The year 2023 witnessed a wave of closures in the Indian startup ecosystem, influenced by a combination of funding challenges, adverse market conditions, and regulatory headwinds. In this blog, we delve into the stories of 15 startups that faced the harsh realities of the business landscape, exploring the reasons behind their shutdowns and the lessons to be learned.
1. Anar- Networking Dreams Dissolve
Founded in 2020, Anar aimed to connect small and medium enterprises, resembling a LinkedIn for businesses. Despite a promising start with a $6.2 Mn seed funding round in 2021, low retention rates and failure to create sufficient value led to Anar’s closure in November 2023.
2. Belora- Cosmetics Beauty Fades Amid Capital Crunch
With aspirations for a full-scale public expansion, Belora Cosmetics, a vegan and toxin-free makeup brand, faced a dead end in October 2023. Funding taps ran dry, and talks of acquisition fell through, ultimately forcing the startup to wind up operations.
3. Bluepad- Vernacular Content Dreams Diminish
Bluepad, aggregating content in regional languages since 2020, closed its doors in April 2023. Despite raising INR 1.8 Cr in a pre-seed round, the startup struggled with the absence of a reliable monetization channel and a perceived lack of urgent need for its product.
4. ConnectedH- B2B Healthtech Hit by Market Realities
Backed by Kalaari Capital, ConnectedH provided CRM solutions for diagnostic labs. Despite serving over 5 Lakh patients, the startup succumbed to unaddressable market realities in August 2023, resulting in a complete shutdown.
5. DUX Education- Edtech’s Fundraising Struggles
DUX Education, offering K-12 online classes, became one of the early casualties in April 2023 due to a failure to raise funds. Founded in 2020, the startup aimed to provide quality education during the Covid-19 pandemic but couldn’t sustain operations.
6. Fantok- Real Money Gaming Takes a Break
Fantok, a social gaming platform for real money binary prediction games, temporarily suspended operations due to a 28% GST levy on online gaming platforms. Facing challenges in the regulatory environment, the startup plans to pivot in alignment with evolving regulations.
7. Fipola- D2C Meat Delivery Faces Liquidation
Fipola, a D2C meat delivery startup, faced the brunt of the ongoing funding winter in February 2023. Unable to secure additional funding, Fipola chose to shut down, seeking ways to liquidate assets to settle operational dues.
8. Friyey- Coworking Dreams Fade Away
Friyey, a Pune-based coworking space provider, featured on Shark Tank India but closed operations in July 2023. High expenses, coupled with the paucity of funds exacerbated by the Covid-19 pandemic, led to the demise of this unique business model.
9. FrontRow- Extracurricular Struggles and Shutdown
Despite raising $17 Mn, FrontRow, an extracurricular activity startup, faced insurmountable challenges. The startup struggled with low traction, marketing costs exceeding revenue, and an overestimation of the Indian online extracurricular activities market, ultimately shutting down by mid-June.
10. OSlash- SaaS Struggles with Traction
OSlash, a SaaS startup providing AI-based copilots for workplace productivity, ceased operations in November 2023. Despite raising $7.5 Mn, the startup cited a failure to find traction and commercial success as the primary reasons behind its closure.
11. Pillow Crypto’s Regulatory Headwinds
Pillow, a crypto investment platform, faced regulatory headwinds and a tough business environment, leading to its closure in July 2023. Despite raising $18 Mn in 2022, the startup deemed it impossible to sustain operations, returning nearly 80% of the capital to investors.
12. Quizy- Tax Woes and Regulatory Challenges
Quizy, a real money gaming platform offering gamified educational experiences, shut down in August 2023. Regulatory challenges, including changes in GST affecting player earnings, motivated the startup to cease operations, burning through $317K of investor capital.
13. Tiki Short Video Dreams Cut Short
Tiki, a short video platform, succumbed to the challenges faced by the tech industry in June 2023. Faced with a funding drought, lower retention, and competition from global social media giants, the startup chose to shut down.
14. Vah Vah! Declining Revenue Spells Closure
Vah Vah!, a vocational training startup offering courses in makeup artistry and grooming, silently shut operations in July 2023. Plagued by declining revenue, weak unit economics, and an inability to raise funds, the startup fired its entire workforce of 150 employees.
15. WeTrade Crypto Market’s Unpredictability
Bengaluru-based crypto platform WeTrade closed its doors in January 2023, citing the deepening crypto winter and an increasingly hostile environment. The startup, founded in 2022, struggled with funding challenges and regulatory uncertainties, leading to the decision to pause its services.
Winding it up
As we bid farewell to these startups, their stories serve as valuable lessons in navigating the complexities of the startup landscape. The shutdowns highlight the importance of sustainable business models, adaptability to regulatory changes, and a strategic approach to fundraising in a dynamic market. The Indian startup ecosystem continues to evolve, and from the ashes of closures, new opportunities and lessons emerge.
