Last year i.e in 2015, about 140 startups shut their shops but this year Indian startup ecosystem saw the one of the worst downturn as the number is 50% higher then the previous year. According data analytics firm Traxcn, year 2016 witnessed 212 startups shut down and not survived to see 2017.
Seven out of top-10 highly funded startups which closed down were founded in or after 2014. These included online courier booking platform Parcelled, which wound up business in June 2016, and DoorMint, which shut its on-demand laundry service in September due to lack of funds.
The biggest casualty in 2016 was grocery delivery startup PepperTap, which had raised the highest funding from investors including Sequoia Capital. The company, which started operations in 2014, had raised more than $51 million from a league of big investors, including Sequoia Capital, Saif Partners and e-commerce major Snapdeal. In April, its founder Navneet Mishra announced the decision to close the grocery business.
The list also includes Buildzar, an e-commerce marketplace for construction material. It stopped services this month, just 11 months after raising $4 million from Puneet Dalmia, MD of Dalmia Bharat.
“There is a growing intolerance for companies which are not performing; and there is increasing pressure from investors who are closely seeing what works and what doesn’t. Investors know that there is credible capital that this country can’t afford to waste, so there is very little merit in allowing such companies to continue running,” says Ajay Hattangdi, CEO of InnoVen Capital — a venture lending firm which had lent $4 million to PepperTap last December.
[Top Image – Shuuterestock]