As the San Francisco and Bengaluru-based company became one of the few from the well-funded segment to halt operations, the shutdown of SaaS startup Toplyne took many by surprise.
Toplybe had raised over USD 17 million from investors including Tiger Global and Peak XV. Furthemore, the firm had also garnered attention due to its commitment to return the remaining capital to investors. This greatly highlighted the importance of ethical practices in the startup landscape.
And it is not just Toplyne, but a number of startups that shut themselves down or pivoted have returned capital to their investors. This is purely due to these startups struggling to build a sustainable revenue model. Furthermore, they also encountered pressing challenges that included funding shortages, adverse market conditions, and deteriorated cash flow.
As per credible data from TheKredible, as many as 8 Indian startups have refunded investors due to the shutting down of operations or unsuccessful pivots as of October 12. This accounted for about 50 percent of all shutdowns and pivots that have occurred in the current calendar year.
The first startup to announce its shutdown was Paras Chopra-led Nintee. The firm returned capital to investors in April this year. Ninety was backed by Peak XV and angel investors such as Kunal Shah. Post this, several other startups started joining this downward trend, The startups which included this list were edtech firm Bluelearn, trading platform Investmint, and offline firm Convenio, launched by former Swiggy senior vice president Karthik Gurumurthy.
Also to add, agritech startup Greenikk has also announced that it would refund investors after ceasing operations. It is important to note that Gurumurthy had raised USD 3 million from Matrix Partners and others in stealth mode.
After struggling to find traction with their original business models, two fashion tech companies - Fashinza and Virgio - had opted to return capital to their investors, earlier this year. Virgio, led by former Myntra CEO Amar Nagaram, raised over USD 37 million from investors which consisted of Prosus Ventures, Alpha Wave Partners, and Accel Partners before its pivot. Moreover, Fashinza, which was the highest-funded company on the list, secured USD 150 million in equity and working capital from notable backers including Mars Growth Capital, Liquidity Group, Accel, Prosus, WestBridge, and Elevation Capital.
Out of all these startups, five startups on this exclusive list are stationed out of Bengaluru, while two are from NCR. If we look at the past data - between 2022 and 2023 - various startups such as Frontrow, Udayy, ConnectedH, and Anar, had returned capital to their investors due to shutting down operations for various reasons.
