2019 In Review: 12 Indian Startups Which Shut Shop This Year

This article is part of Inc42’s special year-end series — 2019 In Review — in which we will refresh your memory on the major developments in the Indian startup ecosystem such as funding deals and acquisitions, and their impact on various stakeholders — from entrepreneurs to investors. Find more stories from this series here.

In the Indian startup ecosystem, most of the stakeholders have been busy celebrating funding success and growth, even in the face of no profits. While there is no investor who has not seen a portfolio startup fail, their confidence and hope for disruption keep the ball rolling for newer startups as well as those who have managed to survive the Valley of Death.

It has been widely acknowledged fact in India that even million-dollar fundings and years of strategic planning haven’t been able to save several startups from dying a premature death. In 2016, it was blamed on dearth of funding; in 2017 on lack of market demand; in 2018 it was lack of originality and failure to raise follow-on funding and in 2019, we have seen a mix of it all.

In a surprise, this dearth of funding has even impacted India’s one of the largest carriers, Jet Airways. The company had to cease operations in April 2019 as it had about $1.2 Bn debt and failed to receive survival funding.

But it was not the only one that failed to cross troubled waters. Many perished in the attempt. Here’s a look at the major shutdowns of 2019 in the Indian startup ecosystem!

Wooplr

Bengaluru-based social commerce company Wooplr had to shut down its operations due to a failed merger. The company, which has raised $16 Mn from investors such as Helion Ventures, Sistema Asia Fund, Deep Kalra etc, had informed its clients about the temporary shutdown of its operations in April 2019.

Wooplr provided a platform to social sellers to open their online store, add products from the Wooplr catalogue and start selling in less than a minute through social media platforms. As of October 2018, the company had over 1 lakh products from over 300 brands and was reporting a staggering growth rate of 20% M-o-M.

Social commerce has picked up pace in this past one year, hence, Wooplr’s shutdown was a surprise amid the burgeoning opportunity. Today, players like Meesho, GlowRoad, Shop101, Mall91 and others have created buzz and have found huge acceptance in the tier 2 and 3 markets.

But, with years of experience in the industry, well before other market leaders came in, was Wooplr too early to the market?

Buttercups

One of the early players in India’s online lingerie industry, Buttercups had huge competition from larger well-funded players such as Zivame, Clovia, PrettySecrets etc. But, the sudden shut down was a surprise for many.

Since around July 2019, the company’s website was shut down, with a message saying goodbye and see you soon. However, in September, Buttercups founder Arpita Ganesh took it to LinkedIn to announce that she is closing the Bengaluru-based online lingerie startup.

Buttercups claimed to have up to 43% repeat customers. The company has raised $1 Mn from investors such as Anand Chandrasekaran, Rajan Anandan, Kanwaljit Singh, Manoj Varghese, Angie Mahtaney and others.

In FY19, the company reported a net loss of INR 1.94 Cr, and at the time, its current liabilities exceeded its total assets by INR 28.4 Lakh. The auditors had noted that this indicated a “material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern.” Hence, it is to be believed that the challenges for the company’s performance began long back.

However, Ganesh had later claimed that “the brand remains and will be relaunched soon in a new avtaar.”

But the year is ending and the update is that Buttercups’ products are now available on Amazon. Is this the new avtaar?

Doodhwala

In October 2019, when Doodhwala customers got messages about being redirected to FreshToHome Daily, it was a different deal. The company’s website showed that its existing customers can transfer their active subscriptions and wallet balance to the FTHDaily app.

Doodhwala had shut down and customers could shift to FTHDaily, but what about employees and vendors? As we later reported in November, Doodhwala employees as well as vendors had claimed that Doodhwala founders are “absconding” and even filed FIR to get back unpaid dues.

There had been speculation that FTHDaily has acquired Doodhwala, but Doodhwala founders reiterated a number of times to its employees, in emails reviewed by Inc42, that there was no such deal and if they had money, they would pay back dues.

But, its December 2019, the police are still investigating the case and the employees and vendors still have unpaid dues. A fresh beginning perhaps?

Koinex

At a time when India’s apex court has been stretching its case to identify legality of cryptocurrency, several crypto startups gave up and shut shop in 2019. One of these being, Mumbai-based multi-cryptocurrency exchange and trading platform Koinex.

