Sanjeev Bikhchandani, Founder and executive vice chairman of Info Edge Image: Madhu Kapparath
September 2021, New Delhi. Let’s start the story from the climax. It was September 2021. Bijnis, a B2B platform for the unorganised retail segment such as footwear and apparel, raised $30 million in a series B round of funding led by WestBridge Capital. Existing investors such as Info Edge, Matrix Partners India, Sequoia Capital, and WaterBridge Ventures too participated in the round. Big backers, a big round of funding, and big prospects… everything was going well for bijnis.
The CEO laid down the grand vision of the startup which was started in 2015 by Siddharth Vij, Chaitanya Rathi, Siddharth Rastogi, and Shubham Agarwal. “We want to take factories to the world by digitising and building a globally integrated network of manufacturers on one platform,” underlined co-founder and CEO Vij in the funding media release, claiming that over 5,000 manufacturers were running their businesses on the startup’s app. “We are grateful to all our investors for the faith they have shown in our mission,” he added a note of thanks.
Well, bijnis did need a huge leap of faith. The reason was its gloomy report card since inception. From Rs 37 lakh in operating revenue in FY18, the numbers increased to Rs 15.91 crore in FY21. During the same period, however, losses jumped from Rs 78.5 lakh to Rs 18.34 crore. The most interesting point, though, happened to be the most alarming point. There was no single fiscal year of operations when the revenue was more than the loss. The bottom line was always much bigger than the top line. (see box).
The backers, though, were least bothered. Reason: They were glued to a bigger picture, and the prospects of a promising future. bijnis, they argued, was operating in the over $100 billion largely unorganised categories of fashion, footwear and lifestyle. The headroom to grow business, undoubtedly, was immense. A bloating loss, most of them reckoned, could be ignored as promising businesses need time to grow and post profit. Kitty Agarwal, the then partner at Info Edge Ventures, gave a peep into the mindset and approach of all the VCs on the board. “We are fortunate to be close partners with the bijnis team since their seed round in 2018,” Agarwal highlighted in the media release, proudly stressing that the fund had doubled down in every round of investment. “(We have) our deep faith in the founders and their passion for truly changing how Indian factories do business with the world,” the VC noted.
Agarwal’s optimism and exuberance was matched by other fellow VCs. Take, for instance, Shraeyansh Thakur. “The team is very excited about bijnis's vision and look forward to partnering them on this mission,” the vice president at Sequoia India reckoned. Ashish Jain of WaterBridge Ventures too sounded quite upbeat. "bijnis represents quintessential Tech disruption… and is on track to create a scaled-up game-changing company," the partner outlined.
Around 18 months later, the vision is blurred, and the mission looks lost. In May 2023, Info Edge wrote off its entire investment in bijnis. “Following the principles of conservatism and prudence and after due consideration of factors including continuing cash burn, limited availability of cash in proportion to unspecified liabilities with respect to buyback obligations, and uncertainty of future capital raise… the investment has lost its inherent value," the company highlighted in its regulatory filings. Also read: 2022 was the year of the funding winter for startups. What will 2023 bring?
Industry analysts decode the ‘prudence’ and ‘conservatism’ of the biggest backer of bijnis. “High cash burn and low cash churn in terms of funding are the two big culprits,” says a seasoned venture capitalist requesting anonymity. He explains his point by setting a context. Most of the cash-guzzling businesses survived and thrived not because of sustainable unit economics. “Money kept them running otherwise an obese person can’t run,” he says, alluding to the high cash burn rate of bijnis. For seven years, he lets on, the company kept posting hefty losses. Nobody bothered about the bottom line because funding was readily available. Fast forward to 2023, the market dynamics changed. “A funding winter had set in, and the boys who were never fiscally disciplined will flunk,” he adds.
For bijnis, which has raised over Rs 320 crore since inception, the road ahead is indeed bumpy. Getting a thumbs down from its biggest investor is set to shake the confidence of the other riders as well. “If raising continuous rounds is the only way to grow and run businesses, then definitely the funding tap will run dry one day,” says another VC who recently declined to put more money in a B2C venture which had just a few weeks of runway left. “The founders must realise the VCs acted too generously during the good times,” he says, requesting not to be named. “These are terrible times, and all of us are responsible,” he says, adding that the VCs now can’t afford to be seen as reckless and keep backing the guys who are burning loads of cash. “At the end of the day, business has to make money to make business sense,” he says.