Koo: Twitter’s Indian rival Koo shuts down after failed merger talks

Indian social media app Koo, once considered a rival to microblogging platform X, will be shutting down, its founder Aprameya Radhakrishna said in a LinkedIn post on Wednesday.

The founders’ decision comes after several rounds of talks about a potential sale or merger with multiple companies, including Dailyhunt, ended in failure, people familiar with the matter said.

“Patient, long-term capital is essential to building ambitious, global products from India, be it in social media, AI, space, EVs or other futuristic categories,” Radhakrishna said in a joint post with co-founder Mayank Bidawatka. “Much more capital will be needed once the space has a global giant.”

Koo is supported by Accel and Tiger Global.

“And once one of these companies becomes successful, it cannot be left to the whims of the capital market, which sometimes goes up and sometimes down. It needs a strategic view to secure it and make it grow,” Radhakrishna said in the post. “They should not be treated as profit-making machines within two years of launch. They need to be nurtured so that they can be used in the long term. We would like to see that long-term perspective for large bets from India.”

Koo was last valued at $274 million after the company raised over $66 million from investors including 3one4 Capital.

Before founding Koo, Radhakrishna founded ride-hailing company TaxiForSure, which was acquired by Ola in 2015. Bidawatka was Radhakrishna’s colleague at TaxiForSure. Koo has been struggling to raise new capital since last year, after which it considered merging with multiple platforms, but none of the talks came to fruition. The sources said the company still has some digital assets, such as cloud credits, that could be sold to potential buyers.

“They (Koo) were under a lot of pressure from management and investors. The company laid off most of its employees and even restricted smoking, but nothing came of it in the end,” said a person familiar with the matter.

Radhakrishna said, “We had considered partnerships with many larger internet companies, conglomerates and media houses, but those talks did not yield the desired results. Most of them did not want to deal with user-generated content and the wild nature of a social media company.”

In a LinkedIn post, Koo’s founders wrote that the prolonged funding winter “got the better of us.” “It took five to six years of aggressive, long-term, and patient capital to make this dream a reality,” they said.

Koo’s struggles illustrate the challenges local social media platforms face as they try to challenge global rivals.

ShareChat, another local social media app, has seen its business scale down significantly and has undergone a major restructuring, including large-scale layoffs. Its valuation fell more than 60% in 2022 to below $2 billion from a high of $5 billion, following a $50 million financing via convertible bonds.

“Koo had a 10% like rate, almost 7-10 times more than Twitter, making Koo a more creator-friendly platform. At its peak, we had around 2.1 million daily active users and 10 million monthly active users, over 9,000 VIPs, including some of the most prominent personalities across various fields,” the Koo founders wrote in a joint post. “We were just a few months away from beating Twitter in India in 2022, and could have doubled that near-term goal with the capital behind us.”

Last year, Koo expanded its operations to Brazil.

“A little yellow bird says its last goodbye,” the entry reads.