Tuesday, 5 April 2016

Failed food-tech start-up and its reasons



These are three other food delivery start-ups that were short-lived. Spoonjoy, like Dazo, had an impressive roster of investors including Flipkart founder Sachin Bansal. This food tech company got follow-up funding of US$1 million from Saif Partners. But it could not sustain operations and scaled back last month before being acquired by grocery delivery start-up Grofers, whose founder Albinder Dhindsa made it clear that it was an acqui-hire and Grofers had no intention to diversify into the food delivery business.

As urban India sees a mushrooming of nuclear, double-income families, as well as a large influx of young singles with busy work schedules, there’s clearly a big opportunity for food e-commerce. But this has led to a rush to fund food startups from investors with a “fear of missing out” syndrome. Not enough attention has gone into the cash burn and quality problems on the ground. Now, many of the start-ups are finding it hard to raise later stage funding and floundering.


Langhar, a Delhi-based service for freshly cooked meals, shut down earlier this year, and Chennai-based OrderSnack closed after failing to raise funds. EatloFreshmenu, and Frsh are others reported to be in a desperate hunt for funding and may be the next to bite the dust. We can expect more failures before fundamental issues in execution are sorted out in this space.

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