2024-07-04 10:50:02
Koo reported a net loss of INR 244 Cr between FY20 and FY22, while it could only mint a revenue of INR 21 Lakh during the same period
The biggest problem that led to Koo’s demise was its dwindling user numbers and failure to raise funds as investors tightened their purse strings amid a raging funding winter
As troubles piled on, reports surfaced that Dailyhunt and Josh parent VerSe were in talks to acquire the microblogging platform but that too failed, paving the way for Koo’s shutdown
It was the peak of the Covid-19 pandemic in 2021 and the world appeared to be homegrown microblogging platform Koo’s oyster. Founded a year earlier by TaxiForSure cofounder Aprameya Radhakrishna and Mayank Bidawatka, Koo
had a great run in 2021.
Be its sharp logo featuring a yellow bird (strikingly similar to erstwhile Twitter’s blue motif) or the vernacular pitch, Koo left no stone unturned to woo Indian users amid the growth of social media platforms due to the nationwide lockdown.
In the words of the two cofounders themselves, they believed that India should have a place at the table dominated by Americans.
But, the real traction came when the then IT Minister Ravi Shankar Prasad, in early 2021, praised the desi microblogging platform. What followed were the investors lining up to invest in the company amid the funding boom and pandemic-induced growth.
By June 2022, Koo had raised more than $50 Mn and its valuation had reached the peak of $285 Mn. On the operational front, the app had more than 9 Mn monthly active users and the future looked bright for the platform.
Cut to July 2024, Koo has shut shop and has become the latest entrant to India’s social media wasteland.
In a post on LinkedIn on July 3, the cofounders in a joint statement said, “Here’s the final pause from our end… While we would’ve liked to keep the app running, the cost of technology services to keep a social media app running is high and we’ve had to take this tough decision”.
From being backed by the likes of Tiger Global, Accel and Kalaari Capital to biting the dust, what led to the demise of a promising, well-funded Koo that looked to rival the dominance of Twitter (now X)?
The Meagre Revenues
Despite raising big bucks from some of the marquee names in the Indian investor space, the biggest thorn in Koo’s flesh was its dwindling financial health. From the very outset, the startup was plagued by mounting losses with little revenue to show for it.
For context, the company reported a net loss of INR 244 Cr between the financial year 2019-20 (FY20) and FY22. During the same period, it could only mint a revenue of INR 21 Lakh. Meanwhile, total expenses nearly doubled year-on-year (YoY) to INR 24.77 Cr in FY21 and then zoomed 741% YoY to INR 202 Cr in FY22. The company has not filed its financials for FY23 and FY24.
Making matters worse were the dwindling engagement levels (active users), which crashed 62% to 2.7 Mn in February 2024 from 7.2 Mn in June 2023. As user traction fell, advertisers also began to leave the platform in droves.
While the attrition of advertisers could very well be attributed to lower digital marketing budgets by large brands post the pandemic and Koo’s relatively small user base, ads on the desi X avatar themselves did not garner the expected level of attention or impressions.
As per an Inc42 deep dive into Koo’s troubles earlier this year, the social media platform failed to offer any competitive advantage over X, despite the former offering subscription models like Koo Premium priced between INR 6 and INR 30 per month.
“The biggest issue with Koo is that it does not offer any differentiation nor does it want to simply be a copy of X. This could be a good college project, not a serious business to count on,” Nishant Mittal, who previously founded a social media platform Cread, told Inc42 then.
The Death Knell
However, the biggest problem that led to the downfall of Koo was its failure to raise funds as investors tightened their purse strings amid a raging funding winter in the past two years.
Despite having raised capital in excess of $50 Mn since its inception, the startup found no takers for its Series C round as the financials were “not impressive enough,” an existing angel investor in Koo earlier told Inc42.
In late 2023, even cofounder Bidawatka conceded the fact saying that Koo was caught in a sour market and had to switch its focus from growth to generating revenue.
“With just six months more on our trajectory, we would have beaten Twitter in India. But we had to become more efficient by curbing expenses and start generating revenue. It takes years to build a globally competitive microblog..,” he said in a LinkedIn post.
Just as it was grappling with these challenges, the entry and sudden popularity of Meta’s Threads left Koo in dire straits as users flocked to the new platform. However, even Threads failed to dislodge X from its top position in the microblogging space despite the former accumulating 100 Mn users in a matter of days.
For Koo, competing with an entrenched player like X seemed to have met with little result.
In the middle of all this, the company began laying off employees in droves. It first fired 5% of its workforce and stopped paying salaries altogether to all its employees from April 2024 onwards citing financial constraints.
As troubles piled on, there seemed to be light at the end of the tunnel for Koo as reports surfaced that Dailyhunt and Josh parent VerSe were in talks to acquire the microblogging platform. Koo itself was looking for strategic partners for acquisition or funding starting October 2023.
“While we talk to the right partners to build this out, we urge and request our well-wishers and friends in the media to stop speculating and be patient till we have something concrete to announce. All we can tell you is that, with all these changes, Koo will be much stronger as an organisation and will make all of us proud!” Bidawatka had said in October last year in a social media post.
However, the talks quickly floundered, leaving Koo without money to pay salaries or sustain operations. This brings us to the fateful day of July 3, 2024, when the social media company finally announced that it would shut shop and wrap up operations.
With the company pulling down its shutters, many of its employees have been left without a job. The story is emblematic of the larger Indian social media wasteland, which has seen big names including the likes of Trell and Roposo fall on tough times as they navigate the uncertainties of funding winter.
Meanwhile, Koo is also the fourth funded Indian startup to shut shop this year, after Nintee, GoldPe and Muvin. The stark picture of startup shutdowns continues to cast a dark shadow the ecosystem as the landscape patiently awaits the funding winter to abate.
That said, all eyes will now be on what Radhakrishna and Bidawatka plan next even as Koo, once touted as a desi challenger to X, bites the dust.
