5 Startups that failed to raise further rounds and How You should Know and Avoid it

Some startups that failed to raise further rounds but teaches other entrepreneurs a lot about what points everyone should always check upon

1. HIKE 

India's own social networking platform Hike shut down its messaging service by shifting its focus to two new social products: Rush and Vibe. Launched in Dec 2012, Hike targeted youth below age 30 offering instant messaging and file sharing. Moreover, the company was being hailed as the youngest startup to get a unicorn title in India, with a valuation of over 1 Billion within just 4 yrs of launch. Despite all this, on January 6, 2021, Hike informed its users that it will be shutting down its messaging platform. 

REASONS FOR ITS FAILURE 

1. Hiring Mistakes 
2. Too Many Features
3. Lack of USP 
4. Fast Evolution 
5. Lack of User Retention 
6. Whatsapp’s Market Dominance

2. PURPLE SQUIRREL

Purple Squirrel was a platform for students to tour industries, one-day workshops across the country on the basis of their curriculum.

The startup was incubated at IIT Bombay in September 2013 founded by Aditya Gandhi and Sahiba Dhandhania.

Their long term plan was to get students placed in these companies and get a commission for headhunting. But that was after it hit a critical mass.

REASONS:

1. They failed to achieve the promised target, which forced them to look for new investors.

2. To stay competitive, Purple Squirrel burned its own cash. And their margin started to disappear.

3. Lack of funding when it was needed was one of the biggest reasons for their failure.

3. JABONG

Jabong was an online mall where the customer can access products ranging from footwear to apparel sold by their partners at affordable rates.

Earlier, Flipkart had acquired Jabong from Global Fashion Group in a fire sale worth $70 million in 2016.

However in June 2020, Flipkart decided to shut down the operations of Jabong to empower its premium fashion marketplace Myntra.

REASONS:

1. No differentiating factor

2. Leadership problems

3. Funding crunches

4. Active users dropped

4. JUST BUY LIVE

Just Buy Live provided access to a very wide range of Brands with simplified technology enhancing the buying experience of customers.

In January 2016, the company raised $20 million in a Series A funding round from Alpha Capital. Followed by $100 million and a Series B funding round.

In spite of heavy funding rounds into a B2B e-commerce entity, they had to shutdown their operations.

REASONS:

1. They adopted a flawed business model which led to large-scale bleeding of cash

2. Company burnt their funds on marketing and same day delivery

3. Hit by demonetization many retailers did not pay back and they had to pay the outstanding dues.

4. Company’s expenses increased

5. iPROF

One of the early education technology start-ups, iProf offered coaching and study material for competitive exams both through online and offline (files in pen drive, secure digital cards and tablets) mediums. iProf delivered educational content, including videos, digitized notes, and practice questions on a seven-inch touch screen.

The product priced at Rs 14,990 & is positioned as a supplementary learning module which aids in giving the students a platform to revise what they’ve learnt at training. It shut down in 2017.

REASONS:

1. Low adoption

2. Intense competition with other platforms such as Byju’s

3. Schools’ reluctance to try out its material