The Indian startup ecosystem is witnessing a series of layoff and shutdowns, owing to an aftermath of a slowdown in funding in 2016. Some have graciously bowed out of the race like online-hotel aggregator StayZilla, Dazo and more. According to a report by Tracxn, more than 200 startups have shut shop in2016.
Startups like CraftsVilla, Softbank-backed Snapdeal, have slashed a massive number of jobs at their firms.
There are several internal issues that could eventually lead to the closure of ambitious business models, however industry experts and entrepreneurs have jotted these to be the main reasons for exiting the market.
1.Not having the first mover advantage
When Zomato and Swiggy’s saw good business traction, several others followed suit and launched identical business models. This didn’t go down well with consumers, who preferred to stick by the first movers of this industry, which lead to several shutdowns in the food-tech startup business.
Many a times, having the first mover advantage and getting the first set of customers early in the business can leave very little chance for other players to enter the market.
2.Excessive splurge of money
Several startups, especially in the e-commerce and food-tech space, saw a splurge of funds from investors based on the one or two success stories in that particular sector. A successful Flipkart, lead to several copy-cat models getting funded.
The deluge of funds prompted entrepreneurs to heavily spend on marketing strategies and discounts, which lead to empty pockets when the industry was hit by a dry spell of funding. Unable to pay basic salaries and carry out operations, lead to these companies being shut eventually.
In some cases,…