In Zombieland
KOCHI: Rohildev N got propelled into instant stardom in Kerala when his Kochi-based startup Fin Robotics raised over $200,000 through crowd-funding in 2014. The 26-year-old’s stock went further up among wannabe startup entrepreneurs in the state when the company raised $3 million from well-known venture fund Kalaari Capital a year later. The company’s product ‘Neyya’, a smart ring which enables the users to take selfies, play music and get call or message notifications with a swap or tap of your palm, now seems to have run out of steam.
Nearly four years after founding the startup and shipping around 7,500 smart rings, Rohildev and his core team has effectively dumped the product and is looking for the next big idea. “World-over the market for wearable products including watches are shrinking. We are now brainstorming on what we should do next,” he says while explaining the reason behind the shift in the plan and insisting that the startup has not shutdown, though in all practical sense it has.
In the crowded startup sector in Kerala, Rohildev is an exception. Many so-called startups in the state are still groping in the dark at the “incubation centres” even three years after founding their firms.
"Failure is nothing to be ashamed of." Danielle Morrill, the CEO of Mattermark, a data platform for venture capital companies, explains in her blog that “the greatest fear isn’t to fail, but to become a zombie startup. Kind of like in the Sixth Sense when Bruce Willis doesn’t realise he is dead and tries to have a nice dinner with his wife. There are startups out there who are still ‘operating’ but might well not be.”
A veteran, who tracks the Kerala startup industry, says this is exactly the problem encountered by a large number of Kerala startups - the zombie stage. They neither die nor are alive. “Closing down is a completely acceptable outcome for startups entering the zombie stage,” he says. “Most of the Kerala startups are either in the idea, prototype or product stage. They have a product but have no sales. And, they continue in that state eternally. Only a handful of those who I met have moved to the growth stage,” he adds.
Robin Alex Panicker, who founded two startups and closed one with another one in the process of winding up, says he has “grown wiser” from the experience. Incidentally, Robin hit the jackpot on his investment in another Kochi startup Profoundis, which announced its acquisition by US-based FullContact last week. FullContact bought out all the investors in Profoundis in a deal valued at millions in US-dollar.
When should a startup continue or close down?
“In 2 to 3 years, the company should have enough customer base, and it should show growth from the previous year,” Robin says. Simply put, if you are not achieving this, you are a typical zombie startup.
Profoundis is a good example for the zombie startups in the state. The company’s first three products were failures but the founders Arjun R Pillai, Jofin Joseph, Anoop Thomas Mathew and Nithin Sam Oommen were quick to realize it. They learned from their mistakes before launching the fourth product ‘Vibe’ in early 2014. The product fetched them clients and mega-returns, before the eventual takeover by FullContact.
According to an industry veteran, two startups incubated in Kerala viz., MindHelix and Jiffstore would have entered zombie stage had they continued in the state. Both the firms shifted to Bengaluru, where they were acquired by AskMe and PepperTap respectively. Reportedly, AskMe has closed shop, while another startup Innoz, which moved to Bengaluru, also shut down.
Pranav Kumar Suresh, former CEO of Startup Village, admits there are some startups in Kerala which are in zombie stage. He, however, said that there are no hard and fast rules as to when one should shutdown and look for a new idea. “When we launched Startup Village in 2012, the startups we had were all promoted by youngsters just out of the colleges. They were fearless, brought new ideas and lot of energy. Some were, however, not mature enough to realise when their idea failed,” he said. “With Kerala Startup Mission taking over Startup Village, many such zombies are in the process of being weeded out,” he adds.
Arun George, who has two startup failures behind him, admits that it’s a difficult decision when it comes to wind-up companies. He failed to make a success out of Genzcom Technologies (to build an app that would have helped travellers find bus timings based on their location) and ‘Motocura’ (to help passengers set their destination and go off to sleep during travel).
“The lesson which I learnt is that one has to do market research and have a foolproof business plan before launching a startup. Both of which I didn't do when I launched my two ventures,” he says. He is planning his third startup.