Why 98% of startups fail? A BigBasket competitor’s journey from early traction to shutdown

Startup stories are usually told after the outcome is clear. They are shaped around success, around what worked, around the moments that led to scale. But as Sanjay Swamy points out early in this conversation, only a small fraction of startups actually make it.

2% of startups become successful companies, but what happens to the other 98%?

This question frames this episode of the Prime Venture Partners Podcast, where Sushant Junnarkar shares a journey that does not end in scale or exit, but in a painful closure of his online grocery store in the 2010s. He takes us through the complete entrepreneurial roller coaster from early traction and funding to competition, pivots, and the tough decision to shut down.

Early struggles of starting up

Before the startup even began, the work was already in progress. Junnarkar was chasing his intuition about the future of digital commerce. As market research, he was trying to understand user behaviour.

“I would go to different malls and observe how customers are shopping, what kind of baskets they are picking.”

Over months of observation, a pattern became clear.

“Almost 60 to 70% of groceries were more or less repeated month on month.”

That insight shaped everything that followed. The idea was to focus on predictable demand, build for the larger monthly basket, and avoid heavy capital investment.

“We were not holding any inventory, we used to take orders and pick up stuff based on what the customers were ordering.”

But before it could even be tested, the first major setback arrived.

“My co-founder, just a few days before we were supposed to sign the papers, backed out. I had already resigned from my job and committed to the idea. My family was informed that I’m starting up.”

Junnarkar decided. “Let me not go back, otherwise I might never be able to do it again.”

Online grocery in 2010s

“There were many days when I kept refreshing the website, the analytics used to show only one person, which was me only.”

There was no sudden surge, no breakout moment. But then the first order came, finally. “The first order was euphoric.”

More importantly, it was followed by repeat orders. “Every order was probably corroborating us that yes, the path that we are on is right.”

Momentum built gradually, customers returned and the elusive press coverage followed.

“We were covered by Economic Times, Business World, and a lot of other top media coverage that really gave us a huge boost.”

Within a year, the company was doing around 70 to 80 orders a day. “Less, if you look at it in relative terms today, but at that point in time that was the scale of online grocery.”

When the market catches Up

“Competition started coming up, BigBasket came well capitalised.”

For the first time, there was a clear competition, “We suddenly had a benchmark to compare and compete.” That changed everything. Customer expectations went up. Technology expectations went up. Marketing intensity increased.

“I think that is where we started seeing some kind of customer attrition happening.” What had worked in the early phase was no longer enough. “When you are trying to change a category ‘jugaad’ doesn’t help.”

In the early days, small fixes were enough to keep things running.“I used to type in the Ubuntu code and the server would restart.” But scaling required a more structured approach along with deep domain experts.

Scale vs Funding trap

By the time the company entered its third phase, the problem had become structural. “We got into a vicious cycle like every startup founder, without scale there is no funding, without funding there is no scale.”

Investors compared the company with better-funded competitors. “They were asking, you’ve been here for two years but we don’t see you scaled up as much as BigBasket.”

At the same time, without capital, reaching that scale was difficult. There were also broader concerns around the category.

“There was an overhang of Webvan, people had seen it fail.” Multiple attempts were made to break out of this cycle. We explored different partnerships, numerous business models were tested including gourmet food and pharmacy delivery, but nothing worked. 

As an outrageous final attempt, “I wrote a mail to Mr Ambani for funding”, to change destiny, but with no luck. 

When things start slipping

What followed was not an immediate shutdown, it was a gradual realisation. “Suddenly we used to see a green shoot and we used to think maybe this time it will be different.”

But something had begun to shift internally, “I would say the energy was actually running very thin.”

This is where the most important insight from the conversation comes through.

“A founder or a venture does not fail when the funds dry up, it is when the energy of the entrepreneur starts falling apart.”

At one point, the reality became stark. “There was a time when we had ₹9,000 in the bank” and soon after, the decision was made to shut down.

Why you start matters more than how it ends

Through all of this, one idea stands out more than anything else. “Do entrepreneurship for the right reasons.” 

Not because it is trending. "Just because two other companies have got funded, doesn’t mean you need to get into it.” And most importantly, “it is not something to kill boredom in your corporate job.”

And not as a shortcut, “it is not a get rich quick scheme.”

Because at some point, external signals fade. What remains is the founder’s relationship with the journey.

He ends with a powerful quote, “Entrepreneurship is a journey, not a destination.”