Arab & Middle East News
(ARABNEWSWIRE.COM, December 19, 2012 ) London,UK -- Almost 50% of e-commerce firms that were launched this year, up to October, have closed due to investors tightening their respective purse strings. That collective move has left fledgling ventured to beg for cash, else starve and force them to exit. That fate is one that most have had to succumb to.
Most founders opt to work with stable employers these days as well, rather than start another online company in contrast.
There had been 379 companies that started up to October, and 193 were e-commerce firms. Of those nearly 200 firms, 87 have closed. Companies include Shopveg.in, Taggle.co, Letsbuy.com, according to the data compiled by Microsoft Corp.'s India Accelerator program.
The gold rush of 2010-11 was followed by the 2012 hangover. That’s typical of boom and bust cycles though,” said Mukund Mohan, CEO in residence at Microsoft Accelerator, which tracked more than 6,214 start-ups and 3,948 technology product companies in India between 2009 and 2012.
“It’s certainly not for the faint-hearted, but kudos to all who tried, failed and are living to tell the story,” added Mohan.
Flipkart Online Services Pvt. Ltd acquired Letsbuy.com. The parent company runs India's largest e-commerce portal (Flipkart.com). The purchasing of the rival retailer was Flipkart's third purchase in the last 24 months.
“Almost all investors are doing this,” said Sinha, who was a product manager at Yahoo before launching the start-up site in July 2009.
“A lot of these sites have dead inventories and the 20-30% discounts are not helping them cover their costs,” said Sinha.
Rutvik Doshi, founder of now defunct Taggle.com, was forced to close his company, as his company failed to strive through rivals' deeper pockets.
“We didn’t have the bank balance needed to sustain and it was difficult to take Flipkart and others with deep pockets head on,” said Doshi, who quit his job as a product manager at Google Inc. in mid-2010 to start Taggle.com.
Doshi has since become an investor in his own right, as he has placed capital in Inventus Capital Partners, and spends time evaluating e-commerce concepts that decides where to place money into.
Until six months ago, every second idea pitched to us was e-commerce, now it’s every third of the ideas we evaluate,” he said.
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