Purple Squirrel, a Mumbai-based ed-tech company has shut down its operations in lieu of continuously dipping sales and increasing cash burn rate. According to our sources, the team was dealing with these issues from past few months.
Inspite of raising a bridge round in January, the company was left with only INR 3 crores, with a burn rate of INR 1.2 crores per month. This resulted into lay-off of 40 people and resignation of many, out of a staff of 120, according to BS. The company has raised over INR 15 crores to date and was under pressure to achieve a target of Rs 30 crore by 2015-16.
Mail sent to Aditya Gandhi, founder of Purple Squirrel, did not elicit any response. However, employees have confirmed the development.
The startup was incubated in September 2013 by IIT Bombay. The founders Aditya Gandhi and Sahiba Dhandhania, aim was to take graduation students on industrial visits – either day-long workshops or week-long trips, across the country. The trips were focused on learning and gaining practical knowledge, so that students can get an edge during recruitment.
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In April 2015, it raised an INR 12 Cr in funding from Matrix Partners. Prior to this, it had raised an undisclosed amount of funding from Mumbai-based venture capital investor India Quotient.
The founders claimed to have already delivered 5000+ unique experiences in experiential learning, associating with 350+ campuses and corporates, across 12+ destinations within 1 year of its operations. Also, the founders confirmed the connection with 70 colleges from 10 cities, 8,000 students and more than 300 partner companies, as of April 2015.
As per BS report, the company was under pressure to achieve a target of INR 30 Cr. by 2015-16 and Matrix had promised another funding in September if the startup had hit the INR 15 Cr. revenue mark. The company had failed to achieve the promised target, which forced them to look for new investors.
According to Matrix Partners, it’s not a shutdown.
Earlier in 2015, Smarton, an ed-tech venture by Rakshit Kejriwal, Lakshmi Dasaka, and Chaitanya Chitta, also shut down its operations. As said by Chaitanya, the factors such as long sales cycle, dependence on educational institutes owners, and immature consumer market are few reasons which led to the failure.
Online education market is pegged to grow to $40 Bn next year. Technavio’s analysts forecast the online education market in India to grow at a CAGR of 19.05% during the period 2016-2020. However, still there has not been seen much interest from VC’s to invest billions in this category.
Although, a few have been the exceptions and were successful in convincing investors to pour in million plus such as Embibe, Simplilearn ($15 Mn), UpGrad ($415 Mn), Toppr ($10 Mn), Vedantu ($5 Mn), Meritnation ($4 Mn), EduKart($1 Mn), Plancess Edusolutions($2 Mn) and School Guru($3 Mn). But, Data from venture capital analytics firm Tracxn shows that edtech has received less than one percent of the venture capital flow into India this year.