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The Real Reasons Behind Indian Startups Shutting Down

In April, on-demand grocery delivery service PepperTap shut shop. Recently, online beauty services provider Amber Wellness, which was operating in Bangalore, New Delhi and Mumbai, closed down.

But these are not isolated cases. In 2015, around 13 startups closed operations. And others, such as food technology startups TinyOwl and Zomato, scaled down last year. Between the two companies, more than 400 people lost their jobs last year.

Investor Pressure: “There’s investor pressure. They want companies to become profitable and sustainable before they are even ready,” Sanchit Gogia, Chief Futurist, Founder & CEO, Greyhound Knowledge Group, told The Quint. “And if not profits, companies are under tremendous pressure to show user acquisition.”

Numbers That Lie: “A lot of me-too and copycat companies are coming up. But only the best in each category will survive. For instance, Meru is being wiped out by Ola and Uber,” Gogia said.

Discounts Galore: “Most e-commerce companies focus on discounts. So they hardly see repeat customers because for the Indian consumer, it’s all about the price. So now, moving from cost-based conversations to value-based conversations is too little too late,” Gogia said.

Where’s the Talent? Often, newer companies lack the talent for non-traditional roles, or they are too expensive, said Gogia. Moreover, the founder doesn’t necessarily make for good CEOs, Gogia added. “Starting a company is one thing and scaling it is another. To be able to manage the employees requires professional management. Housing.com (and Rahul Yadav) is a classic example.”

“A lot of startups are not able to adapt because they are stuck to their original idea. They are not very open to listening to other people,” Gogia said.

Source: The Quint

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