With millions still in the bank, why is Indian start-up GoZoomo shutting shop

The founding team of three IITians looked at the data objectively and took the tough decision, reports Tech in Asia

Used car marketplace GoZoomo decided to shut shop and return millions of dollars which it had raised from top venture capitalists (VCs).

The start-up had raised $7 million and had more than half of that amount still left in the bank. 

With the unit economics not adding up, despite several iterations in the business model, the two-year-old start-up, which had shown much promise in tackling the problem of mistrust in this space, is shutting down.

The founding team of three IITians looked at the data objectively and took the tough decision to shut shop instead of burning VC money on an unsustainable business.

“The right thing to do is to treat the capital respectfully and deploy it where there is a better chance to create huge value,” GoZoomo CEO and co-founder Arnav Kumar said. “We tried to build a fast-scaleable business, but realised that the business model does not work. So it is better that this capital gets deployed elsewhere instead of us hoarding it and hoping that something good happens,” added Kumar.

The decision has earned the respect of Alok Goel, MD of GoZoomo’s main investor Saif Partners.

“The start-up journey is very, very hard,” said Goel, who was earlier the CEO of FreeCharge until its acquisition by Snapdeal. “The entrepreneur takes a lot of risk and puts his life at stake by picking up entrepreneurship. During that stage, he is fighting all kinds of odds to survive and win. So it takes a lot of emotional and intellectual maturity on the part of the founder to take a decision like this,” added Goel.
This is an excerpt from Tech in Asia. You can read the full article here