Exclusive: Battling For Survival, Stellaris-Backed BeepKart Shuts Chennai Ops

Used two-wheeler marketplace Beepkart is on the verge of a breakdown. As per sources, the Stellaris Venture Partners-backed startup has shut operations in Chennai, one of the two cities it was operational, and has fired its entire team in the city.

As per Inc42 sources, the startup is gradually winding down its operations in Bengaluru as well.

Confirming the same, a company spokesperson in a statement said, “BeepKart has consistently raised the bar by delivering best-in-category economics and metrics. We have been aligning with asset-light models of operations, while continuing to leverage our integrated tech, product and analytics platform. The company has improved its profitability substantially, it has a comfortable runway and is in conversation with potential strategic investor partners.”

However, the startup didn’t comment on the layoffs and shutting of its Chennai operations. Questions sent to Beepkart’s investors didn’t elicit any response at the time of publishing the story. 

So, what happened to the four-year-old startup that had raised over $18 Mn in funding from popular investors such as Stellaris, Chiratae Ventures, Innoven Capital to date?

A Year Of Scaling Down

Founded in 2021 by Hemir Doshi and Abhishek Saraf, BeepKart operates a full-stack platform that allows users to buy and sell used two-wheelers online. However, it has been plagued by problems since the beginning of 2024. 

After speaking to sources, Inc42 has learnt that BeepKart became the victim of aggressive expansion without a proper road map. 

Following its $9 Mn fundraise in October 2022, BeepKart looked to grow at a breakneck speed. The startup’s increase in employee count validates this. Based on the EPFO portal, BeepKart’s employee count almost doubled to 226 in April 2024 from 139 a year ago. 

The startup’s $6.5 Mn funding round in April 2024 further added wind to its expansion plans. 

As part of these plans, BeepKart opened new stores in Jayanagar, Rajajinagar, KR Puram in Bengaluru and Ashok Nagar and Poonamallee in Chennai, taking the total hub count to 11 in two cities. However, these stores failed to add to the startup’s top line and led to a surge in its costs. 

“The stores in Jayanagar and Koramangala were within a radius of just 4 kilometres. These stores cut each other’s market share, rather than adding new customers. The same happened with Poonamallee and Porur in Chennai,” a source told Inc42 in October last year. 

As a result, BeepKart started shutting some of its stores. Of the 11 stores, only four are operational now and they are also about to close soon. 

“They (BeepKart) have already informed the landlords of these four showrooms that they will be shutting them down,” one of the sources said. 

 

Besides layoffs, the startup has also been plagued with high-profile exits, with its CTO Nikhil Vaidya being the latest to exit last week. Here are the key employees who have stepped away from the startup in recent months:

• Nikhil Vaidya, CTO 
• Madan Kamath, Director & Head of Marketing 
• Rohit Kapile, Vice President, Head of Business Operations
• Abhinav Srivastava, Director, Projects 
• Kashish Sharma, Supply Chain Head 
• Stephen Raj, Associate Programme Manager

BeepKart’s Unit Economics Mess

While BeepKart’s FY25 numbers aren’t out yet, its FY24 financial numbers revealed a big rise in revenue. Its sales surged 165% to INR 100 Cr from INR 37 Cr in FY23, but so did its losses. Its loss zoomed 136% to INR 66 Cr in FY24 from INR 28 Cr in the previous fiscal year. 

Besides the procurement cost, the startup spends a significant amount on refurbishing two-wheelers. This includes buying company-specific parts, paint and mechanic costs, safety checks, among others. 

An industry insider told Inc42 that BeepKart’s refurbishment cost stood at 10% of its vehicle price, which is too high for the two-wheeler segment. The person said that the startup was trying to replicate the used car marketplace playbook. 

BeepKart, too, realised this and changed its refurbishment policies last year in a bid to cut costs. But, this resulted in poor vehicle quality and customer complaints, the sources added.

Social media is filled with agitated customers posting their bad experiences with BeepKart after purchasing two-wheelers from the platform.

Notably, the margins in the used two-wheeler space are lower than those for new vehicles. To improve the margins, BeepKart decided to increase the prices of the vehicles it sold. As a source said last year, BeepKart would buy a bike at INR 60,000 from a customer and then would try to sell it at INR 1,00,000. 

“When there are so many competitors in the space, why would a customer buy a used bike with so much of a premium when he/she can get it at INR 70,000 to INR 80,000 from competitors,” the source added.

Tough Space To Scale

Due to these troubles, BeepKart finds itself at a critical juncture. Currently, its employees are in the dark about the startup’s future and have been instructed to clear the existing inventory as soon as possible. 

While the BeepKart spokesperson said that it is moving to an asset-light model, without disclosing any details, sources aware of the startup’s condition said it will have to shut its operations without capital infusion. 

As per media reports from December last year, the startup was eyeing raising $20 Mn in its Series B funding round from institutional investors. The round was to give exits to some of BeepKart’s early backers and provide it the capital for expansion. But this round failed to materialise and this has brought the startup in its current position.

However, BeepKart is not the lone player struggling in this segment. The used two-wheeler marketplace model requires a lot of capital and assets, which is why a number of other players in the space have had to wind down their operations.

Take the example of Yamaha-backed CredR. The startup, which had raised over $40 Mn in funding, ceased operations last year, as it failed to fix the challenges it faced and could not get fresh funds. Car24’s used two-wheeler vertical Cars24 Moto was also shelved a year after its launch in 2020. Currently, BikeDekho, TVS-owned DriveX, Vutto, and RoamPrime are among the players operating in the space. 

India’s used two-wheeler online marketplace players are grappling with structural hurdles that make it difficult to scale and achieve sustainable growth. Unlike used car platforms, these businesses operate in a segment with far thinner margins due to low average selling prices. But operational costs, including inspections, refurbishment, doorstep delivery and documentation, remain high, thereby hurting unit economics. 

Fragmented supply, lack of standardisation, and customers opting for local dealers are some of the hurdles preventing these players from scaling up meaningfully. The cost of running a refurbished business is not conducive for positive unit economics unless a platform has a huge user base. 

Besides, regulatory hurdles such as RTO transfers and rising policy focus on EVs and the scrapage of old ICE vehicles add more worries. If these were not enough, investors’ appetite for high burn and ops-heavy business is dying. As a result, startups in this space are scaling back.

However, not all is doom and gloom. Just yesterday, Inc42 reported that TVS Motor is infusing another INR 65 Cr in DriveX. Meanwhile, Bengaluru-based Vutto is nearing the close of its Series A funding round.

Edited By Vinay Kumar Rai