their failure.
Roder offered outstation cab travel by eliminating ‘the return fare’ concept from the market by optimizing resources.
Founded by Abhishek Negi, Ashish Rajput, and Siddhant Matre in 2014, Roder ideas was to ease inter-city rides. One of their highlights was to offer a one-way rides at nearly half the market price.
Why did Roder failed?
- Due to rising acquisition costs and low repeat rates for outstation, the company had to bear high operating costs.
- On one hand, the company was struggling to manage its operating cost and on other, its rivals Ola & Uber showered customers with discounts to make things more difficult for them.
- The company could not win a fresh round of funding ruining their plans for scaling up.
40. Tazzo Technologies
The company offered location-based on-demand self motorbike rental and pick-up service.
It allows users to track the availability of two-wheelers at the nearest station and request free delivery and pickups.
Why did Tazzo failed?
- The company had a non-profitable business model. More services → Low price for consumer.
- Higher operational costs led to more cash burn.
- Not possible to scale business towards profits due to lack of funds.
Gurgaon-based AutOnCab helps people to hire an auto-rickshaw right from their doorstep.
In 2015, the startup acquired hyperlocal grocery delivery startup BigZop for an undisclosed amount.
The idea was to launch new products in the areas of hyperlocal logistics and urban transportation for improving the utilisation of a driver’s time.
Despite over 1,000 drivers, 25,000 customers and an acquisition under their umbrella, they shut down their operations in 2016.
Why did AutOnCab failed?
- The company was not able to withstand the competition given by well-funded rivals Uber, Jugnoo and Ola.
- Predominately, Uber and Ola were offering a lot of discounts, incentives and deals to escalate the market share.
- AUTOnCAB was not in a position to burn cash unnecessarily to match the league of discounts & rebates as provided by its competitors.
- They were in talks to conduct a fresh funding round. However, it failed to crack the deal.
42. Hey Bob
Bengaluru's based startup Hey Bob offered bike taxi services.
They active in Bengaluru and Mumbai with 500 riders on road. They were competing with giants like Ola, Uber & Other players in this market are Mobike.
In 2016, the company shut down both B2C & B2B segment. Co-founder Girish Kumar left the startup to join software firm Intuit. Another co-founder has moved on after the shutdown.
Why did Hey Bob failed?
- The company could not raise another round of funding. Under fund crunch they had to stop operations.
Founded by Amit Kashyap & Tarun Gupta, Freshconnect was an online B2B marketplace for fresh agricultural produce like fruits & vegetables.
The founders wanted to create an impact which led them work on the conditions of Indian Agricultural Producers. On gaining a fair understanding of the inefficiency in this sector, duo started working on bringing markets closer to the producers.
In October 2019, the duo left with only one month runway so they decided to take 3 lakh loan but that wasn't enough for long term.
Why did Fresh Connect failed?
- According to Failory, The startup was completely bootstrapped and the founder was losing money m-o-m due to operations costs & defaults in credits by customers.
- Founders made bad hiring decisions initially as they didn’t fire bad elements at the right time.
- Both co-founders set up wrong expectations from each other & did not work much on financial planning.
- This led to them achieve inappropriate metrics which made it hard to raise external funds which were necessary for early success.
- No investors had heard about them even though they achieved better metrics than others in the ecosystem.
Media & Entertainment 🎥
Founded by Gaurav chopra and Ranjan Agarwal, The startup helped fans to connect and interact with their favourite celebrities.
Dial-a-celeb offered features such a Video chat with celebrities, Video wish from a celebrity and celebrity autographed products.
In spite of this amazing idea, Dial a celeb closed its doors within a year.
Why did Dial-a-Celeb failed?
- Dial-A-Celeb's Celebrities were coming up with their own apps to interact with fans instead of using their platform.
- This trend resulted in competition for Dial-A-Celeb and a direct impact on profitability.
IT Software/Service 💻
45. App Surfer
AppSurfer offered tools for developers to demo their apps from the web itself, without installing. These demos can be embedded on blogs, product pages, press releases etc.
It facilitates to run Android on the cloud and makes it accessible from any device or platform.
Why did App surfer failed?
- Google launched ‘Instant Apps’, a feature that enabled users to stream apps instead of downloading them.
- This launch of a better app with similar features was a killer blow to App Surfer.
46. Intelligent Interfaces
The company offered e-governance solutions like data aggregation and visualization.
They raised total of 3 crores rupees with the valuation of 170 crores from Yuvraj Singh, Flipkart founders Sachin Bansal and Binny Bansal, PayTm founder Vijay Shekhar Sharma and Micromax co-founder Rahul Sharma.
Why did Intelligent Interfaces failed?
- The unwillingness of government officials to take any decision regarding solutions offered by the company in Delhi. The officers were afraid that even approved the solutions, they might be dragged into some sort of favouritism by the country's media.
- Some reports claim that the founder of the company Rahul Yadav used funds to sponsor his US Trips.
InoVVorx offered web & application development and marketing services to other businesses.
The company did well for some time having a team of 25 people, making $300k from their services, and raising $100k.
Why did InoVVorX failed?
- Poor market research, launching too many products & products did not have good monetization model to generate revenues. The company lacked focus on what was the need of the client.
- Inefficient tracking and utilization of funds.
- The laid-off employees were under a cash crunch and did not have enough people to run the business and ultimately had to shut off.
Stayzilla was an Indian version of Airbnb.
Founded by college friends Yogendra Vasupal and Sachit Singhi, the platform offered people across the country to put up their homes and become hosts, i.e., they can rent out these spaces to travelers.
