Elevation Capital Backed Anar Shuts Shop, Returns Capital To Investors

The spate of startup shutdowns continue. B2B networking platform Anar has now decided to shut down operations and return the remaining capital to investors.

“It’s painful but it is what it is. After ~4.5 yrs of crazy hard work, we are shutting down Anar and returning capital to investors,” said Anar’s cofounder and chief executive officer (CEO) Nishank Jain on X, formerly Twitter.

Jain attributed the reason to shut down the startup to low retention, not enough value for sellers and failure to solve enough for sellers. 

“Enter 2023 – the most difficult period of Anar’s life where we switched between different models on a continuous basis… However, on doing all this, we noticed retention was still low and buyers were not getting enough value. It was just the smallest retailers (turnover <INR 50,000 per month) or new businesses who were sourcing via Anar,” said Jain in a LinkedIn post. 

Meanwhile, on his future course of action, Jain said that he wants to work on super-large problems which, once solved, would fundamentally define how society operates. Without elaborating further, he also hinted at exploring a new venture in the AI space that would ‘hit it out of the fences.’

Founded in 2020 by Jain and Sanjay Bhat, Anar was a B2B networking platform that helped small and medium enterprises across the value chain, be it manufacturers or retailers or wholesalers, connect and interact with one another. 

Businesses could upload their catalogues, post requirements and interact with other like-minded SMBs on the platform. 

The startup last raised $6.2 Mn as part of a seed funding round co-led by Elevation Capital and Accel India in September 2021. It was also backed by Titan Capital and other marquee founders and angel investors such as Pratilipi’s Ranjeet Pratap Singh, ShareCha’s Farid Ahsan, Meesho cofounders Vidit Aatrey and Sanjeev Barnwal, as well as BharatPe’s Shashvat Nakrani.

At the time of shutting shop, Anar listed more than 15 Lakh SMBs, including 11 Lakh buyers and hosted 66 Lakh products. It claims to have generated more than 70 Lakh enquiries over the course of its lifespan. 

Despite raising a big-ticket funding round at the top of capital-fueled 2021, the startup appears to have shut down within two years of that. Despite early successes in generating meaningful conversations for buyers and sellers, the startup hit a wall when it came to long-term engagement and retention. It was this that led to the demise of the startup. 

Learnings From The B2B Tryst

In a LinkedIn Post, Jain shared his learnings from the entire experience of operating a startup, scaling it up and then the eventual shutdown. 

The cofounder and CEO believes that a networking platform for SMBs does not ‘make sense’ as business networks are ‘small and tight.’ He adds that tech platforms inherently enable scale which would render the business network less valuable as insider tips (on aspects such as prices, suppliers, and market data) stop being shared.

Noting that offline B2B markets are highly efficient, Jain said that it is ‘super difficult to replicate’ B2B dealings (with tangents such as returns, different payment terms) on a tech-led platform, adding that transaction platforms have to be credit first. 

“B2B leads in unorganised fragmented categories like clothing are not that big a market as there are well-known markets across the country that retailers can go to and source from and most of the big retailers are generally reluctant to source online + because they need credit. Further, leads generally make little sense in low AOV categories. Sourcing is not a top-of-the-mind problem for retailers. Don’t solve this unless you can do a 10X better job than existing systems,” added Jain. 

He further alluded to the following points in his thesis as to why Anar failed to take off:

Be Honest & Read The Signs!: Jain urged founders to be true to themselves, especially when something is working or not. He notes that it is important to ensure corrective actions are taken sooner. 

Don’t Overhire In The Pre-PMF Stage: Jain said that Anar had ‘just too many people’ in the pre-product market fit (PMF) era. He adds that this limits the ability to be agile and limits intuition as ‘context gets divided between more people.’

“At the early stages particularly, I think having a strong intuition is important,” he adds. 

Self Doubt Is Real: Jain believes that it is important to be rooted in reality and self-doubt can become ‘real’ when building a startup. 

“(It is) very very difficult to figure out whether we are doing things wrong or it’s just not meant to be. Self-doubt becomes very real,” he adds.

Make Money Early: He urged the budding founders to start making money as soon as possible, even if it is ‘little’, just to test the waters. Anar cofounder claims that the platform ought to have made money as soon as the platform began offering leads on the platform. This, he adds, would have told the company ‘right things faster.’

Chase The ‘Crazy’ Mission: Jain said that one of his defining learnings was that there has to be a ‘crazy mission’ to unite the team: He further added that having a motivated team helped the workforce forge the path ahead and made attracting good talent ‘much much easier.’

To the founders looking to solve problems in the B2B space, Jain pitched the idea of an ops-first business – a credit-first B2B marketplace that would operate at high gross margins to offset credit losses. 

He also said there was a huge untapped market in building a leads platform with a better user interface that solves for trust.  

“Essentially, the answer in B2B IMO is… a leads platform (think IndiaMART 2.0) with a much better UX and UI and solve for trust. Just that Indiamart solves buyers’ requirements decently well already though the experience is a bit patchy. It’s difficult to build a 10x better product here,” added Jain. 

Closing the LinkedIn post, Jain said that, despite letting a lot of people down, his team ‘tried really hard.’ As he scouts his next venture, Anar joins a growing list of Indian startups from Pillow to Vah Vah! that have wrapped up operations in 2023 alone.