Mumbai-based Shopveg.in, an e-tailer of vegetables, fruit and grocery, has become one of the first casualties of investment polarization. After a little more than a year of operating, Shopveg has decided to pull the shutters down due to lack of capital.
"From the business perspective, this business is damn good and we were also doing good. But this is not typical e-commerce, it needs capital to expand. Unfortunately, we ran out of it. We exhausted all our capital and now despite several efforts we are unable to raise external funds. We are keeping the website on just so that if someone wants to see the architecture, they can benefit from it," said Saurabh Dhapodkar, co-founder, Shopveg.
Earlier this year in August, Shopveg along with another startup Oravel had participated in Angel-backed startup accelerator VentureNursery's accelerator programmes. Last we checked, both the startups had pitched the angels at the accelerator for funds. But Dhapodkar told Techcricle.in that despite great pitches and good response from the investors, the funding did not materialise.
Dhapodkar said as a business, online vegetable and grocery selling model is very good and appeals to the masses but since it requires more capital than traditional e-commerce. "It's a very difficult situation. The investors ask us to scale up first before putting in money, but this business cannot scale up without capital," Dhapodkar stated.
In July this year, Techcircle had spoken to several investors whether they think online grocery and vegetable shopping is a scalable business proposition. Then also some investors had pointed hazards of scaling up in this business.
Though the website says, "We have paused our operations for some time and will not be able to deliver any of the orders for a while," the founders said they will shut operations completely.
The tussle between Investors' faith in novel concepts versus proven business models is very common, especially in the Indian investment ecosystem. Often we have heard of investors scanning the chances of businesses' ability to scale up and proven business model before they put in the money. For more on this, watch this space.
(Edited by Prem Udayabhanu)