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Acquired and Expired: Inside India’s Most Notorious Startup Failures

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Snapdeal’s Acquisition of Freecharge (2015)

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Snapdeal’s $400 million purchase of Freecharge in 2015 was part of an ambitious strategy to carve out a top position in India’s competitive e-commerce landscape. At the time, Snapdeal was India’s second-largest e-commerce platform, but it aimed to overtake rivals Flipkart and Amazon India. Freecharge, a popular mobile recharge and digital wallet platform, seemed the ideal partner to facilitate Snapdeal’s entry into the digital payments arena, where e-commerce and fintech synergies promised to drive growth.

However, this plan quickly unraveled. Snapdeal miscalculated the user demographics: while Freecharge attracted a younger crowd (ages 18-25) who were more digitally savvy, this audience largely lacked significant purchasing power. Snapdeal’s core user base, on the other hand, consisted of working professionals aged 25-35 who could afford higher spending. This mismatch led to minimal overlap in user engagement and prevented Snapdeal from capitalising on the cross-selling potential it envisioned.

To retain Freecharge’s users, Snapdeal poured substantial funds into marketing, cashback offers, and promotions, creating what became known internally as the “leaky bucket.” The company struggled with cash burn from Freecharge, especially as Snapdeal itself expanded into costly non-core ventures, including logistics and a mobile marketplace. By 2017, Snapdeal’s financial health had deteriorated, forcing it to sell Freecharge to Axis Bank for a mere $60 million—an 85% loss from the initial investment​.

Lessons Learned: This acquisition underscores the importance of user demographic alignment in mergers and acquisitions. The failure also highlights the risks of rapid, unfocused diversification and the need for conservative cash management, especially in volatile markets. The collapse demonstrated that even industry giants can falter when they pursue acquisitions without thoroughly understanding target user compatibility and operational sustainability.

BYJU’s Acquisition of WhiteHat Jr (2020)

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In 2020, BYJU’s acquired WhiteHat Jr, a burgeoning ed-tech platform focused on teaching coding to children, for $300 million. With WhiteHat Jr, BYJU’s hoped to expand into international markets, specifically the U.S., leveraging the rising interest in children’s coding education as a catalyst for growth. WhiteHat Jr’s popularity among Indian parents, driven largely by FOMO and aggressive advertising, made it seem like a lucrative addition to BYJU’s portfolio.

However, the acquisition soon turned problematic. WhiteHat Jr’s marketing tactics, including sensationalized advertisements with fictional characters like “Wolf Gupta,” quickly drew widespread criticism. Parents and regulatory bodies alike accused the company of exploiting parental anxieties to generate enrollment. The high customer acquisition costs and backlash impacted BYJU’s brand reputation and financials, forcing BYJU’s to pour additional resources into damage control.

Operationally, WhiteHat Jr’s one-on-one model became financially burdensome. Unlike scalable video-based courses, personalized coding lessons required an ever-increasing roster of instructors, leading to soaring costs and unscalable operations. By 2022, WhiteHat Jr was a significant source of losses for BYJU’s, contributing nearly 27% of the company’s deficit. The acquisition’s financial strain on BYJU’s led to major layoffs and ultimately the integration of WhiteHat Jr into BYJU’s broader operations by 2023​.

Lessons Learned: This acquisition highlights the risk of acquiring companies during temporary market booms. WhiteHat Jr’s appeal grew in a pandemic-driven online learning environment, but as in-person classes resumed, demand waned. BYJU’s acquisition of WhiteHat Jr serves as a cautionary tale against over-reliance on short-lived trends and underscores the importance of scalable business models in high-cost acquisitions.

Zomato’s Acquisition of UrbanSpoon (2015)

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Zomato’s $50 million acquisition of UrbanSpoon was an attempt to expand its restaurant discovery services globally. The deal granted Zomato access to a substantial number of listings in Western markets, including the U.S., Canada, and Australia. Zomato anticipated that this move would establish it as a global player and boost its monthly traffic from 35 million to 80 million visits.