Koinex facilitated real-time trading of multiple cryptocurrencies like Bitcoin, Ethereum, Ripple, Bitcoin Cash and Litecoin on a single web platform, based on a peer-to-peer exchange model. Within 4 months of operations, Koinex recorded $265 Mn in trading volume and signed up over 40K new users in 24 hours at the peak in December 2018. It had claimed over 100K users at its peak.

But with regulatory hurdles, the company couldn’t stand around anymore. Koinex cofounder Rahul Raj said “Multiple delays by the government agencies in clarifying the regulatory framework for cryptocurrencies despite our pending writ petition in the Supreme Court of India, coupled with regular disruption in our operations,” led to the decision of shutting down.

Today, the country is awaiting Crypto Bill but the apex bank continues to support ban of private cryptocurrency.

Cryptokart

Another martyr of India’s cryptocurrency stance was Cryptokart. The company’s cofounder Gaurang Poddar in July 2019 announced that the company has decided to shut down its operations.

“While its difficult, given the hard work we’ve put in, it’s been a great experience and I’m glad to have gotten to work with such a talented and passionate team, and proud of the platform we’ve built,” Poddar wrote in a LinkedIn post.

Poddar also replied to a few comments saying, “… the general interest in crypto in India has tanked. Also since the govt aren’t going to introduce any regulations and leave it grey for a while, it just makes any long term planning difficult.”

Coinome

Billdesk-backed crypto exchange Coinome suspended its operations, effective from May 15. The company had reportedly informed its customers saying, “India is currently going through uncertainty on crypto guidelines and regulations. The government of India has not yet taken a decision on the regulatory framework for crypto exchanges or wallets. Further, the supreme court is yet to act upon the public interest litigation (PIL) on (the) regulation of crypto assets.”

The first blow for crypto startups in India came in April 2018 when the Reserve Bank of India issued a circular instructing all regulated financial services entities to exit relationships with companies and individuals dealing in virtual currencies and block all such crypto-related transactions.

The RBI circular has been challenged in the Supreme Court of India, but not much has changed. India’s inter-ministerial committee recently recommended a blanket ban on cryptocurrency trading. The government had been working on draft of the Banning of Cryptocurrency and Regulation of Official Digital Currency 2019. However, since it has missed being tabled in the Winter session, 2019 would end on a safe note. But the apprehension of India’s crypto future for 2020 remains.

Russsh

Mumbai-based task management startup RUSSSH had shut shop and terminated all services in June 2019. The company, which was bootstrapping, faced issues in managing capital against competitors and offering a similar surge of discounts.

Founder Bharat Ahirwar had reportedly told its employees that, “Given that it was a self-funded business, we couldn’t offer great discounts like the other emergent players, and to achieve success in a developing service market proved daunting. Building a solid business such as ours became a heartfelt endeavour with a focus on scalability and sustainability.”

The company had completed 5 Lakh tasks before being shut down and had over 50K clients. It claimed to process 150 tasks daily.

Ahirwar did have lessons to share as he realised that one of the biggest reasons the company had to shut down was not being able to get the right team on board. He also emphasised that failing to raise funds kept it limited to Mumbai and that it is difficult to run a company as a single founder.

It is notable that Russsh competes against Dunzo, which enables over 2Mn deliveries every month and is backed by investors such as Google, Blume Ventures, Deep Kalra and others.

Doctalk

Y Combinator-backed medical device startup Doctalk shut down its operations earlier this year, after cofounder and CEO Akshat Goenka resigned from his role last year in November. At the time, it was also reported that the company had laid off over 100 employees, but Goenka reportedly said that it was part of a restructuring process.

However, the shutdown has been attributed to the failure in the company’s attempt to pivot. The reports claimed that the “planned transition into the electronic medical record solution (EMR) business from the existing business model didn’t yield the acceleration that it needed.” Hence, the company had to shut down its healthtech business.

Backed by marquee investors such as Matrix, the founders reportedly returned remaining capital to investors and worked on different products going forward.

Homigo

In March 2019, it came to light that ofounders of Bengaluru-based coliving startup — Nikunj Bhatija, Jatin Mitruka and Aakash Verma — are on a run along with tenants’ money (nearly INR 20 Cr) thereby affecting a large number of tenants residing in more than 100 of its leased properties across Bengaluru.

