Indian social media app Koo, once seen as a rival to the micro-blogging platform X, is shutting down, its founder Aprameya Radhakrishna announced in a LinkedIn post on Wednesday.
This decision follows multiple rounds of discussions for a potential sale or merger with various companies, including Dailyhunt, which ultimately fell through, according to sources familiar with the matter.
“Patient, long-term capital is essential to build ambitious, world-beating products from India, whether in social media, AI (artificial intelligence), space, EV (electric vehicle), or other futuristic categories,” Radhakrishna stated in a joint post with co-founder Mayank Bidawatka. “Such ventures require significant capital, especially when competing against global giants.”
Koo, backed by Accel and Tiger Global, was last valued at $274 million after raising over $66 million from investors, including 3one4 Capital.
“When a company starts to succeed, it can’t be subject to the volatile nature of the capital market. It needs a strategic outlook to ensure its growth and sustainability,” Radhakrishna added. “These companies shouldn’t be viewed as profit machines within two years of launch. They require nurturing for long-term success. We hope to see such a long-term perspective for major investments from India.”
Before founding Koo, Radhakrishna had set up the ride-hailing company TaxiForSure, which was acquired by Ola in 2015. Bidawatka was his colleague at TaxiForSure.
Koo had been struggling to secure new funding since last year and explored mergers with several platforms, but none materialized. The company still holds some digital assets, such as cloud credits, which might be sold to potential buyers.
“They were under significant pressure from the board and investors. The company laid off most of its staff and reduced expenses, but ultimately nothing worked out,” a source said.
Radhakrishna noted, “We explored partnerships with several larger internet companies, conglomerates, and media houses, but these discussions didn’t produce the desired results. Most were reluctant to deal with user-generated content and the unpredictability of a social media company.
The LinkedIn post from Koo’s founders mentioned that the prolonged funding winter “got the better of us.” “We needed five to six years of aggressive, long-term, and patient capital to make this dream a reality,” they said.
Koo’s challenges highlight the difficulties faced by local social media platforms in competing with global rivals.
ShareChat, another Indian social media app, has also scaled down operations and undergone significant restructuring, including large layoffs. In 2022, its valuation dropped by over 60% to below $2 billion from a peak of $5 billion, following a $50-million financing through convertible notes.
“Koo had a 10% like ratio, almost 7-10 times higher than Twitter, making it a more favorable platform for creators. At our peak, we had around 2.1 million daily active users and 10 million monthly active users, with over 9,000 VIPs, including prominent personalities from various fields,” the Koo founders’ post said. “We were just months away from surpassing Twitter in India in 2022 and could have achieved this with sufficient capital.”
