Microsoft, IFC Backed Builder.ai Collapses After AI Fraud Exposed

Founded in 2016 by Sachin Dev Duggal and headquartered in London, Builder.ai burst onto the tech scene with the promise of revolutionizing app development. The company marketed its platform as an artificial intelligence–powered solution, touting an AI assistant named Natasha that could build software as effortlessly as ordering a pizza.

With a dazzling valuation of $1.5 billion, Builder.ai attracted heavyweight investors including Microsoft, the Qatar Investment Authority, SoftBank’s DeepCore, and IFC, and raised more than $450 million in funding.

Beneath the glossy marketing narrative, however, a very different story was unfolding. Rather than relying on groundbreaking algorithms and autonomous machine learning, Builder.ai’s “AI” was fueled by human ingenuity. Investigations revealed that more than 700 skilled engineers in India were manually crafting the code that the company claimed was generated by Natasha. These engineers, working from hubs in cities like Bengaluru and Noida, were responsible for delivering customized software solutions for clients, all while their efforts were misrepresented as the output of advanced AI.

The exposure of this deception sent shockwaves through the industry. Former employees and insiders began to speak out, pointing to a well-orchestrated façade where human developers were camouflaged as an AI solution. What initially appeared to be a leap forward in technology turned out to be a classic case of “AI washing”—where a company exaggerates its technological capabilities to lure in investments and boost its market presence. This revelation not only undermined the credibility of Builder.ai but also called into question the ethics of promoting technology based on inflated claims

The financial repercussions were swift and severe. Builder.ai’s management had previously reported stellar revenue figures—claims of $220 million in 2024 were later debunked by an independent audit showing actual earnings closer to $50 million. With lender Viola Credit seizing $37 million from the company’s accounts and mounting debts including approximately $85 million owed to Amazon and $30 million to Microsoft, the startup found itself on a downward spiral.

These financial misrepresentations led to insolvency proceedings across multiple jurisdictions, forcing the company to lay off nearly 1,000 employees in India, the UK, and the US.

Beyond the immediate fallout, the collapse of Builder.ai has ignited a broader debate about transparency and accountability in the AI industry. The scandal stands as a stark reminder that in a time dominated by the promise of artificial intelligence, authenticity remains paramount. Investors and regulators are now urged to conduct greater due diligence and demand verifiable evidence behind any claims of AI-driven innovation. The Builder.ai debacle serves as a cautionary tale, urging the tech community to distinguish genuine technological breakthroughs from marketing-driven illusions.

As the industry reels from this saga, many are left questioning the ethical responsibilities of startups seeking to capitalize on AI hype. The case of Builder.ai underscores the need for clear standards and robust verification mechanisms to prevent similar deceptions in the future. In a rapidly evolving technological landscape, the lessons learned from this collapse may pave the way for stronger industry regulations and a renewed focus on real, substantive innovation.

The story of Builder.ai is more than just a tale of financial misrepresentation; it is a reminder that in the race toward the future, innovation built on transparency and truth will always outlast the fleeting allure of hype. The fallout is prompting a broader discussion on how best to balance bold visions with ethical practices in the age of artificial intelligence.

India's 1st Bitcoin Company Shuts Down Amid RBI's Crypto Ban

It all started in late 2012 when Mahin Gupta started India's first Bitcoin exchange, buysellbitco.in, and made it most trusted and used exchange in India pioneering online purchase of Bitcoin in the country and voted as best new bitcoin company at CoinAgenda conference in Las Vegas in 2014. Later in September 2014, Buysellbitco.inwas was rebranded to Zebpay -- a bitcoin wallet. In 2016, the company announced that it had crossed a whopping ₹100 crore (~$15 Million) turnover milestone.

Everything was going well with Zebpay, one of the first to usher buying Bitcoins in India, until one silly day India's central bank Reserve Bank of India (RBI) banned banks from servicing crypto exchanges/wallets.

Despite the ban, Zebpay has survived and was up and running by introducing Crypto-to-Crypto trading but all gone in vain as on Friday, the crypto exchange Zebpay announced that it is shutting down after the long fight the exchange has given to prejudiced and pessimism about cryptocurrencies in India.

In its official blog post, ZebPay officially announced that it was forced to stop activity due to legal and regulatory obstacles.

"Despite regulatory and banking problems along our journey, we continued to look for solutions as we did not want India to miss the bus of digital assets that power the public blockchain," said the blog post of Zebpay.

[caption id="attachment_126431" align="aligncenter" width="700"] Zebpay Co-founders (From Left ) Sandeep Goenka, Mahin Gupta and Saurabh Agrawal [Image ForbesIndia.com, Mexy Xavier][/caption]

It further said, "At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business. As a result, we are stopping our exchange activities. At 4 p.m. today (28 September 2018), we will cancel all unexecuted crypto-to-crypto orders and credit your coins / tokens back to your Zebpay wallet. No new orders will be accepted until further notice.”

In a statement to Crypto-News India, Chief Executive Officer (CEO) of Zebpay Ajeet Khurana, said "The Indian environment is highly non-conducive to the crypto business. Our revenue model is only through transaction fees. So by shutting the exchange, we have effectively made our revenue zero. Naturally no company would want to do that if it has a choice.”

Notably in February 2017, Zebpay along with other bitcoin startups in India -- Unocoin, Coinsecure and Searchtrade, jointly launched Digital Asset and Blockchain Foundation of India (DABFI) for the orderly and transparent growth of virtual currency market. It however didn't resulted into anything fruitful and nothing substantial happened in DABFI apart from the fact that in November 2017 the self-regulatory body eventually merged with the Internet and Mobile Association of India (IAMAI), the internet industry body. The new merged entity is called as 'IAMAI FinTech Council' however even after this no new development has been heard since then.

Ironically, in January this year, a nationwide survey revealed that people in India have invested in Bitcoin and other cryptocurrencies worth whopping $3.5 billion. Seeing this, income tax (I-T) department had even sent notices to tens of thousands of such people who have done trading in any of the cryptocurrencies.