For the first 5 Years Stayzilla was running on the savings accumulated by its two founders. They were also making enough profits on these investments and Stayzilla was running steady.
However, ambitions were growing, and founders decided to change gears and gather funding. The company raised a massive $34 million dollars over 4 rounds of funding.
Stayzilla were having 15,000+ listings and a sprawling network of 11,000 cities in India. Regardless of all this the founders brought halt to the operations in 2017.
Why did Stayzilla failed?
- Competition intensified with —deep-pocketed rivals such as MakeMyTrip and Ibibo when started targeting budget hotels.
- Stayzilla changed track to aggregate homestays from hotels. But the larger rivals had their eyes on homestays as well, gradually outspending Stayzilla, which could barely match their marketing spending and discounts.
- Heavy Discounts and miniscule margin led high cash burn rate.
- Company could not pay bills to its vendors. In non-payment of bill of 1.72 crore rupees to Jigshaw Advertising, founder Yogendra Vasupal was put behind the bars.
49. Rooms Tonite
Founded by Suresh John, Rooms Tonite helps customers to book good hotel rooms at cheap rates. It enables users to book hotels for the same day or next day.
They raised around $1.5 million in funding and ceased functioning by September 2017. The startup rose and fallen within three years!
Why did Rooms Tonite failed?
- The company failed to win a follow up funding and lacked necessary capital to meet its operating costs.
- Having strong rivals like Makemytrip and OYO was another reason for RoomsTonite's failure.
Job Marketplace 🧑🏻💼
50. Job Bridge
Founded by Jasmeet Singh, the startup connects the right candidates to the right companies based on their skills, rather than their background.
Jobridge pricing strategy was simple:
- Each Job posting cost $10
- Jobseeker premium membership cost $15
- Franchise owners pay a one-time fee, which cost $200
- Jobrodge kept 50% commission from each sale made by the franchise (from both job postings & premium jobseeker memberships)
Jobridge’s USP was the ability to cater to those job seekers who did not have the facility of internet.
The business model involves Jobs posting the portal and the job seekers will get the updates via text messages on their mobile phones.
Unfortunately, the startup halted it operations with Jasmeet loosing around ₹14 lakh Investment (without including his and his co-founder’s salaries).
Why did Jobridge failed?
- The revenue model started turning unsustainable and they were left with two options, either go offline and turn into a placement consultancy or go online and turn into a job portal. But both of them already existed and dominated in the market.
- High operating cost beats revenue they generated. The issue grew and to an extent that Jobridge was unable to pay salaries to the employees.
Conclusion: Top 12 Reasons Why Indian Startups Fail
1. No market demand
- If the solution offered by the startup fails to solve the existing market problem, it is unlikely create any good demand and hence, low demand, low sales.
- Startups usually are in illusion that their idea is quite appealing and it will automatically generate huge demand when hits the market
- e.g: With vehemently no strong need & low demand in pre-owned apparel and renting garments and their sales Klozee had to shut their operations within 6 months of their maiden funding.
2. Lack of a business model
- Without an effective business model, it is quite difficult to acquire and retain customers.
- Just Buy Live forayed religare to provide retailers with non-secured credit to retailers to order items through their online platform. Many retailers defaulted and Just Buy had to pay the loan themselves which severely affected their finances.
3. Poor product
- If the product quality is not in par with expectations of the customer, it is likely to put bad impression on the minds of the users.
- This can lead to less orders or ultimately no orders. Ensuring the product and service quality should be on the top list of the startups.
4. Poor marketing
- To target the right user segment the startup needs to focus on increasing business visibility, achieving their attention and generating leads.
- Without proper market positioning and promotion the business would not scale in country like India.
5. Poor Unit Economics
- Product price/ costing should be inclusive to breakeven or positive to maintain good unit economics.
- In short term, things could work but when it get beyond control or limit, can severely affect the finances of the business.
6. High cash burn rate
- High cash burn & out of pocket expenses can lead the business run out of cash if revenues generated are not overwhelming.
- After achieving a fund of $5 million, Local Banya started to offer great deals and bargain prices on orders leading to high cash burn rate.
7. No Financing
- A number of startup failed explicitly due to lack of investor interest either at the seed or follow-on stage.
- In deficiency of funds, managing operations, scaling up to profitable model is way tougher.
8. Intense Competition
- Once an idea gets hot or gets market validation, there may be many entrants in a space. And while obsessing over the competition is not healthy, ignoring them can be a recipe for failure.
9. Ignore the need of customers
- It is vital for a startup to understand needs of customer be it pre-purchase or post purchase and come up with solutions to increase their satisfaction level.
- Getting time to time feedback from the customers across different stages of product development is helpful to rectify the shortcomings and provide better customer experience.
10. Legal challenges
- Legal regulations and complexities can strangle startups to failure. Government reforms like demonetization lead to a sudden fund crunch in the market affecting the finances of startups.
- Zebpay and Koinex could not survive the legal challenges faced after the RBI directive on crypto currency transaction ban.
11. Disharmony in the team/Investors
- A startup cannot be successfully ran without a team with various skillsets. Discord within the team is a fatal issue for startup.
- It can lead to clashes and ruin the positive working environment affecting the working potential of team members.
- Sometimes, there can be disharmony among investors of a company might also result in a failure. Non-cooperation between the founder and investor of Askmebazar led to its closure.
12. Don't use advisor or networking
- When founders lack experience in the given market segment, it is better to go for an expert advise to save time and resources.
- That's what happened to the startup Schoolgennie which lacked any prior experience in education segment, and still did not bother to seek expert guidance and it all lead to poor product performance and demand in market resulting in their closure.