A startup that could ‘either be a hero or zero in 2 years’ gets no funds on Shark Tank India S2

• Kolkata-based GunjanApps Studios develops educational games for kids aged between 1.5-12 years.
  
• In FY22, it clocked revenue of ₹24 crore and a net profit of ₹15 crore.
  
• The founders asked for an investment of ₹2.5 crore for 1% equity.
  
• None of the judges extended an offer as a few of them believed that the product wasn’t innovative but rather ‘addictive’ in nature.

Of the 21 startups that have been pitched on Shark Tank India Season 2 so far, 15 startups have received funding from the sharks. Tech startup GunjanApps Studios isn’t one of them.

Started in 2016 by husband and wife duo Sourav and Gunjan Gupta, Kolkata-based GunjanApps Studios develops educational games for kids aged between 1.5-12 years. The startup claims to have developed over 40 mobile apps that collectively have 200 million downloads. Its highest-performing app is a learning app for mathematics, which has 60 million downloads.

“We are on a mission to change the way children experience technology, by creating a safe space for them. We make quality content for children to play and learn. We bring families together over meaningful screen time,” states the company’s website.

The founders claimed that pre-Covid, the average screen time of children was 9 minutes, but it increased to 60 minutes during Covid due to the heavy dependence on Zoom classes. Currently, as per the founders, the average screen time of children stands at 45 minutes.

The founders asked for an investment of ₹2.5 crore for 1% equity, which valued the company at ₹250 crore. The startup has three revenue streams, advertisements, subscriptions and in-app purchases, that contribute 96%, 3%, and 1% respectively to the total revenue. However, going forward, the founders aim to increase the revenue from subscriptions.

In FY22, the company had sales of ₹24 crore, with a net profit of ₹15 crore. And yet, the startup found no takers. Because the sharks, primarily, didn’t believe in the product.

‘Increased screen time is a tragedy’

The founders said that the idea to develop the app came from their own experience. Originally hailing from India, the couple was living in the US when they observed how their son, aged 1 at the time, learned numbers by playing with a PoC (proof of concept) that Gunjan was working on at the time.

That’s when the founders had their ‘eureka moment’ - an app that allows children to learn without parental assistance. As per Gunjan, she could not find any free app that offered a similar learning experience.

She shared on the show, “When I was looking for such learning apps for my son, I found that there were no such apps in the market. The ones that were available had an extremely expensive subscription.”

Consequently, Sourav quit his job with IBM and the couple returned to India to extensively develop GunjanApps. Sourav is an engineer, who worked for 12 years (with L&T Infotech and later IBM) before starting GunjanApps. Gunjan is a certified android programmer, who had 3 years of experience as a web and mobile app developer before she started GunjanApps.

Vineeta Singh, co-founder of Sugar Cosmetics, was the first one to share her apprehensions about the product and back out, claiming that the apps were actually highly ‘addictive’ for children and did not offer any considerable learning.

Namita Thapar, executive director at Emcure Pharmaceuticals, had a similar outlook. She believed that an increase in children’s screen time is a tragedy, and one should work to reverse this trend - not accept it.

“The numbers you shared about increasing screen time - this is a tragedy. Rather than accepting it, we should reverse and go back to old-fashioned ways. Since fundamentally I don’t believe in it, I’m out,” shared Thapar.

On the other hand, sharks Aman Gupta, co-founder of boAt, and Anupam Mittal, founder of Shaadi.com, agreed with the founders to an extent. Both shared that high screen time for children was a reality in present times.

However, Mittal backed out from investing because he didn’t consider the product to be as revolutionary as the founders claimed. He said that considering the limitations on advertising for children, the founders would need to grow their subscriptions - something the founders agreed with. And in a subscription market, they would face stiff competition from established giants in the industry, like ABC mouse and Kiddopia. Mittal opined that he didn’t think the startup had the capability to fight such competition.

Shark Peyush Bansal, the co-founder of Lenskart, who initially appeared to be interested, backed down - not because he didn’t believe in the product but because he didn’t believe in the founders. According to Bansal, the founders required intensive coaching on building a culture in the organisation.

“Your business is at a stage where it’s either a hero or zero in the next two years,” added Bansal. Gupta, on the other hand, believed that while Sourav and Gunjan were passionate founders, they weren’t paranoid about the competition - a quality he looked for in entrepreneurs.

A ray of hope

Dejected by the rejection from all the sharks, Gunjan shared that she believed it would have been easier for the company to grow had they received a deal on the show. That was when Mittal added that he would be happy to discuss ways to improve the app and the business as he’d worked on similar products. He also advised them to not shy away from challenges, which, he claimed, were integral to an entrepreneur’s journey.

“It will never be easy - the path is difficult. Entrepreneurship is very hard. (But) if you need to determine the path ahead, you will. But because I’ve built this business, I am happy to give you advice and input,” said Mittal.

Bansal also added that the duo should be proud of the fact that in a day and age where most tech startups and internet companies, even those making revenue to the tune of ₹1,000 crore, struggle to earn profits, the duo had created a profitable business.

SEE ALSO:
World is in a state of crisis, difficult to predict how long it will last: Modi
TCS revenue growth to slowdown in FY24: Fitch Ratings