What’s happening?
A Bengaluru-based start-up, ShopX decided to close its operation on Monday citing a lack of funds as the primary reason. ShopX in the previous, year and a half has trimmed the size of the firm, removing more than half of its workforce. The decision to stop all its business is backed by a special resolution passed by the board. The development comes at a time when the startup companies are facing a funding crunch with projections of not-so-good days for startups.
Reason for the development
As evident from the statements of representatives from the company, the company has been facing difficulties generating revenues. ShopX has maintained in its insolvency report that, despite all the efforts the company could not position itself to pay its debts.
“Since the business model has not succeeded, it has not been able to generate enough cash flow from operations. The company has tried various options to meet its payment obligations including raising additional equity, sale of assets, sale of business etc, but it is not able to achieve any success, shopX noted in its insolvency application.
ShopX is also in debt to its investors. ShopX has taken multiple loans in Indian currency from its investors. Some of the prominent names among its investors include Nielkani, Fung Investments FSX and FSX PTE. LTD. As per reports, ShopX is expected to now pay a quarterly interest to its lenders. Nilekani reportedly had a total of $18 million investment in ShopX.
The company in a statement issued Monday held that the onus to pay the unpaid loans and interest obligations is on the main shareholder of the company. The company in its statement has said that the company would settle the dues of its employees and stakeholders on priority. ShopX further also said that the firm took care of its employees even when the company was grappling with financial issues.
Brief History of the firm
ShopX which now has a total retail customer base of two million is a Bangaluru-based company operated by 10i Commerce Services, was founded in 2015 by Amit Sharma and Apoorva Jois. In 2021 June, it became an e-commerce enablement platform, and by December of the same year, the company took a plunge into the consumer segment. The company is currently valued at over Rs. 100 million and has raised over 54 million by 2020.
The firm also took off its app yesterday, which it had launched to attract more consumers. LinkedIn estimates the strength of the company to be around 51-200.
