Why Start-ups Failed: The reasons for Lido’s shutdown
I was an employee of Lido Learning sometime before, so it’s my right to know my company well, so, Let’s go!
Mr. Sahil Sheth started Lido in 2019
Lido USPs –
- Online tutoring to the K-12 segment.
- Subject experts in Maths, Science, Coding, and English.
- The curriculum has been designed by experts from Stanford, Harvard, and IITians.
- 6 students, personalized batch group
- They use a combination of AI, an immersive curriculum, and gamification
- Hardworking Team
In-between between INR 30K and INR 120K.
Lido Funding Rounds :
|Jan 2021||Series C||$11.5M|
|Dec 2020||Series C||$1.3M|
|Oct 2020||Series B||$4.09M|
|Nov 2019||Series B||$7.49M|
|May 2019||Series A||$3M|
Company Valuation around $35 million as of October 2020. (According to Fintrackr’s estimates)
- Troubles started during the pandemic when the company’s revenue went down two-folds.
- Chinese investors of Lido also did not finalize because India changed its FDI rules in 2021.
- According to several employees, the start-up is facing financial difficulties and will be unable to pay the salaries of employees
- The company has also laid off over 150-200 employees.
- A statement of Supreme Court lawyer Nitish Banka highlighted that besides the employees, even the teachers’ salaries have not been paid out either.
- Lido was allegedly deducting PF (Provident Fund) amounts from employees’ salaries but hasn’t been depositing the same into the employees’ PF accounts.
- Another employee claimed that Mr. Sahil had mentioned that one of the investors had backed out after committing an investment.
- Social media platforms are piling up with grievances of Lido customers seeking refunds. According to its website.
- The start-up’s expenses in FY21 almost shot by 1.4X, mostly due to the significant rise in employee expenses. It had spent INR 70 Cr, a 47.9% increase from INR 47.3 Cr it incurred in FY20.
- If we look at overall numbers, over the two years (FY20 & FY21), the company recorded losses of nearly INR 102 Cr, and the total funding raised during that time stood at around INR 111 Cr. ($14.8 Mn).
- While the $10 Mn funding that it raised in FY22 helped it stay afloat for some time.
- However, a lack of investor’s interest in the venture and an inability to secure further funding could have made it difficult for the company to sustain itself financially.
- They are young, vibrant, and aggressive in their business approach.
- Spend, spend and spend cannot be the only way forward. over-branding, over-promising, and under-delivering became a major factor of deterioration .
- We have to look at cash flow, balance sheet, and curb expenditure if we notice fault lines in business operations before planning the growth chart
- One of the key reasons behind the difficulty in running Lido could be attributed to its business model as well as the rising competition in the Ed Tech sector
- Customers are the ultimate God of your Business, so Customers Insights is important
- Respect your Employees
- Be a Customer Friendly Brand
- Maintain your Brand Trust
Being an ex-Lido employee, I know the strength of Lido People and I know the management too. This company and team will rise again with a bang!
But some fundamental strategy is always required for any start-up,
We need to Build a Post Mortem Culture For our Start-up:
“Define – Measure – Analyse – Improve – Control” a quality strategy for a quality start-up
~ Pranshu Shubham
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