Zebpay’s might have lost its fight, but still there are quite a few Indian cryptocurrency exchanges up and running work without interruption and seek new solutions such as Peer-to-Peer transactions. These companies include WazirX, Koinex, LocalBitcoins, Unocoin, and many others.

Its Not Just Startups, Tech Accelerator Jaarvis Shuts India Operations, Write-off Investment

In India, its not just startups facing the hard times as in a recent unfortunate instance a Hong Kong-based tech startup accelerator Jaarvis is shutting down its India operations and is also in the process of writing off investments in its portfolio, reported Economic Times.

Launched in 2015 in India and operating from Gurgaon, Jaarvis Accelerator takes early stage technology based startups and helps them rapidly build a sustainable business. It used to have 4-months residence accelerator program and at the end of each four-month program, all Incubatees will be invited for a “Pitch Night” where they were given an opportunity to showcase their product/business to institutional investors and attract further funding.

Till date, Jaarvis accelerated nearly 13-14 startups in the space of Internet of Things, robotics, online-to-offline, fintech, mobility, and other emerging technologies. As part of its accelerator programme, selected startups got access to office space, mentors, prospective customers in Asia Pacific and funding of up to USD50,000 in return of 10-12% stake.

In December 2016, Jaarvis also launched ‘CoWork’, which was touted as India’s first co-working space within a tech accelerator.

Jaarvis' portfolio companies include Arbunize, Comparometer, DesignDodo, Drinks on Me, Edurev, Psychd, R2 Robotronics, Sniffer, Spotwrks, Extra Carbon, iManageMyHotel, and PromOn.

Citing an industry expert, the Economic Times report further said that shutting down of Jaarvis is not shocking as other startup accelerator in India especially of private-label are not doing good as well.

Accelerators are shifting their business models as they find it hard to sustain operations out of revenue from the equity startups give them. This is the key finding in a new report based on a survey of 579 accelerator programs that invested $207 million into 11,305 startups in 2016. Out of this, about US$18 million went into 1,368 startups from 76 accelerator programs in the Asia Pacific region, according to an annual Gust report released in September 2017.

Unable To Raise Funds, Foodtech Startup Yumist To Shut Down

Downturn in foodtech space continues as Gurgaon-based Yumist, which cooks its own meals and deliver it to customers through a cloud kitchen model, said on Friday it has decided to shut down after it was unsuccessful in raising fresh capital to survive in a competitive market.

Launched in 2014 by Alok Jain, an ex-CMO at Zomato along with restaurateur Abhimanyu Maheshwari, Yumist had raised total of $3 million in two rounds from three investors including Unilazer Ventures and Orios Venture Partners. The last funding it racked was in December 2015 and since then it failed to raise any fresh funding.

In an official blog post on Friday evening, the company announced, "We are shutting shop today. We failed to raise the kind of capital that this business required while staying true to the customer problem. In hindsight, there's a bunch of internal and external factors that led us to this dead end. From launching in a second city prematurely, or committing to a high growth, high burn model just because prospective investors wanted to see that back in 2015, or taking a tad bit too long to find the right business model, we made our mistakes. We learnt from these mistakes and recovered fast, but maybe not too fast."

In May, Yummist had already halted its operations in Bengaluru, citing reason of not owning a kitchen facility as the hinderance for the startup in providing quality service and innovation in menu to its Bengaluru customers.

In the same month, an another Gurgaon-based food delivery startup Eatonomist had shut down and prior to that TinyOwl, Spoonjoy, Dazo and a bunch of other food startups shuttered their operation in the past year or so . Globally, too, the segment has seen a churn with San Francisco-based Sprig and SpoonRocket shutting shop after a bevy of such services got funded in the heady years of 2014-15.

The Yumist blog post on Friday said that the company was clocking Rs 65 in margins per order at an average order value of Rs 190 by March this year. "Our delivery outlets were breaking even at just 70 orders a day, we were acquiring new customers at Rs 180 and recovering back this money within 45 days. Owing to our product quality and customer experience, we enjoyed good word of mouth (with 50% of our new customers coming through referrals), 70% of our monthly orders were from repeat customers and from March until September we tripled our revenues and gross margins. With these trends, Yumist would have become a profitable company by June 2018," the blog post said.

Abof.com To Shut Shop By Year End

In a shocker of a news, Aditya Birla Group’s fashion e-commerce platform Abof.com has decided to shut its shop by the end of 2017, according to a report in the Economic Times.

Aditya Birla Online Fashion started its operations two years ago in October 2015. The platform lists clothing and accessories for men and women, both from Aditya Birla’s brands as well as clothing curated from other brands. Last year, global ecommerce giant Amazon ended up adding Abof.com as a seller on its marketplace.

Reportedly, the company has already informed all of its 240 employees about the decision and has finalised December 31, 2017 as its last day of operations. The employees have an option of either accepting four-and-half months’ salary as a severance package and leave the organisation or continue being a part of the Aditya Birla Group in some other department other than Abof. Reportedly, November onwards they will also start closing down their stocks.

Aditya Birla’s director of human resources Santrupt Misra confirmed ET about the development. He further shared that the news shouldn’t come as much of a shock since most ecommerce players in the country are currently finding it hard to survive and it is time to realise that there’s something wrong with the segment.

Aditya Birla Group started Abof saying the platform would not offer discounts and, instead, sell a more limited and fashionable range of merchandise. In an interview in March, chief executive Prashant Gupta had told ET that their “target consumer is not the guy who is looking for a deal”.

Interestingly, Aditya Birla had earlier launched another e-commerce platform called TrendIN.com in 2013. The group used the platform to sell its in-house brands such as Van Heusen, Louis Philippe, Allen Solly, Pantaloons, People, Peter England and Planet Fashion. However, it ended up shutting down this platform and started its separate online platforms for individual brands.

Only 497 Startups Founded In India In 2017 Unlike To 10,906 In 2015, Says Report

The Indian startup ecosystem is in a slump. Once an industry bustling with numerable startup debuts every hour, it is now losing its sheen every succeeding year.

