Indian social media app Koo, once seen as a rival to micro-blogging platform X, is shutting down, its founder, Aprameya Radhakrishna, said in a post on LinkedIn on Wednesday.
The founders' decision comes after several rounds of talks for a potential sale or merger with multiple companies, including Dailyhunt, failed, people aware of the matter said.
“Patient, long-term capital is essential to build ambitious, world-beating products from India, be it in social media, Al (artificial intelligence), space, EV (electric vehicle) or other futuristic categories," Radhakrishna said in a joint post along with cofounder Mayank Bidawatka. “It will need a lot more capital when the space has a global giant already.”
“And when one of these companies takes off, it can't be left to the whims of the capital market, which goes up and down. It needs a strategic outlook to safeguard it and make it thrive,” Radhakrishna said in the post. “These aren't to be looked at as profit churning machines in two years from launch. They need to be nurtured for a larger long-term play. We would love to see that long-term view for large bets from India.”
Koo was last valued at $274 million after it raised more than $66 million from investors, including 3one4 Capital.
Before starting Koo, Radhakrishna had set up ride-hailing company TaxiForSure, which was acquired by Ola in 2015. Bidawatka was a colleague of Radhakrishna at TaxiForSure.
Koo had been struggling to raise new capital since last year, after which it explored merger with many platforms, but none of the talks fructified. Sources said the company still has some digital assets, like cloud credits, which may get sold to potential buyers.
“They (Koo) were under a lot of pressure from the board and investors too. The company fired the majority of staff and even cut down on burn, but eventually nothing worked out,” a person aware of the matter said.
Radhakrishna said, “We explored partnerships with multiple larger internet companies, conglomerates and media houses, but these talks didn’t yield the outcome we wanted. Most of them didn’t want to deal with user-generated content and the wild nature of a social media company.”
The LinkedIn post from the Koo founders said the prolonged funding winter “got the better of us”. “We needed five to six years of aggressive, long-term and patient capital to make this dream a reality,” they said.
Koo’s struggle highlights the challenges local social media platforms face when trying to challenge global rivals.
ShareChat, another local social media app, has seen significant scale down in operations and has undertaken severe restructuring, including large-scale layoffs. In 2022, its valuation plunged by more than 60% to below $2 billion from its peak of $5 billion, following a $50-million financing through convertible notes.
“Koo used to have a 10% like ratio, almost 7-10x the ratio Twitter had, making Koo a more favourable platform for creators. At our peak, we were at about 2.1 million daily active users and 10 million monthly active users, over 9,000 VIPs that included some of the most eminent personalities from various fields,” the joint post from Koo founders said. “We were just months away from beating Twitter in India in 2022 and could have doubled down on that short-term goal with capital behind us.”
Koo had expanded in Brazil last year.
“The little yellow bird says its final goodbye,” the post said.
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