10 startups that shut shop in 2016

Moneycontrol Bureau 2016 was not a very exciting year for Indian startup ecosystem. The shutdowns during the year proved to be an eye opener for many startups who relentlessly burnt cash without any regards to profitability.

The slowdown in funding and stiff competition from foreign players forced many startups to either shutdown or curtail their operations. Companies such as Flipkart, Paytm, Pepperfry posted huge losses in FY16, indicating a mad rush among online majors to achieve volume-based growth.

Funding deals were halved even pre-demonetisation, as investors took a cautious approach which led to a lot of consolidation in the sector.

The demonetisation drive by Modi government in the second half of 2016 has also took a toll and the startup graveyard is also expected to see some new graves during first half of 2017.

Here are top 10 startup shutdowns which made news during the year:

1) AskMeBazaar

The Astro funded ecommerce startup laid off about 4,000 employees in the biggest startup shutdowns of the year. The company downed shutters after its management claimed that the investors had failed to provide adequate funding and the case was dragged to courts. Astro declined further funding claiming mismanagement by co-founder of AskMeBazaar and former managing director of Getit Infoservices.

Funding: USD 300 million

Key investors: Astro Entertainment Network Ltd

2) TinyOwl

One of the top three food tech companies in India, TinyOwl shutdown this year after firing almost 80 percent of its staff strength. The company had fired almost 600 employees in a six month period. Started by a bunch of IIT-Bombay graduates in their twenties, the company aggregated restaurants on its platform and took online deliveries from customers. Over and on top, it offered huge cash discounts which exacerbated its burn rate. The company shutdown and few of the top managers joined hyperlocal logistics player Runnr. The company had raised eyebrows when it raised about Rs 100 crore in 2014.

Funding: USD 27.7 million

Key investors: Sequoia Capital, Nexus Venture Partners, Snapdeal founders Kunal Bahl and Rohit Bansal

3) PepperTap

E-grocer PepperTap closed down its business operations in April, 2016. They started rolling back from various cities across India from 2015 due to non-acceptance of the concept in the market. Lack of demand and poor unit economics forced PepperTap to back out from the business.

Funding: USD 51.2 million

Key investors: Snapdeal, SAIF Partners, Sequoia Capital, InnoVen Capital and others.

4) Fashionara

Bangalore-based fashion and lifestyle e-tailer offered various product listings across men and women clothing and fashion accessories. The startup did not clarify the reason for shutting down its operations. However its rumored that the startup could not sustain discounted competition from its fashion ecommerce rivals Jabonh, Amazon and Myntra. Its net loss widened to Rs 32.13 crore in FY’15 from Rs 21.11 crore in FY’14.

Funding: USD 8 million

Key investors: Helion Venture Partners, Lightspeed China Partners

5) Frankly.Me

Video-Micro blogging platform Frankly.Me allowed users to ask questions from celebrities and public figures and get video selfie replies. It shut down operations in February this year after it was not able to achieve product market fit. The company had returned the remaining funds back to the investors.

Funding: USD 600K

Key investors: Matrix Partners India, Wisecalvin, RB Investments 6) iTiffin

Started in 2013, Bangalore-based meal service provider delivered tiffins based on defined calorie count requirement. In the first year of operations, it served more than one lakh meals. It clocked a revenue of close to Rs 3 crore in 2014. It raised seed funding from a large Indian family office and angel funding from cricketer Robin Uthappa. However the problems in food tech model and reduced funding for the sector made the startup shut down.

Funding: USD 1 million

Key investors: Robin Uthappa and others

7) Purple Squirrel

Edtech startup Purple squirrel closed its business in May 2016 because of fast cash burning. The startup was forged ties with students and industry leaders for industrial exposure and training.

Funding: Undisclosed

Key investors: Matrix Partners India, India Quotient 8) Klozee

Apparel rental platform Klozee allowed customers to access apparels on rent. It use to source apparels with help of partnership with various designers, boutiques and manufacturers. The startup shut down its operations pointing to the challenges faced by players in the pre-owned apparel sale and rental space in India.

Funding: Undisclosed

Key investors: TracxnLabs

9) Intelligent Interfaces

Started by Housing's ex-CEO and cofounder Rahul Yadav, Intelligent Interfaces was a startup that was meant to provide intelligent data aggregation and visualization solutions to the Indian Government. Rahul Yadav announced the shutdown of the company in May 2016 through a Facebook update, after it failed to receive market traction.

The company had raised funding from YouWeCan and Flipkart cofounders Binny Bansal and Sachin Bansal. 10) Tushky Backed by world's largest startup incubator 500Startups, Mumbai based Tushky was an online marketplace for discovering and connecting travelers with tour operators for leisure activities. The startup has quietly stopped operations after it failed to scale up and raise further funding. One of its co-founder joined OYO Rooms after the shutdown. The company was valued at US$1 million at its last round.

Funding: USD 263,000

Key investors: 500Startups, Vijay Shekhar Sharma, Dinesh Chandra Agarwal, Anupam Mittal, Naveen Tiwari, etc. Follow @startup_18