According to reports, there were acquisition talks with Bengaluru-based online home rental marketplace Nestaway. However, neither deal materialised and Nestaway had to issue a notice to Homigo users that it is not in possession of their deposits.

Inc42’s interactions with the Homigo employees revealed that the founders have also allegedly swindled money from its employees. In April 2019, Homigo’s fraud cases, registered at various police stations across Bengaluru including Mico Layout and BTM Layout police stations, were transferred to the CCB Bengaluru at Commissioner of Police T Suneel’s order.

However, in July 2019, CCB was asked to drop the Homigo case and there has been no update on the case yet.

Tinmen

Backed by Zomato, Hyderabad-based food delivery startup, Tinmen, shut down its operations in December 2019. Tinmen took to its official website to inform its customers about the development. The website also talks about how the chefs have cooked and delivered 2 Mn meals on Tinmen.

“The reason for the shut down is that we were unsuccessful in our efforts to raise the capital necessary for sustained growth,” cofounder of Tinmen Mukesh Manda told Inc42.

Tinmen’s USP was that it allowed users to start and opt-out of the deliveries at a day’s notice and also customers could pre-schedule their meals. The meals started at INR 65 and no delivery charges were levied. The business model also offered virtual cafeteria to companies that wanted to give lunch benefits to its employees.

Loanmeet

In May 2019, reports surfaced that fintech startup Loanmeet has shut down its operations. This was attributed to the company’s failure to raise capital, as investors were reportedly wary of the overcrowded market.

LoanMeet was involved in the business of enabling working capital requirement, B2B marketplace financing, cash credit line and channel financing of INR 5,000 to INR 5 lakh for short term period ranging from 15 days to 9 months. The founders are said to have moved on to other projects and had laid off its team.

Zopnow

Zopnow was one among the early starters in India’s online grocery business and has now shut shop. After a pivot from inventory model to marketplace in 2014, the company fulfilled grocery needs in 10 cities including Bengaluru, Delhi (NCR), Mumbai among others.

However, in 2019, the company started scaling down its operations and fully shut shop in March 2019. The company reportedly sold out its assets (software, proprietary tools etc.) to More Stores, which was acquired by Samara and Amazon in September 2018.

The reports added that ZopNow was unable to either grow or raise more capital and hence, had to take this way out. However, the company founder Mukesh Singh reportedly started ZopSmart, which provides tools to build ecommerce businesses, omnichannel businesses and pure play e-tailing for conventional retailers.

Pulling The Plug On Services

While several startups completely scaled down their businesses, there were businesses which went back on their products and services this year. Also, there were businesses such as Wunder Mobility, which bid adieu to India and scaled back.

For instance, German carpool service Wunder scaled back its operations from the country in July 2019. It was operational in Delhi, Bengaluru and Mumbai and had raised $30 Mn in an extended Series B round of funding to expand in India.

However, Wunder isn’t the only mobility company which found difficulties in operating in India. Last year, Ofo, Mobike etc had to pull out of India.

Coming down to other products which were taken down this year, Google’s smart messaging app Allo was shut down in March 2019. In 2018, Google paused investment in Allo and brought some of its features such as Smart Reply, GIFs, and desktop support into Messages.

Further, India’s foodtech unicorn Zomato had to scale back its Infinity Dining product due to angry restaurateurs claiming that deep discounts negatively impacted their businesses. Launched in July 2019, Infinity Dining was based on an all-you-can-eat model and allowed users to avail unlimited serving of the whole menu at a fixed per-person price, which was decided by the restaurants.

In September 2019, Zomato had taken down Infinity Dining service from its app. The restaurants listed on the food aggregator had called out Zomato Gold and Infinity Dining services, which provided heavy discounts, for eating into their profits.

Further, Gurugram-headquartered Soonicorn UrbanClap has narrowed down its operations to only two categories, beauty and home this year. The company planned to shut down its other non-core businesses, including wedding services and photography. UrbanClap cofounder Abhiraj Bhal reportedly said that the company is going to manage and monitor the quality of the service closely on its platform.

Experiments, pivots and eventually shut down, has been a norm in the Indian startup ecosystem which fuels innovation. As investors continue to support new ideas and entrepreneurs continue to innovate and disrupt, shutdowns also continue to be a part and parcel of the Indian startup ecosystem.

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