Member Article

Overview of Startups Shut Down in 2016

Whenever a newly formed business starts its operations and gets funded, it acquires a lot of publicity and it is seen that media is happy to pick up such stories. On the other hand, many companies fail and these failures should be prominently featured so that the founders don’t repeat the same mistakes. The year 2016 saw the launch of two to three startups a day, which enabled India to grab the third place in the world.

Many Indian entrepreneurs want to forget the year 2016 because manystartups have not survived to see 2017. As per the data analytics firm, Tracxn, over 200 newly established firms closed in 2016, which means 50% more from last year. If a data is to believed, seven out of ten new firms shut down after raising huge funds. In this regard, Pepper Tap, which is grocery delivery firm started its business in 2014 closed down after raising the highest funding from investors. In addition to this, there are many other firms, which are further discussed in this blog.

A Deep Insight Into Startups That Shut Their Work

Parcelled, which was an online courier booking platform shuts its businessin June 2016, whereas DoorMint, an on-demand laundry service wound up its work in September mainly because of shortage of funds. Apart from lack of funds, businesses were not getting the projected number of sales. Buildzar, an e-commerce marketplace for construction materials has not survived to see 2017. Most of these newly formed businesses were founded in or after 2014. According to Mohan Kumar, ED, Norwest Venture Partners India, there is so much competition for a startup and thus, only some companies managed to survive. These new companies couldn’t fight challenges and as a result, decided to close their doors.

Delivree King, which was a Delhi-based logistics service provider started itsbusiness in 2015 and used to provide on-demand delivery as well as discount coupons with every parcel and unfortunately, the owner has now closed its company because he was not able to raise fresh funding. FranklyMe also belongs to the same category. In other words, this video microblogging platform started its work in 2015, but the company’s inability to generate fresh funds led to its closure. These are some of the firms that shut down their businesses due to some reasons.

There is nothing wrong in saying that the startup boom began a couple of years ago and analysts think that in the year 2016 most of the newly established companies would have realised the usefulness of their business models.

Vision For 2017

As per the report of analysts, the year 2017 is at a higher chance to witness some shutdowns, but the ecosystem is expected to mature a lot. The whole 2016 shows that many founders go back to square one and rethink about their strategies in order to make their businesses grow. Shutdowns are very common for companies which are not giving proper attention to unit economics. Due to more closure, investors are giving enough importance at capital efficiency metrics.

This Article is originally published here.

This was posted in Bdaily's Members' News section by Eila Martell .