New Delhi: Lummo, a software-as-a-service (SaaS) startup backed by Sequoia Capital, is reportedly considering either getting acquired or closing its operations, as it failed to achieve a product-market fit after several pivots, according to multiple sources. The company has undergone four pivots over the past four years, with each attempt failing to gain traction in the market. As a result, Lummo is now faced with the possibility of returning the remaining funds in its bank to its investors.
The startup, formerly known as BukuKas, raised $80 million in a Series C funding round in January 2022, led by Tiger Global and Sequoia Capital India, with participation from Amazon founder Jeff Bezos. Lummo has raised a total of $140 million across three funding rounds to date. However, if the company decides to shut down, it will return the remaining funds in its bank to the investors.
Sources close to the company have indicated that while Lummo is considering shutting down or being acquired, the company may also decide to invest more into its product and make another attempt to sail through the difficult phase. The company spokesperson stated that Lummo remains well-capitalized, and they undertake adjustments in their business from time to time to refine their financial and strategic direction along with the restructuring of internal resources to keep pace with the same.
Founded in December 2019 by Krishnan Menon and Lorenzo Peracchione as BukuKas, the company initially launched as a book-keeping app for small and medium businesses. In 2020, the company launched Tokko, an online direct-to-consumer commerce builder, which was later rebranded as LummoShop. However, the company discontinued LummoShop in May, reportedly pivoting away from the model, though the company denied the development.
Sources familiar with the company’s operations have revealed that around the same time, Lummo was considering a move into fintech and hired talent accordingly. However, those employees were later let go as the pivot was scrapped.
Overall, Lummo’s struggles to achieve a product-market fit underscore the challenges faced by startups in the fiercely competitive SaaS space. While Lummo’s fundraising success suggests that the company was initially seen as a promising prospect, the failure to find a sustainable business model highlights the difficulties faced by startups in gaining traction in the market. As Lummo weighs its options, it remains to be seen whether the company will opt for a graceful exit or attempt to turn its fortunes around through renewed investment in its product.