However, the acquisition ran into obstacles almost immediately. First, the integration process faced high attrition rates among UrbanSpoon’s employees, and many key staff members left soon after the acquisition. Second, India’s food delivery market was undergoing a transformation, with Swiggy emerging as a strong competitor in food delivery—a service Zomato only introduced months after the acquisition. To compete, Zomato redirected resources to build out delivery infrastructure in India, which ultimately limited its ability to support international expansion. By the end of 2015, Zomato began scaling down its U.S. operations and later exited entirely from international markets​.

Lessons Learned: Zomato’s experience underscores the risks of aggressive global expansion without adequately addressing competitive threats in home markets. The shift from restaurant discovery to food delivery requires significant logistical investment, and the timing of this pivot left Zomato vulnerable both at home and abroad. The acquisition demonstrated the need for companies to solidify their position in core markets before expanding internationally.

Ola’s Acquisition of Foodpanda India (2017)

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In a bid to capture India’s booming food delivery market, ride-hailing giant Ola acquired Foodpanda India from Germany’s Delivery Hero in 2017. The acquisition aimed to build a synergy between Ola’s transportation services and food delivery, aligning it with rivals Uber and Zomato. However, things did not unfold as planned. Despite an aggressive initial investment of ₹400 crores to revive Foodpanda’s operations, Ola struggled to scale and integrate the brand effectively into its ecosystem.

One of the primary issues was intense competition from established players like Swiggy and Zomato, who had already optimised their delivery operations and customer loyalty. Foodpanda lagged in both market share and delivery reliability, while the sector saw escalating delivery costs and fierce price wars. By 2019, Ola had quietly pulled out from food delivery, pivoting to its cloud kitchen segment and ultimately laying off many Foodpanda employees. The acquisition left Ola with sunk costs, underscoring the challenges of scaling a non-core vertical in a highly competitive landscape​.

Lessons Learned: Ola’s venture into food delivery through Foodpanda highlights the risks of entering saturated markets with established players. The failure demonstrates the importance of thoroughly evaluating competitive dynamics and resource allocation when venturing into new business verticals, especially when the acquisition doesn’t directly align with core offerings.

Quikr’s Acquisition of CommonFloor (2015)

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In 2015, Quikr acquired CommonFloor, a leading real estate platform, for an estimated $200 million, marking one of India’s largest online real estate mergers. At the time, Quikr, a classifieds giant, sought to diversify its portfolio by entering the fast-growing real estate sector. However, the integration quickly turned rocky. Quikr struggled to align its core classifieds business model with the operations of CommonFloor, which had a niche but strong user base in property listings.

Challenges emerged as CommonFloor’s founders exited soon after the merger, taking with them critical industry expertise and leadership. Quikr also found it difficult to sustain CommonFloor’s dedicated user base, which sought more in-depth property services rather than general classified listings. By 2017, Quikr had merged CommonFloor into its own property vertical, effectively closing down the platform and absorbing it into QuikrHomes, which still struggled against dedicated real estate giants like MagicBricks and 99acres. This merger is often cited as an example of the risks associated with integrating specialised services into a more generalised platform​.

Lessons Learned: The Quikr-CommonFloor deal underscores the complexities of merging a niche, service-specific brand with a generalised platform. It highlights the importance of understanding user expectations and the need for retaining key leadership and operational expertise to manage the transition effectively.





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RenewBuys pares FY24 losses by 40% amid merger reports

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D2C Consulting Services, the parent company of digital insurance startup RenewBuy, pared its losses by 42% to Rs 114.44 crore in FY24 from Rs 197.19 crore in the previous year. 

The online insurance aggregator clocked 40% rise in operating revenue to Rs 394.40 crore from Rs 280.75 crore in FY23, according to a filing made with the Registrar of Companies.

D2C Consulting Services is reportedly in talks with its larger peer InsuranceDekho for a potential merger in a cash-and-stock deal. The combined entity is expected to be valued over Rs 8,000 crore, with RenewBuy valued at about Rs 3,000 crore. 

The RenewBuy platform offers comparison for motor, health and life insurance. Its total expenses rose 8% to Rs 524.24 crore, mainly driven by higher interest payments and other expenses. 

RenewBuy is valued at $364 million according to the data available on data intelligence platform Tracxn. It last raised $40 million in a Series D round from Dai-ichi Life Holdings in July 2023. 

