Nandan Nilekani-backed ShopX closes down shop
- ByStartupStory | August 22, 2022
ShopX, an e-commerce facilitator, has ceased operations. The Bengaluru-based firm has also applied to adjudicating authorities for insolvency and bankruptcy. The bankruptcy filing is unsurprising given that the company transitioned from its primary model to an e-commerce enablement platform in mid-2021.
According to the company’s filings with the Registrar of Company, the ShopX board of directors voted a special resolution to apply Section 10 of the Insolvency and Bankruptcy Code, 2016.
“ShopX has played an important role in co-creating the e-B2B business.” Given the industry’s poor margin profile, it has been unprofitable to operate at scale over time, prompting the decision to halt operations. “We have concentrated on an orderly and ethical closure while adhering to all company obligations,” said a company representative. “The company’s loan and interest liabilities are confined to its principal stockholders,” the person noted.
ShopX, founded in 2015, had a similar business to Udaan until mid-2021 when it used to offer a five-year aided e-commerce solution that included sourcing, supply chain, and credit line. However, the concept did not work, and the company shifted course and lay off more than half of its staff in June.
According to regulatory documents, ShopX borrowed multiple rupees from its Singapore-based investor Fung Investment and is currently unable to meet its payment commitments (interest on loans) due to a lack of finances. The company also stated that because the business strategy did not succeed, it could not produce sufficient cash flow or raise new financing. As a result, it can no longer meet its different payment obligations and is no longer a continuing concern.
ShopX, which is backed by Nilekani and Fung Investment, has received over $54 million to date and also was valued at more than $100 million during the most recent round. Nilekani alone invested $18 million in the startup formed by Sharma and Apoorva Jois.
ShopX’s struggles may be clear from the fact that the company has not raised a new round of funding since April 2020, a period when most startups in the b2b e-commerce and e-commerce enabling field together raised billions of dollars.
Following the pivot, ShopX explored the consumer internet market by launching a cashback app that used to provide discounts on the MRP plus reward points for every purchase on UPI payment [through its app] at any local retailer and its partners.
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