Y Combinator’s Paul Graham famously said that nine out of ten startups fail. Even the startups which make it big initially, lose momentum going forward and fall short!
According to a report by Nasscom released in October 2015, three to four startups were being born every day in India. As far as funding is concerned, in the past few months, we have observed that on an average – three startups were funded daily, taking the total amount of funding to $3.5 Bn. This amount was spread over 720 deals in the first eight months of 2016.
But, on the other side, there have been startups that couldn’t fight challenges and decided to close doors – some backed with huge funds and some who never raised a farthing. The major reason for the shutdown was saturation in the market and, at the same time, a lot of startups did not have the numbers (market share, sustainable revenue models, etc.) to raise the next round (mostly pre-series A and Series A) of funds.
2016 has already witnessed startups like PepperTap – which grew exponentially well but later switched business models; and Helpchat – which closed down its chatting vertical. On one hand, a couple of startups were getting funded and on the other, a few were shutting their business due to lack of funds or not getting the projected number of sales and another handful were pivoting their models to explore other verticals. A few of them were also getting acquired around the same time.
“H1 2016 showed that 18 startups shut down, approximately 77 M&A’s took place, and 538 startups raised funds, which was 52% more than in H1 2015.”
As per data collected by Nucleus42, more than 500 Indian startups have closed down operations in the last 20 months (January 2015 – August 2016) alone.
Given below is the split of funded and unfunded startups. It is observed that 59% of startups launched before 2013 that got closed, were funded.
Hyperlocal clearly is the sector with the most shutdowns. More than 50% fall in the hyperlocal vertical.
Shutdowns of startups that were launched between 2013 to 2014 increased by 150%, as compared to the 61% shutdowns of startups founded in 2014-2015.
Here’s the first list of 100 Startups that shut shop:
The Non-Funded Startup Shutdownsshutdown-startups-non-funded
The Funded Startup Shutdownsshutdown-startups-funded
These were the first 100 startups that had to face the dreaded shutdown. We will be releasing the rest of the list in our upcoming series. Stay tuned!