According to latest statistics made available by Bengaluru-based startups tracker Tracxn, as against 10,906 startups founded in India in the year 2015, the number has now crumpled down to a disappointing 497 startups in 2017 so far. During the years 2014 and 2016, the figure was above the 5,500 mark. Hence, the 497 startups 2017 statistic points towards the fact that the Indian startup is possibly looking at its slowest year in terms of number of startups founded in last three years, and that too by a leaping margin.

In addition to the slowing number of ventures taking birth, the Indian startup industry is also going through a sluggish period of number of investment deals taking place in this year. The Indian startup industry, which was once the apple of every investor's eye is now seeing experienced investors tightening heir pursue strings and taking much longer than before concluding transactions.

The year 2016 wasn't a good one for Private equity (PE) and venture capital (VC) investments in India. After having a dream run in 2015 with $19.6 billion across 767 deals, 2016 saw this number come down to $16.2 billion across 591 deals. According to data provided by EY, it was 18 per cent decline in terms of deal value and 23 per cent in terms of deal volume year-on-year.

Unfortunately, the year 2017 has seen these numbers depreciating even further. VC investments in the Indian subcontinent hit a three-year low mark in the second quarter of 2017 with $275 million making its way into the industry through 78 deals. The figure is 25 per cent lower when compared investments locked in during the same period last year, and 7 per cent lower than the previous quarter of 2017, which saw 84 deals worth $349 million successfully going through.

While the overall environment when it comes to statistics is particularly glum in the industry, investors, however, feel that all is not lost. In fact, they feel the less number of startups and entrepreneurs entering the market mean that only quality products/services are now making their way into the promising sector. They also believe that even though the number of new startups has shrunk up, the number of market segments where startups are being formed has expanded beyond the over exploited e-commerce sector. This is giving VCs are wider choice to choose and invest their money only in startups and causes that they truly believe in.

While the number of startups taking birth has gone down drastically, the number of startups bidding adieu to the Indian startup ecosystem has gone up. According to data from Traxcn, while 437 startups shut down in 2015, this number increased to 450 in 2016 and in 2017, it is about 130 till date.

Read: 11 Promising Indian Startups that Shut Down in 2017 [January- July’17]

All the aforementioned figures point towards the fact that the Indian startup industry needs attention. More than schemes, programs and initiatives, it needs direction from the industry veterans and the government on what to do and what no to. In the race of World Startup Ecosystem, India might have begun strongly but it's slowly losing sight of the prize by following the copycat trend. It's the need of the hour for the industry to understand that uniqueness and innovation always go a long way.

Only 497 Startups Founded In India In 2017 Unlike To 10,906 In 2015, Says Report

The Indian startup ecosystem is in a slump. Once an industry bustling with numerable startup debuts every hour, it is now losing its sheen every succeeding year.

According to latest statistics made available by Bengaluru-based startups tracker Tracxn, as against 10,906 startups founded in India in the year 2015, the number has now crumpled down to a disappointing 497 startups in 2017 so far. During the years 2014 and 2016, the figure was above the 5,500 mark. Hence, the 497 startups 2017 statistic points towards the fact that the Indian startup is possibly looking at its slowest year in terms of number of startups founded in last three years, and that too by a leaping margin.

In addition to the slowing number of ventures taking birth, the Indian startup industry is also going through a sluggish period of number of investment deals taking place in this year. The Indian startup industry, which was once the apple of every investor's eye is now seeing experienced investors tightening heir pursue strings and taking much longer than before concluding transactions.

The year 2016 wasn't a good one for Private equity (PE) and venture capital (VC) investments in India. After having a dream run in 2015 with $19.6 billion across 767 deals, 2016 saw this number come down to $16.2 billion across 591 deals. According to data provided by EY, it was 18 per cent decline in terms of deal value and 23 per cent in terms of deal volume year-on-year.

Unfortunately, the year 2017 has seen these numbers depreciating even further. VC investments in the Indian subcontinent hit a three-year low mark in the second quarter of 2017 with $275 million making its way into the industry through 78 deals. The figure is 25 per cent lower when compared investments locked in during the same period last year, and 7 per cent lower than the previous quarter of 2017, which saw 84 deals worth $349 million successfully going through.

While the overall environment when it comes to statistics is particularly glum in the industry, investors, however, feel that all is not lost. In fact, they feel the less number of startups and entrepreneurs entering the market mean that only quality products/services are now making their way into the promising sector. They also believe that even though the number of new startups has shrunk up, the number of market segments where startups are being formed has expanded beyond the over exploited e-commerce sector. This is giving VCs are wider choice to choose and invest their money only in startups and causes that they truly believe in.

While the number of startups taking birth has gone down drastically, the number of startups bidding adieu to the Indian startup ecosystem has gone up. According to data from Traxcn, while 437 startups shut down in 2015, this number increased to 450 in 2016 and in 2017, it is about 130 till date.

Read: 11 Promising Indian Startups that Shut Down in 2017 [January- July’17]

All the aforementioned figures point towards the fact that the Indian startup industry needs attention. More than schemes, programs and initiatives, it needs direction from the industry veterans and the government on what to do and what no to. In the race of World Startup Ecosystem, India might have begun strongly but it's slowly losing sight of the prize by following the copycat trend. It's the need of the hour for the industry to understand that uniqueness and innovation always go a long way.

11 Promising Indian Startups that Shut Down in 2017 [January- July'17]

Indian startup ecosystem is very interesting to watch. With the rise of every new startup, we can witness the failure of one or the other startup at the same time. If we look at the report by Institute for Business Value and Oxford Economics, it highlights that more than 90% of startups fail within the first five years. Whereas, 2016 NASSCOM states that the reason behind the failure of startups in India is none other than lack of innovation which led some startups to shut their shops within a few years of their inception.

