5 Biggest, Funded Startups Which Shut Down In 2016!


Closed Shut down locked Startups

The biggest thing to unlearn from the movie Dangal is that, failure is inevitable. And the biggest thing to learn is that, despite failures, the true champion will always get up, and get going.

For an entrepreneur, the default state of a startup is failure, and no wonder that 3 out of 5 startups fail -not only in India, but globally.

Despite India being world’s 3rd largest tech startup hub, despite Govt. of India’s massive push for startups and entrepreneurship, one cannot discount failure. It is an integral part of the eco-system, of the process of creation.

Herein, we bring to you India’s 5 biggest, funded startups which failed in 2016:



In August this year, Malaysia-based Astro Holdings backed AskMe shut down, which led to unemployment of more than 4000 employees. This was easily the most iconic and prolific shutdowns of this year as $300 million of VC funds evaporated into thin air, overnight.

There were several reasons attributed to the massive failure of a startup, which boasted of database of 15 million SMEs and SMUs across India; but the primary reason turned out to be mis-management of venture funds and lack of accountability.

While revenues increased from Rs 23.4 crore in 2011-12 to Rs 51.2 crore in 2014-15, net losses widened from Rs 54.3 crore to Rs 300 crore during the same period. The only investor, Astro Holdings, backed out, as pending dues amounted to $15 million, and there was no solution in place, instead of playing blame-game between the founders and the investors.

The result: Shutdown of a promising hyper-local startup from India and a straight loss of $300 million in this gamble.


Hailed as India’s 3rd biggest grocery startup after Grofers and Big Basket, Peppertap made a sudden decision to shut down in April this year.

After raising funds close to Rs 350 crore ($53 million) in 4 rounds in 24 months from investors such as Sequoia Capital, SAIF Partners, Snapdeal and others, the failure of Peppertap to sustain clearly demonstrated the bubble of hyperlocal delivery startups in India. Later, when Askme also shut down, then it proved the theory.

Mindless spending to acquire customers and uncontrolled marketing budget was stated as the primary reason for the failure of a promising consumer-centric startup, which has now recoiled and re-transformed into a reverse logistics company, delivering orders of other startups.


In May this year, food ordering app TinyOwl decided to shut down its operations across 11 cities in one go. Except Mumbai, they ceased their operations all over the country.

Between September, 2015 and January, 2016, they fired around 600 employees, as the management failed to justify huge losses, and continuous decline in revenues. Overall, they raised Rs 152 crore via 4 rounds in 18 months of their existence, but by the end of April, they were left with nothing but Rs 18 crore to spend. Their investors include Sequoia Capital, Nexus Ventures and Matrix Venture Partners.

Addition of untested features, giving away too much discounts were some of the factors attributed to their failure.


The idea was great, and the execution was smooth: A video micro-blogging portal with an aim to become India’s first video only social network. They raised $600k seed funding from Matrix partners, and then an undisclosed amount from undisclosed investors as Series A funding.

But the magic fizzled out by February, 2016, when they decided to shut down their operations, despite gaining in popularity as Arvind Kejriwal, Javed Akhtar and other used their platform to express themselves via videos.

Their co-founder Nikunj Jain has written an interesting post to explain the reasons behind their closure. And, here is a hint: It was a lot more than mere funding, it seems.


Fashionara, a fashion startup which was considered as promising as Freecultr and Zovi, finally closed their shop in May this year.

Founded by former superstars from Reliance Trends and Times Internet, Fashionara gained momentum during the boom time of 2014 and 2015, but its fuel ran out in 2016 due to increased competition and fluctuating market of online fashion niche.

Although they successfully raised $4 million from Helion Venture Partners and Lightspeed Venture Partners, and expanded into sub-niches such as footwear and accessories, besides partnering with private label brands, lack of funding finally forced them to retreat.

Special Note To Budding Entrepreneurs: These failures stories were not written to highlight the risks of entrepreneurship, but to showcase the realities of entrepreneurship. We would like to add here, that failures are stepping stones of success. The entrepreneurs of these failed startups are lot more wise and experienced that those entrepreneurs, who have failed to even start.

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  5. Shoeb Khan says

    Askme was a shocking shutdown as it offered a huge amount of offers and discounts that were true deals.

  6. Pranab says

    Most of the startup fails because of overconfidence and lack of market knowledge. There are three basic pillars of Business: 1. Operations 2. Promotions 3. Management.

    I also failed in my first experiment, but I take it as a learning cost. That failure helps me to understand the basic rules.

    Later, I worked on my second experiment (Infinite Xtensions) for approx 2 years without any paperwork. Earned the breakeven in 6 months, worked hard on it for next 1 and half year, and finally registered it recently (Infinite Xtensions
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