What Happened to Crejo & