Former Zynga India Head, Shailesh Daxini launched vocational training startup Vah Vah in October 2020
The company reported a loss of INR 7 Cr in FY22, and abruptly sacked 150 employees in April this year
Sources say after shutting down Vah Vah, Daxini is now in talks for raising funding for his mobile gaming venture
India’s edtech industry was once brimming with capital investments as Covid presented multiple opportunities. However, since startups raised millions of dollars of funding on fancy valuations using the country’s billion dollars market size as a bait, every stakeholder has been looking down the rabbit hole.
Reason? Bloated valuations + weak unit economics equals to a scared investor and a funding winter. And we have many examples to prove this point.
Ranging from BYJU’S, the edtech decacorn that is now cornered on multiple fronts, to many others who have shut shops, are on the verge of winding down their operations, or are looking to get acquired, all have been the casualties of the fancy funding and valuation windfalls that they unlocked during the pandemic gold rush.
Away from media attention and limelight, the former India head of Zynga, Shailesh Chaganlal Daxini, has silently shut down his nearly three-year-old venture, Vah Vah, of course, after slashing several headcounts.
Founded in 2020 by Daxini and two ex-Zynga employees, Akash Senapaty and Muthukaleeshwaran Subbiah, Vah Vah, a vocational training startup, last raised $2 Mn from Sequoia Capital India & SEA (now Peak XV Partners) under its scale-up programme for startups, Surge. Vah Vah also received an additional $1 Mn in a bridge round in 2022, sources informed us.
According to Vah Vah’s website, the early stage venture offers certificate courses in makeup artistry, hair styling and grooming. On the website, the online vocational training platform claims to have its main office in Koramangala, Bengaluru.
When we (Inc42) visited the office, we were surprised to find that the office had long been closed. Sources close to the startup said Vah Vah also invited police intervention after it abruptly sacked 150 employees in April this year.
Daxini’s Well-Decorated Resume
While on the ground, we were told that Daxini, an experienced tech entrepreneur, has a great rapport with top VC funds in India and US. It is on the back of this reputation that Daxini first set up Six Red Guns in June 2017.
Six Red Guns’ core focus was combining robotics with social media gaming. With this playbook, the startup aimed to capture a big share of the burgeoning gaming industry. However, the fate of the venture was short-lived and the startup had to embrace its early demise in just a year.
Daxini has a proven track record of turning around the fortunes of global gaming firm, Zynga in India. However, when it comes to his own ventures, he has already run out of luck, twice.
On his Linkedin profile, Daxini endorses himself for the success of Zynga’s most popular games — Mafia Wars, Farmville, and Farmville 2, among others.
“With annual revenues over $160M and margins over 50%, I have grown it (Zynga) into the most profitable studio for Zynga and drive a significant amount of top line and bottom line for Zynga Inc and created the playbook that doubled the LTV (revenue per player),” Daxini mentions in his LinkedIn profile.
Zynga was acquired by Take-Two Interactive Software, an American video game company, in 2022 for $12.7 Bn, marking the second-largest acquisition in the global gaming industry.
How Did Vah Vah Come Into Existence?
Betting big on the pandemic-led boom, Vah Vah was launched in 2020. Like any edtech player, the aim was to leverage the power of technology and the internet to upskill and train individuals who were forced to stay in the confines of their homes due to multiple pandemic waves and extended lockdowns.
“Under his leadership, Zynga flared quite well. The success he got with Zynga brought him everything — reputation, wealth and a network. And the next thing on his mind was to do startups,” a source said.
“Daxini joined hands with Senapaty and Subbiah and cofounded Vah Vah. They pitched something along the lines of coding and robotics before Sequoia and ultimately zeroed in on vocational training in the beauty segment,” we were told.
The pitch was simple: In the next three years (by 2023), India will need a skilled workforce of over 70 Mn individuals, with the beauty industry alone accounting for 3 Mn new workers. Given that the infrastructure (back then) had the capacity to train about half a million people, Vah Vah was looking at a humongous opportunity to fill the gap of labour shortage in the sector.
It targeted skilling individuals with little exposure to formal education so that they could generate a livelihood for themselves.
A Nobel Cause, But What Went Wrong?
After speaking with several erstwhile employees, one thing was clear — Vah Vah was ailing with what almost all edtech have in common — falling revenues and bloating losses — weak unit economics, largely.
Vah Vah offered online courses on professional makeup artistry, hairdressing and personal grooming in the range of INR 15,000 to INR 45,000. The duration of these courses lasted anywhere between two weeks and two months.
The vocational skilling platform also extended easy EMI options to attract the interest of individuals and aspirants, which proved to be a failure.
“Many who signed up for its courses defaulted on paying EMIs even after finishing their courses. Even though the company’s vocational training courses were reasonably priced, students started faltering on EMIs and soon the company was left with no other way to generate revenue,” a former senior employee said.
Adding to the pressure was Vah Vah’s big sales team, (more than 50 employees) which was only straining the startup’s operational cost.
Finally, it all came down to hardcore sales and recovering EMIs, which remained the startup’s Achilles heel, as all cash taps ran dry with each passing day.
According to Vah Vah’s FY22 financial report filed with the Ministry of Corporate Affairs, the company reported a loss of INR 7 Cr during the year against a mere revenue of INR 3.2 Cr.
“A team of 150 employees, including trainers, salespeople, tech staff, et al., makes no sense when you are burning cash. The cofounders had to ultimately fire 150 people in one go and shut down its offices,” a source said.
The source added this made way for a full-scale drama, and even cops got involved when employees created a ruckus over the non-payment of their final dues by the company.
We (Inc42) have sent a detailed questionnaire to Daxini and his team to tell their side of the story. The article will be updated accordingly.
According to sources, Daxini is in talks to pick funding for his next startup, which could be a mobile gaming venture.
Third Time’s A Charm
Well, there is no doubt about the fact that investors are always more comfortable with second-time founders and entrepreneurs. This is because such entrepreneurs bring loads of experience around on what could and won’t work for them and their next business venture.
In Daxini’s case, investors already know that Zynaga’s India operations grew leaps and bounds under his leadership. Furthermore, Daxini’s third attempt could work as a charm as he is expected to operate in his area of expertise, i.e., gaming.
Moving on, in Vah Vah’s case, even though the founders tried to cash in on the pandemic bull run and the edtech gold rush, things started falling apart, adding much to his chagrin. Given that Vah Vah wasn’t the only casualty of the 2020-21 windfall, much could yet be anticipated to save the venture from meeting its judgement day.
The Indian startup ecosystem currently is way too much exposed to uncertainties, and this is probably the reason why almost 90% of startups are unable to commit to dying another day.
At this point in time, only time will tell if Daxini’s third attempt will prove to be a charm or just another stepping stone to a future venture, paving the way for his fascination to do startups.