Indian social media app Koo is shutting down operations after failed acquisition talks, as announced by founders Aprameya Radhakrishna and Mayank Bidawatka. Despite early successes and expansion efforts, Koo struggled to secure long-term funding and partnerships. The high costs of maintaining a social media platform and a prolonged funding winter ultimately led to the decision to shut down.
Funding Issues and High Operating Costs
Koo, the Indian social media app launched in March 2020 as an alternative to X (formerly Twitter), is shutting down operations due to funding issues and high operating costs. Despite its rapid rise to prominence during the 2021 standoff between the Indian government and Twitter, Koo could not secure the necessary capital to sustain its growth. The founders, Aprameya Radhakrishna and Mayank Bidawatka, revealed in a LinkedIn post that they had explored partnerships with multiple larger internet companies, conglomerates, and media houses, but none resulted in a successful deal.
“Most of them didn’t want to deal with user-generated content and the wild nature of a social media company,” the founders stated. Even near-final negotiations changed priorities, leaving Koo with no viable path forward. The high costs of maintaining the technology services necessary for a social media platform ultimately led to the tough decision to shut down.
Failed Acquisition Talks
Despite being valued at $275 million and raising over $66 million from investors, including 3one4 Capital and Accel, Koo could not attract additional long-term funding. The founders engaged with startups like Dailyhunt and Sharechat for potential buyouts, but these talks did not materialize. The inability to secure funding was the last nail in the coffin, forcing Koo to shut down.
Koo’s troubles began in September 2022 when it laid off around 40 employees. In February 2023, Bidawatka warned of more layoffs, and by April, the company had trimmed 30% of its workforce. Koo’s monthly active users (MAUs) also declined significantly, dropping to about 3.1 million in April 2023 from a peak of 9.4 million in July 2022.
Impact of the Funding Winter
A prolonged funding winter during Koo’s peak period hurt its plans, forcing the platform to tone down its growth trajectory. Despite reducing its monthly cash burn from roughly Rs 16 crore in January 2023 to around Rs 10.2 crore in April 2023, it was still far from the target of Rs 6.5 crore. The founders even used personal funds to pay salaries for March.
Despite having about 2.1 million daily active users and around 10 million MAUs at its peak, Koo could not sustain its operations. The platform had over 9,000 VIPs, including eminent personalities across various fields. The founders now plan to evaluate making Koo’s assets into a digital public good to enable social conversations in native languages worldwide.
Conclusion: A Dream Unfulfilled
The founders concluded by acknowledging the market’s mood and the funding winter’s impact on Koo. They expressed that timing the market is an underestimated variable that can significantly influence outcomes. Despite the closure, the founders believe Koo could have scaled internationally and become a truly global brand made in India. This dream, however, remains unfulfilled.
Koo’s shutdown is a stark reminder of the challenges faced by startups in securing sustainable funding and navigating market dynamics, even with a promising product and user base.
