In January 2016, ShopClues became India’s fourth unicorn firm valued over a billion dollars at $1.1 billion. It was no mean feat at a time when Unicorns were rare unlike present day when there are more than 30 such startups that enjoy a billion dollar plus valuation, nearly a third added in 2019 alone. But in a little less than four years, it has gone from an early unicorn to outcast, having held merger discussions with every e-commerce firm in the country and outside, finally selling the business at a 90% discount to its peak valuation. As per the details of the transaction which became known Thursday evening, ShopClues will merge with Singapore’s online retailer Qoo10 Pte. Ltd in an all stock deal. While the deal still hasn’t closed, with documentation and board approval pending, it appears that ShopClues will fetch a valuation of $80 million, said two people close to the company, requesting anonymity.

So what led to the steep fall? According to industry watchers, while the ShopClues business model was smaller and less capital-intensive than bigger rivals such as Flipkart, Amazon and Snapdeal, it still had a significant cash burn and was simply unable to raise further funding after its $100 million round in 2016, which was led by Tiger Global and Singapore’s sovereign wealth fund GIC.

“It missed one fundraising cycle, and the next time around, investor sentiment was poor. Flipkart and Amazon had more than enough capital, which certainly didn’t help," said an investor in ShopClues who requested anonymity.

“Despite having better-unit economics than others, it wasn’t able to build a sustainable business and failed to convince investors to back it up which began adversely impacting its scale of operations and service quality such as reach and delivery," the person added.

Right from the start, ShopClues’ strategy was to focus more on Tier 2 and 3 towns. But in a bid to control cash burn, its growth too stumbled, and fell sharply from financial year 2017 to the next fiscal. Gross Merchandise Value, or value of goods sold, a common metric for online retailers, fell from $3 billion to $500 million in that year. While the bid to control cash burn was relevant, it could not grow its valuation without another external round of funding as it did not happen.

In fiscal 2018, its revenue grew from $28 million to $42 million and losses came down to $31 million, co-founder Sanjay Sethi said in a blog post last year, without revealing 2017’s losses.

At the same time, rival Snapdeal that also saw its valuation slide too began pivoting its business focussing on Tier 2 and 3 cities. However, Snapdeal managed to execute better in this market and having more revenue, despite it being ShopClues’ strategy first say industry watchers.

In the startup ecosystem, investors typically always look for rapid topline growth but ShopClues while for the right reasons wanted to control its cash burn, ended up sacrificing revenue growth in the process. ShopClues’ management issues did not help either. It was founded by husband-wife duo Sandeep Aggarwal and Radhika Aggarwal. They split up in 2017 and had an ugly public spat over voting rights, cheating and forgery charges. Sandeep Aggarwal had left the company in 2013 following insider trading charges during his time at a wealth management firm in the US. He now runs automotive portal Droom. Aggarwal’s departure came while it was still business as usual for ShopClues. However, the company faced trouble convincing investors about the leadership potential of the company, according to several former employees of the company.

Many potential investors were simply skeptical about the management ability to withstand the onslaught from global names such as Amazon and Walmart. This despite the fact that a number of high-profile venture capitalists, publicly and privately had placed ShopClues on their most-promising companies list from 2012-17.