Homegrown hyperlocal startup AskMe has recently decided to shut its operations due to severe financial crunch the company was facing since the beginning of 2016. However, AskMe’s eCommerce wing, AskMe.com is still live, but is not accepting any new orders.
The on-demand hyperlocal startup ran short on repaying its primary investor Astro Holdings which made them defaulted on payments to sellers, own employees and various other dues. These total bills were amounted up to $15 million from January 2016. As AskMe’s 98.5 per cent stakes were owned by Astro Holdings, the company did not have any options but to bank upon a single source of income.
Commenting on the closure of the company, Manav Sethi, CMO, AskMe Group said that Astro Holdings had some political and legal issues and thus it is now exiting from all its businesses in the country. AskMe Group has made a management buyout agreement and thus, the management is now planning to take over the company.
But as Astro was supposed to sign the Management Buyout Proposal (MBO), they eventually refused to exit the business or inject further capital into the company. This blocked AskMe from all sides and it could not raise money from any other investor to clear off the dues and continue the business. Even the employees haven’t been paid for the past two months which has made things more complex with the company.
Looking at all these issues, finally AskMe Group has decided to suspend its operations across India with immediate effect. The increasing operational costs and legal conflicts were making things worse and thus, shutting down the operation was the only step management could have taken.
Though the company has shut operation across the country, there is still some changes of that the operation might resume soon as the investing group is itself stuck with legal matters related to money laundering in the country.
But looking at verticals AskMe Group caters to, i.e. grocery and furniture, comeback will not be so easy for them. As both of these verticals are facing operational and financial challenges, it will be tough for the hyperlocal firm to find enough investors and sufficient funding to restart operations.