In Pakistan, not just one but many ventures started and thrived but eventually failed. The reasons behind their failure included a lack of funds and misallocation, no transparency between founder and investor, poor business and revenue models, wrong forecasts, weak supply chain, and much more.
In this blog post, we will discuss some ventures that were started in Pakistan but had to shut down even after gaining immense popularity and sales. Join us as we unveil the factors that caused these famous ventures to end.
Startups that Badly Failed in Pakistan
Here are a few startup failure stories that can teach great lessons to entrepreneurs who are looking forward to starting their own venture.
1. JUGNU
An investor has pulled out from Jugnu, and that’s the primary reason they are closing down, confirmed a former Business Development Executive at Jugnu talking to ProPakistani. He added that E-commerce FMCG companies cannot be in profit due to low margins on products in which they are dealing with high costs.
Sharoon Saleem and Yasir Suleman Memon founded Jugnu in 2019. They are co-founders of retail automation and former Unilever Executives. Jugnu’s main aim was to digitalize, empower, and help small and medium-sized retailers grow their businesses and take better control of their capital flow and inventory. In Islamabad, Rawalpindi, and Lahore, Jugnu connected with 30,000 retailers with plans to expand to other cities. It raised $25.7 million in total over three funding rounds from MENA-based eCommerce marketplace Sary, Sarmayacar, and Systems Limited.
The company was unable to produce profit because of the thin profit margins on some high-cost products. There were around 10-15% losses in inventory management due to mismanagement. The business also could not complete payments to some of its logistics partners. During the same time, an investor withdrew his investment, and Jugnu eventually had to stop its operations in Pakistan.
2. Airlift
Airlift, a venture founded by Usman Gul, gained immense popularity among the people in Pakistan. Airlift promised its customers to deliver necessary items, including medicines, fresh fruits and vegetables, small electronic items, pet food, household supplies, and much more, in just 30 minutes. But after raising a whopping $85 million amount, it suddenly had to shut down its operations.
According to sources, Airlift was portraying to the investors that it was performing great instead of actually focusing on running a sustainable business. While trying to raise another amount of $20 million, two of its most prominent investors, Ali Mukhtar of Fatima Gobi Ventures and Aatif Awan of Indus Valley Capital, backed out. This was the investment that Airlift badly needed to get through the economic downturn, but it’s unfortunate days had started. With the cash flow drying up, Airlift was forced to generate cash solely from its own operations.
Another problem that added to the lower revenue stream was the purchasing power of the people. The rising inflation and the hike in prices did not bring any good news to Airlift, and the startup had to stop running its operations.
3. Beauty Hooked
Beauty Hooked, also known as BH, raised $280,000 in 2016 through Fatima Ventures. The startup was in the constant spotlight and gained immense support and sales but could not stay consistent.
The funding that they initially secured was for developing a mobile app and expanding inside and outside of Pakistan, but the startup could not match its objectives. Their website did not generate enough traffic, and the mobile app did not come into existence.
The competitors, ‘Ghar par’ and ‘Bagallery,’ got immense sales on several festivities and events, but Beauty Hooked was nowhere near.
The startup could not even maintain its partnerships with the Lahore-based partnerships and eventually failed due to its failure to offer discounts and sell low-quality beauty products.
4. Sukoon.com.pk
Sukoon.com.pk was founded by Shoaib Iqbal and Qazi Umair, who were ex-employees of Rocket Internet. They launched their startup Sukoon.com.pk in 2015. It was Pakistan’s first-ever online platform that provided household services with top-quality, pre-screened blue-collared professionals to individuals looking for them. Through the application, you could easily get service providers like handypersons or home cleaners.
They raised their funding from DotZero Ventures, The Indus Entrepreneur (TiE) Islamabad Chapter, and Crescent Ventures. After securing a good amount of funding, they hired technicians and some independent contractors.
Even though the demand was massive, the startup could still not survive. This was because the quality of services started becoming poor. The customers began complaining about the poor services and high charges. What added fuel to the fire was the inability of the founders to get more funding and the poor attitude of the people on contract. They would directly call the families to form a direct contract without the involvement of sukoon.com.pk. In addition to this, they did not have enough service providers to cater to the needs of the customers even though they spent massive amounts on marketing.
In short, their business strategy was not sustainable enough, and the founders eventually ended the platform.
5. Veon
Veon was launched by Mobilink in the year 2017. Its mission was to work as WeChat in Pakistan and was a mobile app that served almost all purposes like mobile top-ups, utility bill payments, news feeds, etc.
The business model was to make money by gaining users on the platform and then make revenue by selling them services by running ads. Millions were invested in advertising and marketing of the forum.
The management had aimed to get a very high number of users, but they only got around 2 million downloads. They could still generate more numbers, but another hindrance was WhatsApp. Getting WhatsApp users to join Veon was a difficult task. In addition to this, they were offering too much, which gave off a very confusing message; therefore, they were also not able to retain the customers.
The management soon realized that they would not get to where they had forecasted, and the app was brought down in 2019.
6. Sabzi.pk
It started from the LUMS Center for Entrepreneurship (LCE), Sabzi.pk gained immense popularity after its launch. After securing funding of around $7.5 million, the venture started growing at a fast pace. Sabzi.pk did try to expand to other cities, but it failed to do so; therefore, the operations were only limited to Lahore.
The aim of this platform was to get fresh fruits and vegetables from the farmers and directly get them delivered to the customers. However, the supply chain model was not sustainable. They were unable to meet the number of orders, which led to late deliveries and poor services. With consistent problems arising, the platform was eventually shut down.
Conclusion
In a nutshell, many ventures in Pakistan failed because of many factors, including unsustainable business and revenue models, setting unrealistic expectations, wrong forecasting, misallocation of funds, lack of information systems, and much more. To overcome these challenges and bear the fruits of your struggle as an entrepreneur, it is essential to develop business models that set realistic expectations, are transparent with everybody involved, and make the most out of the latest and advanced technologies. By using these strategies, you can make your business thrive and save it from being a case study like many failed ventures that we discussed above.
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