In 2016, it was reported that between January and August, 29 startup shutdowns in India took place. Startup shutting their shops in 2017 (from January to July) have a no different story to tell. Until July 2017, the year has seen the total of 11 major startups closing down their operations and winding up some part of their business. The Stayzilla shutdown has been the most talked about affair. If we look at the main reason for startup shutdowns, it is none other than cash crunch. Today’s investors are taking less risk and cautiously investing in startups.

We at IndianWeb2 has curated the list of startups that end up breaking dead instead of breaking even.

Finomena

Founded in: 2015
Founded by: Abhishek Garg and Ridhi Mittal
Headquartered in: Bengaluru
Shut Down in: July 2017

Though its still has to come officially from the company officials about the shutdown announcement, its quite evident that Finomena users could not able to log in on its app. Moreover the startup's Google business listing also shows that its permanently closed.

Founded by IIT-Delhi graduate Abhishek Garg and Stanford graduate Ridhi Mittal in 2015, Finomena had shut its shops after it failed to raise series-A funding. It is said that the main reasons for shutdown were the high cash burn and moreover cost of acquisition was high for any plausible buyout.

The Bengaluru-based fintech startup used to facilitate small ticket loans to students and young professionals for buying electronic devices and appliances. For the same, startup had inculcated data and machine learning to reassess the creditworthiness of borrowers for the disbursal of loans.
The startup which was funded by notable private equity firm Matrix Partners was the only fintech company from India to have made it to “International Innovator of the Year award” by LendIt USA 2017, the world’s largest show in lending and fintech.

Finomena was different from P2P lending firms but was in competition with rivals such as ZestMoney, CashCare, Capital Float, and Lendingkart, among dozen other alternate loans startups that have cropped up in the country.

Surpluss

Founded in: 2014
Founded by: Amit Gupta
Headquartered in: New Delhi
Shut Down in: July 2017

Owing to internal business issues aggravated by demonetization, an online retail store for refurbished electronics, Surpluss has shut their operation. Surpluss used to sold refurbished and surplus products ranging from mobile phones and tablets to fashion apparel.

Owned and operated under, Pluss Digital Ventures Private Limited had directors such as SN Rai, co-founder of Lava Mobiles, Amit Gupta, former director Channel Strategies at Samsung India and HS Bhatia, founder of Green Lava, a battery rejuvenation business.

Cardback

Founded in: 2012
Founded by: Nidhi Gurnani and Nikhil Wason
Headquartered in: New Delhi
Shut Down in: June 2017

Online platform for loyalty cardholders Cardback has shut down its operation due to fund crunch and less demand in India for multiple credit cards. During his five year journey, the startup had raised $170Kfrom some of the prominent angel investors including Rajan Anandan, Sunil Kalra, and Alok Mittal. It was a platform for credit, debit and loyalty cardholders to check rewards.

Eatonomist

Founded in: November 2014
Founded by: Anisha Dhar and Nupur Khanna
Headquartered in: Gurugram
Shut Down in: May 2017

An online food delivery startup, Eatonomist has recently shut down its operation. The startup used to deliver meals prepared in its own kitchens. Founded in November 2014 Eatonomist was operational in Gurgaon and Delhi and followed a full-stack business model wherein it controls the kitchens and delivery services. According to the reports, one of the Eatonomist co-founder, Anisha Dhar has joined UberEATS, a food delivery service launched by Uber.

In 2016, the Gurugram-based startup had raised an undisclosed amount in seed funding from MCube Capital Advisors Pvt Ltd. However the firm failed to raise much-needed follow-on funding, and this might be one of the reasons for the shutdown.

HotelsAroundYou

Founded in: 2013
Founded by: Harsha Nallur, Mohsin Dingankar and Animesh Chaudhary
Headquartered in: Mumbai
Shut Down in: May 2017

Owned and operated under, Instant Hotels Around You Pvt Ltd, HotelsAroundYou has recently ceased its operations as it could not raise follow-on funding. An online platform that allowed room bookings at the last minute had raised an undisclosed amount of seed funding from VentureNursery in 2014. Not only this, startup was also graduated from the accelerator’s fifth batch.

Besides VentureNursery, other prominent investors who backed the firm includes Amit and Arihant Patni and the then founder and chief executive of Aditya Birla private equity group Bharat Banka.

As per the media reports, the firm had closed its functioning in the latter half of 2016, although the timeline was not clear. The company’s website was defunct and the mobile app was not working when an attempt was made to install it from the Android play store.

Turant Delivery

Founded In: 2015
Founded by: Satish Gupta, Ankur Majumder, Siddharth Arora
Headquartered in: Delhi
Shut Down in: May 2017

Turant Delivery, an intra-city logistics company has shut down its operation as the firm was unable to raise funds and burning money blindly was not advisable. The last social media update was on March 28, 2016, but the shutdown was reported in May 2017. The startup used to utilize its technology platform to help customers book and monitor their deliveries on a daily basis. With the help of a zone-based algorithm, it claimed to provide services at less than 15% less. It was operational in Delhi, Mumbai, Bengaluru, Kolkata, and Surat.

Genie

Founded in: 2015
Founded by: Sreekesh Krishnan, Rakesh Mani and Parth Shah
Headquartered in: Chennai
Shut Down in: March 2017

Due to the insufficiency of funds and lack of investor interest, in March 2017, hyper-local delivery startup Genie cease its operations. Founders had announced the close down of the operation through Facebook post. In October 2015, the startup bagged funding from Wayne Burt Group, a Singapore-based group that invests in oil and gas, aerospace and petrochemicals.
 
Genie started off as an on-demand delivery platform for customers. A year after the startup launched Genie for Business to look after on demand, bulk and scheduled orders for restaurants, home bakers and any other business that needed assistance with deliveries. Genie is one among many startups in hyper-local delivery sector who couldn’t survive even for two years since starting their operations.

Cube26

Founded in: 2012
Founded by: Saurav Kumar, Abhilekh Agarwal and Aakash Jain
Headquartered in: New Delhi
Shut Down in: March 2017

Mobile technology startup Cube26 Software Pvt. Ltd has closed its Internet of Things (IoT) business which has led to several job cuts. The firm had raised $7.7 million (Rs 50 crore then) in seed funding from Tiger Global and Flipkart in October 2015. The firm has now decided to solely focus on its software and services business.

