Koo, the Indian microblogging platform that aimed to rival Twitter, is shutting down after failing to secure acquisition deals. The startup, which launched in March 2020, experienced rapid growth and became a significant player in the social media space. Despite initial success and expansion efforts, Koo could not sustain its operations due to financial challenges and a tough market environment.
Rise of Koo: A Promising Start
Koo was established by Aprameya Radhakrishna and Mayank Bidawatka in 2019 and launched in March 2020. It quickly gained prominence, especially during the 2021 standoff between the Indian government and Twitter (now X). Koo was marketed as a homegrown alternative to Twitter, and its yellow bird logo became widely recognized. The app offered a unique platform that catered to users in over 10 languages and managed to amass nearly 60 million downloads. By July 2022, Koo had reached a peak of more than 9 million monthly active users, making it a significant player in the social media landscape.
Financial Backing and Expansion
Koo’s initial success attracted substantial investment. In February 2021, the company raised $4.1 million in its Series A round and followed it with another $31 million three months later, led by Tiger Global. By June 2022, Koo had raised over $57 million and achieved a peak valuation of $285.5 million. The company even expanded its footprint to Nigeria and Brazil, showcasing its potential to scale globally.
Challenges and Decline
Despite its early triumphs, Koo began to face significant challenges in late 2022. The company had to lay off around 40 employees in September 2022, marking the beginning of a tough period. By February 2023, the situation had worsened, and Koo had to reduce its workforce by another 30 percent. The company’s monthly active users (MAUs) also started to decline, dropping from 9.4 million in July 2022 to just 3.1 million by April 2023. This decline was partly due to a prolonged funding winter, which severely impacted Koo’s growth plans.
Failed Acquisition Attempts
Koo’s founders sought partnerships with larger internet companies, conglomerates, and media houses to secure the platform’s future. However, these talks did not yield the desired outcomes. Many potential partners were reluctant to engage with a social media company due to the challenges associated with user-generated content. Talks with startups like Dailyhunt and Sharechat also fell through, further complicating Koo’s financial situation.
Financial Struggles and Cost Cutting
The financial strain on Koo became increasingly apparent as the company struggled to control its monthly cash burn. Despite multiple rounds of layoffs and cost-cutting measures, Koo’s monthly cash burn remained high. In April 2023, Koo’s monthly expenses stood at Rs 10.2 crore, significantly above the target of Rs 6.5 crore set for March-end. The founders even had to dip into their personal funds to ensure salaries were paid, but it was not enough to keep the company afloat.
Reflections from the Founders
In a heartfelt LinkedIn post, Koo’s co-founders expressed their disappointment at having to shut down the platform. They highlighted the challenges of building a social media company, particularly the need for long-term, patient capital to achieve significant scale. They also lamented the missed opportunity to create a globally recognized brand that was truly made in India. Despite their efforts, the tough market conditions and a challenging funding environment proved insurmountable.
Koo’s journey, from a promising startup to a company forced to shut down, underscores the volatility and challenges of the social media industry. Despite its initial success and substantial financial backing, Koo could not sustain its operations in a competitive and financially demanding environment. The platform’s closure marks the end of an ambitious project that aimed to provide a homegrown alternative to Twitter and elevate India’s presence in the global social media space. The story of Koo serves as a reminder of the importance of timing and financial resilience in the rapidly changing landscape of technology startups.
(With inputs from agencies)
