Pune-based coworking space provider Friyey has become the latest casualty of the ongoing funding crunch in the Indian startup ecosystem. Friyey founder and CEO Yogesh Thore took to LinkedIn to announce the closure, expressing mixed emotions about shutting down the venture after four years.
Funding crunch and challenges for idea-based startups
Thore cited the funding crunch as one of the key factors behind Friyey’s shutdown. He explained that receiving investments for idea-based startups is more challenging compared to product-based businesses in India, contributing to the company’s difficulties.
Friyey’s unique approach and challenges
Founded in 2019, Friyey adopted a unique approach of transforming restaurants, pubs, and clubs into coworking spaces during morning hours. Thore mentioned in his post that Friyey had amassed over 500 restaurant partners and catered to more than 24,000 remote workers. However, creating constant demand and managing higher expenses relative to revenue proved challenging, especially with limited external funding options.
Impact of funding winter on Indian startups
Friyey’s closure adds to the growing list of Indian startups shutting down due to the funding winter. In 2022, eight startups, including five from the edtech sector, ceased operations. This trend continued into 2023, with social media app Tiki and vernacular content platform Bluepad also announcing their closures.
Lingering effects of the funding winter
Despite the Indian startup ecosystem’s resilience, the funding winter continues to exert its influence. According to a source ‘Indian Tech Startup Funding Report H1 2023,’ total funding for Indian startups in the first half of 2023 amounted to $5.4 billion, significantly lower than the $19 billion raised during the same period last year. The decline in funding is reflected in the decreased deal count, indicating the ongoing challenges faced by Indian startups in securing financial support.
