Why did we shut down and returned the investor money?

Saurabh Jain
4 min readNov 4, 2020

In 2015, my cofounder Kedar Gokhale and I decided to shut down our first venture, Truce, and return the money to investors when we still had almost half of the raised capital in the bank.

Truce was a B2B marketplace for fresh produce to help farmers sell better.

The problem the venture had was more related to the Indian market at that time. As a team, we believe that the Indian market was not ready and needed a more mature environment to pull off a similar model and make it scalable. After considering a merger or an acquisition for a brief period, we decided to cut their journey short and return the remaining capital.

But why am I writing about this now?

Since letting people know of our decision, my co-founder and I frequently get asked what we learned from the process. And this has exponentially increased over the last couple of months as Agritech is getting a lot of traction. Below is an email we shared with our investors on some of the business's key learnings and the decision.

Date: 30 July, 2017

Dear Investors,

We have been working on a marketplace model for the last 22 months now. However, a dispassionate assessment of the past few months has forced us to rethink the very fundamentals on which the business is based, the value addition which we were trying bring to the table.

Brief — A solution suggested most of the time is “eliminate the middleman or de-layer the supply chain”. What we learned, it is easy to de-layer the chain but not easy to de-layer the costs. Formal organizations like us often add costs; there are delays in decision making and are bound by legality or organizational rules. While the small player/ vendors are efficient in operation but it is very difficult to scale up or replicate their operations. Intermediaries are indispensable in an economy like India where intermediaries are adding value to every step of the supply chain at a low cost. Intermediaries have the expertise in storage, transportation, quality assessment, and counter-party risk reduction, which are difficult to replicate.

Over the last few months, the more relevant, and more painful, question for us was should any money be returned while there is a drop of life in the proposition that started it all? Or, should we close up shop and return the money as soon as it is apparent that the original proposition is not turning out as pre-supposed? The nuances to this confusion are endless.

We believe, the right thing to do is to treat the capital respectfully and deploy it where there are brighter chances to create huge value. We tried to build a scaleable business but realized that the business model does not work. So it is better that this capital gets deployed elsewhere instead of us hoarding it. We could continue to deploy the capital we had raised and scaled the business. However, this would go against the fundamentals of company building. Or we could fix the unit economics by owning physical inventory and building an offline business like any existing APMC vendor. But that would be going against our strengths. The third option we had was an M&A with a bigger player. We have explored this option thoroughly, talking with more than 8–10 potential companies, and got some interest too. But none of it was worth the efforts or capital we all have put in to build it so far.

At one point, we were in two minds because we have enough capital in the bank, marquee angel investors, and a great team — all desirable assets. So we thought, why not use these resources and build something new? But then, we realized that we should not force ourselves to pick an idea in a limited amount of time because we have money and a team in place. If there’s a deadline, then we will end up picking up suboptimal ideas and that would be disastrous. Using the investor money in the bank to do something completely different would be nearsighted.

We also took care to keep every employee informed about the challenges, tweaks in strategy, and what was happening. So people knew there were struggles. We have had few open discussions with the team over the past few months. We took questions and explained the rationale behind the decision. They realized that what we had been doing with the marketplace wasn’t scaling well. We ensured that everyone from our team is placed or has an offer.

Lastly, I want to thank you for showing faith in us, right till the end. It was always great fun and learning to talk to you. We have learned the hard way that it is really difficult to build a sustainable company. But we are also more confident than ever that it is possible. We hope to build a big company one day with the same investors.

Our guiding principles of transparency and long-term thinking helped us in taking the call of shutting down our venture when we still had money in the bank.

I think a lot of start-ups struggle with doing things fast or doing things right. At times, the acceptance that your great idea, coupled with a great team, solid investors still might not work, is not easy. It still bothers us, but moving away from something that was not scalable has taught us the value of failing fast and learn.

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