Cube26 launched its first IoT product, a Bluetooth-controlled colour-changing smart bulb, in November 2015 under the brand IOTA. The company introduced a new IoT brand, Reos, in August last year, under which it launched a suite of smartphone apps as well as a new version of the smart bulb, Reos Lite.

Stayzilla

Founded in: 2005
Founded by: Yogendra Vasupal (Yogi), Rupal Yogendra, Sachit Singhi
Headquartered in: Bengaluru
Shut down in: February 2017

Yogendra Vasupal, co-founder Stayzilla announced the shutdown of the venture through a Medium blogpost in February 2017. The reason stated by Yogi was the lack of local network effect, inability to expand quickly, and cost effectively plus high costs and low revenues. Not only this, the firm was in plenty of legal trouble, following the startup shutdown with Yogi being arrested on charges of fraud.

Founded as an online travel agency for hotel bookings named as Inasra, Stayzilla was latterly renamed and pivoted to a hotel aggregator model in 2010. Backed by investors including Matrix Partners and Nexus Venture Partners, the company had raised $33.5 million funding in three funding rounds – $500K in 2012, $20 million in 2015 and $13 million in 2016.

Taskbob

Founded in: December 2014
Founded by: Aseem Khare, Abhiroop Medhekar, Ajay Bhatt and Amit Chahalia
Headquartered in: Mumbai
Shut Down in: January 2017

Home and beauty services startup, Taskbob, shuts down its operations due to unforeseen circumstances. According to the media reports, the decision of shutting the operation came after the startup failed to raise fresh funds since February last year.

Startup that had also acquired Zepper, a Bengaluru-based home services startup had raised Rs 28-crore Series A funding from Ivy Cap Ventures and existing investors Orios Ventures Partners and Mayfield India.

Prophesee

Founded in: 2014
Founded by: Ishaan Sethi, Harshil Gurha, Jitesh Luthra
Headquartered in: Delhi
Shut Down in: January 2017

Prophesee has recently shut down its operation. The reason for shutdown remains unknown.The startup empowered brands with data-driven insights that allow managers to compare and analyse digital campaigns and execute directly from the platform. The firm had raised $516K funding in an angel round from Indian Angel Network (IAN), Stanford Angels and Entrepreneurs India (SA&E India). Ajay Lavakare, Bikky Khosla and Satveer Thakral were the lead investors in the company.

Our Take

Plenty of startups in India are failing to sustain its existence in the last couple of years, particularly in food-delivery segment, hyperlocal, etc. Last year, several food-tech startups shut down its operations including Bite Club, an another Gurgaon-based food delivery startup, along with others similar ones such as Frsh.com, iTiffin, Zuper Meal, MealHopper, and and Zeppery, which shut shop due to poor unit economics and unsustainable business models.

On the one hand, the government is making its efforts to provide entrepreneurs with the adequate resources. It has recently launched Startup India Online Hub to encourage entrepreneurs and business in the emerging economy.
But, as it is said startup shutdowns are the part of the business ecosystem, now we have to wait and watch what 2017 hold for these upcoming startups. Time will only tell that how many more wickets are gonna fall in coming months.

Promising Fintech Startup Finomena Shuts Down Amid Funding Crunch

Bangalore-based fintech startup Finomena has shuts its shops after it failed to raise series-A funding and now it is no longer accepting new users on its website. The startup was funded by notable private equity firm Matrix Partners.

One can get an idea that how promising the startup was with the very fact that it is the only fintech company from India to have made it to "International Innovator of the Year award" by LendIt USA 2017, the world’s largest show in lending and fintech.

Launched in 2015 by IIT-Delhi graduate Abhishek Garg and Stanford graduate Ridhi Mittal, Finomena used to facilitate small ticket loans to students and young professionals for buying electronic devices and appliances and for same it had inculcated data and machine learning to reassess the creditworthiness of borrowers for the disbursal of loans.

Before starting finomena, both the co-founders were previously worked at places like Facebook, Microsoft, Boston Consulting Group and Bain Capital.

NOtably, Flipkart and other e-commerce firms also have a partnership with Finomena where the startup allows loan seekers to key in links of items on the e-commerce marketplace they want to buy with a loan.

"The company was in the market to raise series A funding since early this year, but that didn’t materialize. There were two buyout offers too. That failed because of valuation,” said a report by Moneycontrol.

The startup had raised its seed round from Matrix Partners and angel investors in March 2016.

The primary reasons for shut down of the startup is said to be high cash burn and moreover cost of acquisition was high for any plausible buy out.

"The startup managed to bring down the costs, but it wasn’t enough to bring up the average ticket size. Now in the second phase of expansion they need funds, but the cash burn makes it difficult," said an analyst.

The startup was addressing loan market for young professionals and self-employed people which has market size of around $50-60 Bn.

Finomena was different from P2P lending firms but was in competition with rivals such as ZestMoney, CashCare, Capital Float, and Lendingkart, among dozen other alternate loans startups that have cropped up in the country.

Last two years have saw a lot of early stage startups shutting their shops including some heavily funded as well like Stayzilla and Askme.

The year 2017 saw a serious funding crunch for young startups as according to a latest report by Tracxn, a startup analytics firm, the number of angel and seed investments made in the first half of 2017 (January to June) is down to 260, indicating a drastic drop from 419 in the first half of 2016. Whereas, Seed funding has seen a steep decline from 278 to 152.

Earlier in May 2017, News Corp, had released Startup Deal Report Q1 CY2017. According to this report, investors prefers late stage funding. The report states, angel and seed investments fell both in volume and value terms with deal volumes reduced to half with 120 deals in Q1 CY2017 in comparison to 245 deals in the same period last year.

