Dazo

What did it do?

Dazo was a food platform in Bengaluru that offered daily changing menus, curated from local restaurants and food entrepreneurs, exclusively through its mobile app, and handled last-mile delivery itself. The company described itself as India's first curated food-on-demand platform.

Why did it shut down?

Shashank Shekhar Singhal and Monica Rastogi started out in October 2014 as an internet-first kitchen under the name Tapcibo, then switched the model to menus curated from local restaurants. The company raised an undisclosed amount from figures such as Rajan Anandan, the head of Google India, and Amit Agarwal, the head of Amazon India. In 2015 India's food-tech companies were grappling with cash burn, scaling and efficiency problems, and rival aggregators were competing with much larger restaurant networks and deep pockets. According to a Business Standard report, Dazo could not find new funding and ceased operations on 7 October 2015. Singhal said that, as a team, they would leave this business behind and work on a new product.

The story

Dazo was born at a time when investment was pouring into food technology in India. When Shashank Shekhar Singhal and Monica Rastogi founded the company in Bengaluru in October 2014, the country's food delivery market, according to Inc42, was worth $2 billion and growing by 30 to 40 per cent a year. By November 2014 around $125 million had been invested in the sector.

The venture started out under the name Tapcibo, as a model with its own kitchen taking orders online. It soon changed direction and positioned itself as India's first curated food-on-demand platform. Users chose from daily changing menus prepared by local restaurants through the Android app and usually received their orders within 30 minutes. The service ran at lunch, in the early evening and at dinner time in neighbourhoods such as Indiranagar, Koramangala and Domlur.

The company raised an undisclosed amount from figures including Rajan Anandan, the head of Google India; Amit Agarwal, the head of Amazon India; Vinay Goel of Google; and Gaurav Munjal, founder of Flatchat. By 2015, however, the mood in the sector had changed. Companies such as TinyOwl, Spoonjoy and Foodpanda were grappling with cash burn, scaling and efficiency problems, while rival aggregator platforms dominated the market with much larger restaurant networks and deep pockets.

According to a Business Standard report, Dazo, unable to find new funding, ceased operations on 7 October 2015. Singhal said that, as a team, they would leave this business behind and work on a new product. Dazo's short life shows how quickly a small team's room to differentiate can shrink in a market where capital is concentrated in a few big players.

Lessons for founders

• Moving from a kitchen to an aggregator model within a year leaves no time to learn the economics of either; justify a pivot with data.
• If you are moving forward on small angel rounds in a category where capital is concentrated, pick a narrow niche the big players are not interested in.
• A single menu that changes daily simplifies operations but limits choice; measure early how this model's repeat-order rate holds up against rivals with broad menus.

Sources

1. Food Tech Startup Dazo Shuts Down Operations (Inc42, 2015-10-07)
2. Bengaluru-based food-tech startup Dazo shuts down due to lack of funding (Business Standard, 2015-10-07)

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