WhatsOnRent was an online rental marketplace founded in September 2015, offering products like home appliances, furniture, and medical equipment. Despite initial success and funding, it shut down in November 2016 due to funding challenges and high operational costs, returning 50% of its seed funding to investors.
What was WhatsOnRent
WhatsOnRent, an online rental marketplace, offered a diverse range of products including home appliances, furniture, and medical equipment. Its unique "Try-before-you-Buy" program allowed customers to test products before purchasing. Notably, it raised significant funding from prominent investors and returned over 50% of seed funding upon closure.
Reasons behind WhatsOnRent's Failure
Inability to Secure Additional Funding WhatsOnRent struggled to raise the crucial pre-Series A funding needed to scale operations and change consumer behavior. Co-founder Bharat Goyal noted, "We could not see the next round of funding coming. Without that pre-Series A funding of a couple of million dollars, it was not possible."
Difficulty in Changing Consumer Mindsets The rental model required a significant shift in consumer behavior, convincing people that renting could be more beneficial than buying. Goyal explained, "The only issue with the rental business was of changing the mindset of the consumers. Changing the consumer behavior that renting makes more sense was a big deal."
High Operational Costs Managing logistics for both delivery and pick-up, along with product maintenance, incurred high costs. These expenses were difficult to cover, especially when operating at a fraction of the product's MRP. The high operational costs ultimately contributed to the unsustainability of the business model.
Impact on Investors and Market
WhatsOnRent's failure had a notable impact on its investors and the market. Investors, including Lalit Mangal and Neeraj Gupta, received over 50% of their seed funding back. The market saw the shutdown as a reflection of the inherent challenges in the rental business model, affecting investor confidence in similar startups.
Lessons Learned from WhatsOnRent's Failure
Secure Adequate Funding: Ensure sufficient capital for scaling operations and changing consumer behavior to avoid financial shortfalls.
Understand Consumer Behavior: Recognize the challenges in altering consumer mindsets and develop strategies to effectively communicate the benefits of your business model.
Manage Operational Costs: Keep logistics and maintenance expenses in check to maintain a sustainable business model.
Adaptability: Be prepared to pivot or adjust your business model based on market feedback and financial realities.
Investor Relations: Maintain transparent communication with investors to manage expectations and build long-term trust.
Market Research: Conduct thorough market analysis to understand demand and competition, ensuring your product or service meets a genuine need.
Scalability: Design your business model to be scalable from the outset, considering both financial and operational aspects.
Frequently Asked Questions about WhatsOnRent
When was WhatsOnRent founded?
WhatsOnRent was founded in September 2015.
What products could users rent on WhatsOnRent?
Users could rent home appliances, kitchen appliances, laptops, furniture, treadmills, and medical equipment.
Why did WhatsOnRent shut down?
WhatsOnRent shut down due to funding challenges, difficulty in changing consumer mindsets, and high operational costs.
Looking Ahead
As startup founders navigate the challenging landscape of entrepreneurship, it's crucial to learn from past failures and plan for potential pitfalls. Consider how Sunset can help you avoid penalties, reduce liabilities, and move on to your next venture seamlessly.
