Aadit Palicha Calls Foul, Nestlé’s Minority Stake, and Myntra’s ‘Dream Room Inspirations’

This week has started with few setbacks such as closure of a few Zepto cafes and shutdown of Otipy, which sent ripples through the startup world. One of our favorite apps for getting fresh veggies and fruits, Otipy’s closure shows how tough it is to survive in Indian startup game if you can’t make your numbers work.

Founded with big dreams in 2020, Otipy promised to connect farmers directly with urban consumers (aka farm-to-fork), bringing fresh vegetables to our doorsteps faster and cheaper. With backing from big investors (WestBridge Capital, SIG, and Omidyar Network India), it raised $69 million. But last week, it all came crashing down, leaving almost 300 employees jobless and many unpaid vendors. So, what really went wrong? Simply put, Otipy ran out of money. The company couldn't get extra money - its lead investor, reportedly the Hero family office, backed out at the last moment from the $10 million funding round.

So, what went wrong? India’s startup ecosystem has been stuck in a funding slump since 2022, and investors are now extra cautious. They want to see startups making profits, or at least a clear path to it. In Otipy’s case, managing a perishable goods supply chain involved high logistics costs, warehousing, and quality control. In the end, Otipy couldn't make enough money to cover its expenses and compete with big players who can afford to sell at rock-bottom prices (Milkbasket, Bigbasket, Zepto, Blinkit, etc.).

Otipy also relied heavily on a network of community resellers, mostly women, which was a nice idea but added a layer of complexity and cost - their training, coordination, and incentives,  increased operational overheads. On top of that, the market was crowded with many other similar businesses, and traditional ways of selling produce is hard to beat (although Otipy tried selling through community carts also).

Being a user of Otipy, the Editor relied on the platform to deliver fresh veggies and fruits. We clearly remember when the first shipment from Otipy was delivered with all the fruits, vegetables, and leafy vegetables segregated in different packs to maintain the freshness. There were two thoughts at the time - 1. Surprisingly high quality and 2. "Can they sustain this model? Can they sustain these high costs? How will they survive?". We knew hyperlocal deliveries are cash burners. However, they were innovative enough to partner with women (who were their customers) in a particular locality to become partners in handle the last-minute deliveries. It was a mini-version of what Blinkit or BigBasket's dark stores, from where they deliver into a given area. But what Otipy did was create these small mini room-size stores which can cater deliveries in a radius of let's say one kilometer. These women partners received a commission, based on the sales they have done in a given month. In our opinion, that was a clever move where they could have saved a lot of costs.

The Agritech space in India is crowded, with over 2,800 startups fighting for a slice of the market. Otipy tried to replace traditional mandis, where farmers sell their produce, but many farmers stuck to what they knew, trusting mandis for guaranteed payments. Otipy’s tech-heavy approach needed farmers to adopt new ways of working, which wasn’t always easy. Plus, Agritech startups in India face big hurdles: unpredictable weather, poor internet in rural areas, and long waits for profits.

Otipy’s downfall came from a mix of problems. It couldn’t secure the funds it needed in a tight market, and its high costs made it hard to compete. The reseller model, while creative, added complexity, and broader issues like farmer reluctance and regulatory pressures didn’t help.

Now the question comes in the mind, what could have been done to avoid this failure? Maybe the founders could have worked on their unit economics before scaling. Otipy’s model was capital-intensive with high logistics cost and thin margins, so they should have stress-tested their unit economics in one city (let’s say Delhi NCR), ensuring that they were profitable, and then they should have expanded to other metros.

Next, they could have diversified into B2B. For example, supplying to restaurants or grocery chains. Otipy did try to get into the B2B vertical in 2024, but it was too late by then.

One more mistake, but they are not the first venture backed company to make that mistake, was to over-rely on funding for growth. In this funding winter, you have to be really prepared for the worst-case scenarios. Companies should always have a 12-month runway, no matter what. So when funding was tight, Otipy should have re-negotiated vendor contracts and paused the new city expansions to extend its cash runway.

The end-users, including your truly, will miss Otipy, but this is a reminder that Agritech startups need patience, discipline, adaptability, and luck to survive in Indian market. Otipy’s vision was right, but its luck and timing was bad. We will reserve our judgment on execution till more details come out from behind the scenes.

Let’s go through what else is happening in Indian startup world - Grab your simmering cup of StartupChai.in and unwind with our hand-brewed memes.

“Sufferin’ From Success”: Aadit Palicha Alleges ‘Smear Campaign’ By Rival’s Top Executive

Zepto CEO Aadit Palicha is calling foul - accusing a rival’s CFO of dialing up investors and spreading lies about the company.

From fake numbers to bot-powered negativity, Palicha claims it’s a full-blown smear campaign with no facts to back it up. In response, he flexed Zepto’s growing GOV and EBITDA, saying numbers don’t lie - even if rivals do.

Read more here

“Chhupana Bhi Nahi Aata”: Nestlé Picks Up Minority Stake In Pet Care Unicorn Drools

Nestlé just fetched a minority stake in Drools, India’s newly-declared pet care unicorn - but mum’s the word on the exact numbers.

With this move, Drools is wagging its tail toward global expansion, hoping to bark louder on the international stage. Fun fact: L Catterton had sniffed out the potential early, investing $60M last year for a 10% bite at a $600M valuation.

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“Ab Hogi AI Ki Kranti”: Google Cloud and Myntra create AI-powered ‘Dream Room Inspirations’

Myntra has partnered with Google Cloud to launch ‘Dream Room Inspirations,’ an AI-powered feature that turns text prompts into visual room designs.

Built on Google’s Imagen 3 model via Vertex AI, the tool aims to simplify how users explore home decor by offering personalized, generated inspiration. As Myntra’s home category sees a sharp rise in demand, this move signals a deeper push into tech-driven retail experiences.

Read more here

1. Info Edge shareholders have greenlit a ₹1,000 Cr infusion into its new VC arm, backing the next wave of startups through Fund III. With holdings like Zomato and PB Fintech already valued at ₹31,500 Cr, the company is doubling down on its bet on India’s digital future.
   Read more here

2. Mufin Green has secured $18M in debt funding to power EV loans for MSMEs, with a focus on underserved regions. The move aims to boost access to electric two-, three-, and four-wheelers, reinforcing clean mobility at the grassroots.
   Read more here

“Naari Shakti Zindabad Zindabad”: Dhaaga Life Is Embroidering a Future of Sustainability and Empowerment

What began as Usha Borda’s embroidery hobby is now Dhaaga Life—a thriving Mumbai-based brand she co-founded with her daughter Bansari.

From handcrafted bags to brand collabs with Lakmé and PUMA, they’ve stitched a movement that blends tradition with trend. Even without a Shark Tank deal, their mission to empower women through flexible, home-based work keeps gaining ground, one thread at a time.

Read full story here