Gurgaon-based Food Delivery Startup Eatonomist Shuts Down; Co-founder Joins UberEATS

Gurgaon based Eatonomist, an online food delivery startup that used to deliver meals prepared in its own kitchens, has shutdown its operation lately.

As of now the Eatonomist website says -- "We will be back shortly"

Exactly a year ago, the startup had raised an undisclosed amount in seed funding from MCube Capital Advisors Pvt Ltd however the company failed to raise much needed follow-on funding, and that might be one of the reasons for the shutdown.

Founded in November 2014 by Anisha Dhar and Nupur Khanna, Eatonomist was operational in Gurgaon and Delhi and followed a full-stack business model wherein it controls the kitchens and delivery services.

One of the Eatonomist co-founder -- Anisha Dhar, has joined UberEATS, a food delivery service recently launched by cab-hailing service Uber, while Nupur Khanna, the other co-founder, left the company in November 2016, according to their LinkedIn profiles.

Notably, plenty of startups in India are failing to sustain its existence in last couple of years, particularly in food-delivery segment. Last year, several food-tech startups shutdown its operations including Bite Club, an another Gurgaon-based food delivery startup, along with others similar ones such as Frsh.com, iTiffin, Zuper Meal, MealHopper, and and Zeppery, which shut shop due to poor unit economics and unsustainable business models.

Just yesterday, IBM has released its report on failing Indian startups where it says that startups in India face failure because of poor corporate governance due to entrepreneurial inexperience and unethical business conduct.

Chennai-based Delivery Startup Genie Shuts Down

Chennai based hyper-local delivery startup Genie on Monday announced that it would cease operations due to insufficiency of funds and lack of investor interest. In a Facebook post, the founders announced the decision to close down operations.

“We have been trying very hard to raise a round of funding to sustain operations and for growth. Over time, we courted a lot of investors who made a lot of promises, but none of them materialized,” Genie's founders said in a Facebook post.

"Genie will be delivering its last delight on March 31," they said.

Founded in 2015 by Sreekesh Krishnan, Rakesh Mani and Parth Shah, Genie started off as an on-demand delivery platform for customers. A year after the startup launched Genie for Business to look after on demand, bulk and scheduled orders for restaurants, home bakers and any other business that needed assistance with deliveries.

In October 2015, the startup bagged funding from Wayne Burt Group, a Singapore-based group that invests in oil and gas, aerospace and petrochemicals.

Genie is one among many startups in hyper-local delivery sector who couldn't survive even for two years since starting their operations. During 2014 several delivery startups raised funds and in a bid to offer instant satisfaction to customers, many dispense out discounts and offers, burning cash to acquire customers. While Sequoia and SAIF backed Peppertap, which was known as India’s third-largest e-grocer, shut down its online grocery business to focus on logistics, Grofers rolled back operations in nine cities and others like LocalBanya, GrocShop, LazyLad and MovinCart simply pulled the plug on their business.

Related Reading - 20 Indian Startups That Died Young in 2016

A study done by Xeler8 revealed that in India nearly one in two startups shuts down.

[Top Image - Genie founders in earlier days; Via - The Hindu]

20 Indian Startups That Died Young in 2016

Startups have been mushrooming in every segment now! Starting of a new business, scaling up and close down has become a part of the startup ecosystem. In every segment, there are plenty of imitator business ideas that struggled hard to survive but eventually failed. If we just checkout 2016 data, bounty of startups opened and closed down in past eight months. A study done by Xeler8 revealed that in India nearly one in two startups failed to sustain.

Here is a list of some of these startups who failed and forced to shut down operations because of poor business strategies or may be of any other reason. Here you can go for a quick review below:

1. LazyLad

Hyperlocal grocery marketplace LazyLad closed down its B2C business operations and cut down a large part of its workforce in Feb 2016! It was offering services in northern region and has raised around Rs 3.18 crore in its pre-Series A round of funding from Jai Choi, Tekton Ventures’ Founder and Managing Partner, Japan-based Sugashita Partners’ Kiyohiro Sugashita, and Japanese venture capitalist Hirokazu.It was launched by II Tians Paresh Goel, Ajay Sethi and Saurabh Singla.

2. Delivree King

Delhi based Delivree King was founded in March 2015 by Neeraj Bisht and Akash Sharma. It was focusing on logistics and provided special offers with each of its delivered parcel from different e - commerce companies. It had funding issue and finally closed all business functions this year.

3. PepperTap

Once upon a time when PepperTap was known as India’s third-largest e-grocer, but it closed down its business operation in April 2016. The shutting down harmed employees as well as its sister concern logistic company NuvoEex - that has Snapdeal as a biggest customer. In the last month the number of processing orders was less and it forced managing team to take decision to close down the business operations. This startup was launched by Navneet and Millind Sharma in November 2014 and had raised funding in four rounds from Sequoia Capital, SAIF Partners, Snapdeal and others. It had also acquired another budding hyperlocal grocery marketplace – Jiffstore but all went in vain.

4. Fashionara

Bangalore based Fashionara, which was launched by former Reliance Trends CEO Arun Sirdeshmukh and Former Chief Technology Officer, Times Internet Ltd, Darpan Munjal in 2012 closed its business in May 2016. It has raised $4 million from Helion Venture Partners and Lightspeed Venture Partners and scaled business in apparel, accessories, and footwear segment.

5. GetNow.at

Another hyperlocal on demand service provider, GetNow.at also closed down operations in June 2016. It was based in Nagpur and started by Jayesh Bagde in November 2014. It has raised an unknown amount of seed funding in July 2015 from Atulya Mittal, steel tycoon Lakshmi Mittal’s nephew but failed to tell the success tale.

6. AAGAAR.com

Delhi-based e-grocery delivery service provider AAGAAR.com shut down its operation in the month of June. It was run by Asankhya Retail Pvt. Ltd and had raised an unidentified angel funding amount from a group of investors in June 2015. Saharawat , who worked with Shoppers Stop and HyperCITY earlier has launched this concept in November 2014 to deliver fresh daily essential things to the customers’ doorstep.

