How RentOnGo closed down
Every entrepreneur goes through a journey that maybe similar to the stock exchange or the Bangalore weather with unpredictable ups and downs. But what is important is the extract out of it as you near the end of journey.
After having spent over 6 years of founding my 1st startup RentOnGo, the journey has been full of learning through multiple pivots. It is known that more than 90% of Indian startups fail within the first five years. But we survived that 5 years period with couple of rounds of fundraising too. After we moved to the shared mobility space with the daily commute business model, things were looking upwards. But we were burning cash m-o-m and that meant we had to continuously raise funds to sustain in the market. This was not easy as it was a capital intensive model with no moats. We felt it would be wise to look at consolidation and spoke to interested players in the mobility space.
This is when during the start of Oct 2018 (exactly an year earlier), after couple of months of negotiations for M&A, we got a Term Sheet from Bounce (aka Wicked Ride). The value was lower than what I would have liked but we agreed for the larger interest of all shareholders. After a month of that, the Due Diligence got underway. Since we knew that there would be no red flags in the DD, after discussing with Bounce and checking their willingness to take over our locations/vehicles, we decided to suspend operations as we were only burning money. This was met with no resistance or indication of any risk to the deal from Bounce. By end of Dec 2018, everything was cleared from the DD team. This is when the real ordeal began.
10 months of excruciating pain that I personally as the founder and every shareholder of RentOnGo has had to go through. During this period every Call/WhatsApp message to Bounce was either met either with ignorance or a string of common excuses — “we are raising more money, so will need more time”, “board is not approving the deal and taking time” and so on. Whenever we challenged the very basis of having given a Term Sheet and going through entire DD, all we got was a threat of calling off the deal. And no surprise that during the DD the entire confidential data of customers was shared. Till date we have not received an email/call from Bounce to even share any reasons/logic or even stating in writing that they cannot go ahead with this deal.
Now, I understand that as a startup, one of the possible outcomes was to go down with no financial returns. But the kind of treatment we have received from Bounce as part of this M&A deal is very disturbing. I don’t want to be blaming anyone specific here, but I think the entire board of Bounce comprising of founders and investors, who approved the deal in 1st place to go ahead with Term Sheet and DD, should have stood up to the new board members. We Indians are so comfortable in just blaming others (new board members in this case), rather than having the guts to stand up for what is right ethically and professionally. I am writing this so that the startup ecosystem evolves to be more mature and gutsy and other entrepreneurs get a learning from my experience.
I would like to personally thank all our Angel Investors with special mention to Anand Chandrasekaran and Rajesh Sawhney (GSF) for all their support during this tough time.
Would be happy to hear what other founders feel about this and share their experiences.