The startup was founded in 2016 by Balachander Sekhar and Indraneel Chatterjee. RenewBuy plans to expand beyond India, especially in the Asian markets. 

Its peer PolicyBazaar, a unit of listed entity PB Fintech, reported a 43.81% year-over-year jump in operational revenue at Rs 1,167 crore in Q2. During the same period, it clocked a profit after tax of Rs 51 crore, marking a turnaround from a loss of Rs 21.11 crore incurred in the corresponding year-ago period.





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Startup news and updates: Daily roundup (November 7, 2024)

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Funding news:

Enlog secures Rs 1.75 Cr in equity funding

Enlog, a Delhi-based startup specialising in AI-powered energy management and IoT solutions, has secured Rs 1.75 crore in equity funding from Vinners.

The fresh funds will be used to boost its operations and accelerate its growth in India’s energy management sector.

Enlog, a Delhi-based energy management startup, was founded in 2019 by Bharath Rnkawat and Jharna Saha, focuses on IoT and AI-powered energy solutions to optimise electricity consumption and reduce carbon footprints. So far, it has managed 11,300 MWh of electricity and reduced over 2,000 tons of carbon emissions.

With over 15,000 users, Enlog aims to reduce carbon emissions by one million tons by 2027. It plans to triple its revenue from Rs 12 crore in 2024 to Rs 40-45 crore by 2025, focusing on expanding into key Indian metro cities like Bangalore, Hyderabad, Pune, and Indore.

Pulse bags $1.4M in a seed funding round led by Endiya Partners

Pulse, an advanced Agentic AI platform, has secured $1.4 million in seed funding from Endiya Partners, with participation from angel investors, including founders of Zluri and Yellow.ai, and other entrepreneurs and product leaders.

The funding will primarily focus on building a robust core team, enhancing the platform’s development, purpose-built LLMs, and Agentic AI capabilities.

It is launching its MVP in November 2024, following pilots with multiple design partners. The company plans to allocate resources for early go-to-market initiatives to establish a foothold in India and the US, paving the way for long-term growth and leadership in the AI-first product management space.

Hyderabad-based Pulse, founded in 2024, uses Agentic AI to collect customer feedback, analyse structured and unstructured data, and automate key processes like feature extraction, prioritisation, and product hierarchy creation.

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Other News

DaveAI secures patent for real-time adaptive digital aisle, transforming customer engagement

Dave.AI, an interactive digital solutions, has been granted a patent by the Government of India for its “System and Method for Real-Time Adaptive Interactive Digital Aisle of Products.”

The patented system leverages DaveAI’s proprietary Affinity Engine, a multi-dimensional AI with an online learning genetic algorithm, powers real-time hyper-personalisation, allowing brands to craft adaptable and engaging digital customer experiences.

DaveAI combines machine learning with genetic algorithms to personalise customer interactions in real time. This allows brands to provide tailored recommendations, adapt to changing customer needs, and build lasting connections.

(The copy will be updated with the latest news throughout the day)





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KL Rahul-backed Boldfit raises Rs 110 Cr from Bessemer Venture

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Fitness brand Boldfit on Thursday said it raised Rs 110 crore in its series A round from Bessemer Venture Partners (BVP). 

Boldfit, which sells everything from yoga mats and water bottles to protein powers and exercise apparel, plans to use the latest infusion for product innovation and brand expansion. 

Boldfit, which was founded by Pallav Bihani in 2019, had earlier announced a strategic investment from cricketer KL Rahul in July. Rahul also joined the company as a brand ambassador.

“We believe sports and fitness is a rapidly growing market in India and Boldfit has emerged as an early leader in the space with its strong focus on product quality, holistic distribution, and strong brand partnerships. We’re excited to partner with Pallav and the team in their next stage of growth,” noted Anant Vidur Puri, Partner at Bessemer Venture Partners.

Boldfit had earlier outlined its plans to use the funds for the development of new product lines and enhance customer engagement through targeted campaigns and community development initiatives. Additionally, the company is also looking to optimise its supply chain and improve logistics to reduce delivery times. 

Boldfit said it clocked revenue of Rs 73 crore in FY24 and expects to cross the Rs 500 crore threshold by FY26, which it had shared with Yourstory earlier.

The company currently claims to serve over one crore customers annually. 





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