7. FranklyMe

Another name in the failed startups list is FranklyMe! It was a video micro-blogging website founded by Abhishek Gupta and Nikunj Jain in 2014. It has raised $600k seed funding from Matrix partners. In another round, it has received an undisclosed amount from undisclosed investors. Despite the fact that it has been a well funded company, it failed to capture the market attention and closed down all operations in Feb 2016.

8. Amber wellness

Amber Wellness, an online beauty services startup closed down its operation in May 2016. It was co-founded by Abhimanyu Dhamija, former Co-founder of Housing.com and Saurabh Goel in August 2015. It has raised $1 million funding from unidentified angel investors and has also launched app but little traction and low margin forced to shut down operations.

9. Intelligent Interfaces

Another former Co-founder of Housing.com and the bad boy of Indian Startup history, Rahul Yadav took decision to shut down his new startup Intelligent Interfaces in May 2016 right after funding announcement from Sachin Bansal, Binny Bansal and YouWeCan at a valuation of 173.0 crore in total. He had launched this idea with Azeem Zainubhai to make the Indian governance highly efficient by providing intelligent data aggregation and visualization solutions. Everybody was stunned when read Rahul Yadav’s Facebook update in which he had mentioned that Intelligent Interfaces not working out anymore.

10. Purple Squirrel

Purple Squirrel an EdTech financial startup baked by Matrix closed down business in May 2016. It was started by Aditya Gandhi and Sahiba Dhandania to hook up students with industry leaders and big companies for industrial exposure and training. It forced to close down because of poor business and fast cash burning.

11. ClassVerse

Delhi-based fitness startup ClassVerse closed its operations just after 10 months of its start. It was launched by Rukaiya Kanchwala, a former director of Jabong as a marketplace to provide access of health services to fitness lovers but failed to achieve unit economics. It was operating business in Mumbai and NCR areas.

12. ZuperMeal

Another shocking shut down was of ZuperMeal, a home delivery food venture backed by world famous chef Sanjeev Kapoor! It has closed its operations in May 2016 just after eight months of raising seed funds from celebrity chef Sanjeev Kapoor and Ravi Saxena. It has also raised undisclosed amount from overseas investors in October 2015 but could not survive for a long time period. It was started by Pallavi Saxena, Balasubramanian Anantha Narayanan and Prabhakar Banerjee to allow users pre-order food at nearby restaurants.

13. ITiffin

Another meal service provider iTiffin closed down operations in March 2016! It was based in Bangalore and started by Ryan Fernando and Tapan Kumar Das in 2013. Although it has raised $1 million seed funding from different investors but all went in vain as it could not survived for a long time period.

14. EazyMeals

Another failure was EazyMeals! It closed operations just after eight months of its start. Ravi Baranwal and Harshdeep Rapal launched this venture and has raised funding from Matrix Partners successfully but died early after that.

15. Zeppery

Zeppery, another restaurant pre-ordering app closed down its operations just after six months. It was founded by Lalit Vijay and Utkarsh Srivastava in 2015 and backed by Suyash Sharma with $77k funding amount. It closed down operations as it fail to retain its customers.

16. BiteClub

BiteClub was launched in 2014 by Aushim Krishan, Prateek Agarwal and Siddharth Sharma to connect consumers and home chefs via a mobile app and the website. Although investors including Powai Lake Ventures, growX ventures and a group of angels invested in BiteClub but it stepped back in May as it could not able to solve few problems.

17. Klozee

Klozee is another failure! Bangalore based platform was renting apparel and founded by Pratik Moona, Aman Haji, Prashant Jain in 2015.  It has raised undisclosed seed funding amount from Tracxn Labs and other investors but closed its operation because it failed to overpower the challenges in apparel rental space in India.

18. AUTOnCAB

Delhi based AUTOnCAB took decision to shut down its operations as it failed to sustain its business because of unbendable competition from Uber and Ola who are heavily funded from investors. It was launched by Vinti Doshi and Aaditya Goyal in 2015 and stayed behind to crack any funding deal.

19. Zimply

Zimply is another startup that ended in Feb 2016 without mentioning any convincing reason! It was founded in 2014 by Karan Baweja, Ishaan Bhola and Viraj Verma to make online shopping of home decor easy. It has raised $510K funding amount from Matrix Partners and a group of Angel investors but now has closed its operations.

20. AskMe

AskMe, a Gurgaon-based online classified website announced to shut down its operations recently because of cash crunch as majority of investors exited! It was launched in 2010 and came out with new concept Askmebazaar - an online shopping portal in 2012.  Getit acquired AskMe from Network18 in 2013.

These are not only startups that closed operations in past eight months. Many others including GetNow (founded in 2014), Znapin (founded in 2013) and Flashdoor (founded in 2015) also closed operations in 2016. Apart from them, there could have more names to mention which became history now.

Besides, India's bilion dollar startups such as Flipkart and Ola closed its online grocer delivery services - Nearby and Ola Store respectively, this year. Grophers too closed its services in nine major tier-2 cities. In May 2016, TinyOwl, a restaurant food delivery app service discontinued its operations in all cities except Mumbai that's too despite $27 million funding amount raised from Matrix Partners and Sequoia Capital.

What’s going wrong in Indian Startup Ecosystem?

All these failures offer much to learn. Most important point is that the Indian market is in nascent stage and tremendous challenges stop startups to become money-spinning. Some startups wiped out because they were copycat ideas and failed to compete in stiff competition from leading giants who are backed by a crowd of investors. Moreover, startup companies also failed to fulfill the expectation of investors who compare the Indian market with Silicon Valley and US market and over pressurized founders to make businesses profitable before scaling. Some other failed because they lack right talent or did not have enough money hire talented staff.

[Top Image - Shutterstock]

In India, Nearly One in Every Two New Startups Fails

Starting a company has become much easier than it was a few years ago. Everyday we read about a new startup coming up in some or other part of the country. While we do get to read about their glorious debuts, it's their hardships and sad exits that we often don't get to know much about. Now, a study done by Xeler8, a market research firm, has put some hard facts about the Indian startup industry on the table.

