Social gifting space in India gets a setback. Delhi based social gifting startup, Giftology owned and operated by Sama Web Innovations Pvt Ltd. has shut shop. The website has been down for at least a week now.
Giftology, as a startup in the social gifting space, was trying to make the gifting process simple. It allowed users to connect to Facebook and offer friends redeemable gift vouchers both paid and free. The startup, founded in 2006, initially had been offering free coupons but later it started offering paid gifts along with the free ones, as reported by Watblog. The paid section cost ranged from Rs. 100 – Rs. 1000. A trend that has been adopted by most of the competing startups in the same space, such as Giveter, Badhai, 99presents, among others.
The startup was last in the news in the early part of 2013 when it had raised a seed round of funding from Kiran Sidhu. The undisclosed funding from Kiran Sidhu, Chairman of Transact Network, was planned to be used for expansion of the team. Along with this the founders Nikhil Sama and Aman Narang also planned investing the funds in enhancing the product and rolling out mobile apps across all platforms. In addition to the funding, the startup has also hired Varun Vummidi as the CEO. Varun previously was working as an entrepreneur in residence at Jabong.
With the story of the startup closing down getting clearer in the market, two more stories have come up by two of the leading tech publications in the country – YourStory and TechCircle. According to YourStory, founder Aman Narang has confirmed that the company has officially shut down. Speaking to YourStory, Aman cited the difference in opinion between the entrepreneur and investor as the main reason behind the shutdown. He added,
“The investment happened earlier this year in January, and recently we started to see some fissures in our relationship with the investor.
There are two types of funders – one who is a pure financial guy, who puts in some amount and expects a 4x – 5x return at the end of a specified time period, and then there are those who are also mentors, who invest time in the company that you spent time building as it is similar to bringing up and nurturing your own child. As an entrepreneur, you have a vision for the company you’re building and you know where you want to take it because you are eating, drinking and sleeping it, not unlike the investor who is sitting in his plush office and just doing calls to check where his returns are going to come from. The second kind of investor gives the company a direction that might not always match with your vision for the company. That’s essentially what happened in our case.”
Aman feels that 6-7 months is too short a time to show results and he thinks that the startup was doing some great work.
“We were running campaigns with reputed brands like UCB, we had offline gifting partners, an area which is literally untouched considering our try-n-buy approach and even had gifts like free cocktails, starters, drinks etc. at pubs. Now these kind of gifts were truly unique. But the investors couldn’t see the results they were looking for, because West is West and India is India, and we were asked to close it down.”
While Aman confirmed that the startup has shut shop, Techcircle has reported that according to their source the company is looking for a possible sell out. However, it is not clear whether Giftology is selling its entire stake and whether the prospective buyer is going to operate from the same domain.
Aman has refused to comment on this development but looks like that the investor wants to take out as much money as possible to bear a lesser percentage of loss. Looking forward for a break, Aman has advised other startups to choose investors carefully, the CEO even more carefully and bootstrap as long as possible.
It would be good to know what the investors think about the social gifting space, which is still scratching the surface in our country.