Failed start-ups in India return capital to investors

Toplyne, provider of AI-based marketing solutions, shut shop when the founder realised that the venture was not meeting their expectations. They also returned the investment money left with them to the private equity investors. Toplyne had raised over $17 million from top investors like Tiger Global and Peak XV.

“After 3.5 years of building Toplyne, we’ve made the tough decision to wind down operations and return capital to our investors. Despite our best efforts, we couldn’t reach the scale or product-market fit we aimed for,” said Rishen Kapoor, co-founder and CEO of Toplyne.

Apart from Toplyne, a bunch of start-ups have returned capital to their investors after struggling to establish a sustainable revenue model.

Paras Chopra-led Nintee was backed by Peak XV and angels like Kunal Shah. Edtech firm Bluelearn, trading platform Investmint, Convenio launched by former Swiggy senior vice president Karthik Gurumurthy and agritech start-up Greenikk are some among the ventures that refunded investors after ceasing operations.

Earlier this year, fashion tech companies Fashinza and Virgio returned their capital to investors. Virgio, led by former Myntra CEO Amar Nagaram, had raised over $37 million from investors including Prosus Ventures, Alpha Wave Partners, and Accel Partners. Fashinza, the highest-funded company on the list, secured $150 million from investors. The eight ventures listed by TheKredible are half of the total number of start-ups that shut shop this year.

“Usually we see start-ups persisting with a failed venture or pivoting into some other business just to use up the money raised from investors. The trend of returning capital after settling the dues indicates a certain level of maturity of the ecosystem. Admitting failure and returning the money adds to their credibility. It also shows that failure is no longer considered a negative in the Indian start-up ecosystem,” said Arun Natarajan, founder, Venture Intelligence.