The study revealed that 997 (43.7%) of 2,281 startups have had to a pull a plug on their operations since the June, 2014. Companies dealing in sectors such as eCommerce, logistics, analytics and food tech are finding it really hard to save the day because of too much competition. While a few sectors are finding it way too hard to keep their wheel spinning, companies in sectors such as banking, financial services and insurance (BFSI) are able to find themselves investors who are ready to bid bucks on them. Currently, topping the list for angel investors and Venture Capitalists is the Fin-tech sector, followed by health-tech in the second place and online recruitment coming at a close third.

The Xeler8 study reveals that many augmented reality (AR) and virtual reality (VR) ventures had to bite the dust last year. The study also talks about a new upcoming trend in the industry where when a startup fails in one niche, they try to make things work in some other related field.

"Some startups who failed when they dabbed their hands in logistics and e-commerce are now taking to SaaS (software as a service) and analytics given their tech background," said Xeler8's founder Rishabh Lawania in a statement.

After facing an array of failures in the past, Augmented reality (AR) and Virtual Reality (VR) have still somehow managed to arrest the interest of investors, all thanks to the runway hit game Pokemon Go. The game by Niantic is a testimonial of the fact, if AI is used intelligently one can make billions in no time at all.

According to Lawania, Internet of Things (IoT) is also climbing up the growth and popularity ladder much quicker than others. All that the investors want is a niche expertise and if you have got that, the field is yours.

The study calculates the average age of the failed startups to be 11.5 months. The ventures having some sort of funding survived for a long duration among the 2,281 startups that went live after June 2014. Out of the 997 failed ventures, only 32 had raised funds. Some of the famous names in the list include Frankly.me, Investo Presto, Eazymeals, Autoraja and TalentPad.

The Xeler8 study also reveals that higher regulation seems to be working out pretty well for survival of Indian startups. NBFCs, Wallets, MFIs and fintech ventures have lesser probability of ending up as a failure as they come with better capital adequacy, solid expertise and traditional backing. "Even crowd funding is highly regulated by Sebi. Of the 45-odd crowd funding platforms in India, 11 are doing really well. So I'd say in India, regulations are no hindrance to the startup ecosystem," said Lawania in a statement.

A large percentage of failed startup entrepreneurs end up jumping on the 9 to 5 corporate job bandwagon or join other startups. Only 1 in every 5 (22-24%) start a new venture. The study calculates the average age of the captains of these failed startups as just 27.3 years.

So, starting a company might be easy but making it survive the test of times seems to be a tough job, it seems.

[Top Image - Shutterstock]

Food delivery startup TinyOwl reportedly shuts down in all cities except Mumbai

Foodies all over India are well aware of the name, TinyOwl. Well, here's some sad news for all regular TinyOwl users. The Indian-based restaurant delivery app service that had recently raised more than a whopping $27 million from investors including big names like Matrix Partners and Sequoia Capital, has now decided to put a stop to its service in all its functional cities except for Mumbai. A week back some of the loyal TinyOwl users were shocked to see a notification stating that their services will be discontinued after May 22 in their area. The notification was visible everywhere except for some areas of Mumbai, where the company is headquartered. Prior to this, the startup was functional in eleven cities all around India. The food delivery app is one amongst many Indian startups that have recently been witnessing troubles times despite of receiving substantial support from investors. Most experts believe that this is because of the incapability of these startups to effectively manage their operations. Last year, the startup was in limelight when Gaurav Choudhary, one of its founders, was detained for two whole days by few of the startup's ex-employees after they were unceremoniously fired with post-dated checks. Well, it does seem a little gloomy for TinyOwl but all is certainly not lost. According to tech rumour mills, the startup is soon going to announce its merger with Roadrunnr, a logistics firm handling the last-mile deliveries for various food and e-commerce delivery companies. The two companies, which are both backed by Nexus Venture Partners and Sequoia, are expected to enter in an all-stock deal and give birth to a new food delivery service, Runnr. Whether this deals materialises or not, is something we will have to wait and watch. Further, for Roadrunnr itself, the path hasn't been rosy for quite sometime now. Last month, there were several news-pieces floating in the media about how the logistics firm was planning to exit the e-commerce business after it failed to raise more funding.

Indian Crowdfunding platform Wishberg.com to shut down

India's crowdfunding and social wishlist platform Wishberg.com has announced that portal will be shutting down in coming days.

In a blog post Wishberg team announced - "As a startup, data is your best friend. Reviewing those goals at the end of the year, we realised that we have trailed behind on few of them. For us a team, we have always believed in chasing bigger dreams and not take up smaller challenges. Keeping up with that belief, we will be sunsetting Wishberg in coming days while we give time to our users to go through their accounts and wishes."

Wishberg's founders - Pravin Jadhav (CEO) and Kulin Shah (COO) are joining online mobile recharge startup FreeCharge, and will lead its product & growth and partnerships & alliances, respectively.

Wishberg was founded by Pravin Jadhav and Kulin Shah in December 2011 as a social discovery site and the name was Tyche’d, it was in July last year when the startup was renamed and rebranded to Wishberg.com.

Almost a year before (April 2013) Wishberg raised it's first investment and raised $150,000 in funding from early-stage investment firm India Quotient, with participations from angel investors including Vijay Shekhar Sharma, founder and CEO of One97, and Uday Sodhi, CEO of HeadHonchos, among others

Wishberg got many accolades when it was launched and named among the top startups to be featured among the best products. The all of a sudden decision of shutting down the crowdfunding platform is disheartening for its many users. Although not many tech ideas was there in the portal wish funding lists nevertheless the portal is still receiving many wishes from users across India for crowdfunding.

India does not have many crowdfunding online platforms and Wishberg is among few crowdfunding platforms dedicatedly for India and was one of the firs such platform in India. The reason as why Crowdfunding platform like Wishberg doesn't make it to success in India is unknown as founders doesn't reveal as why they are moving crowdfunding model to online mobile recharge business.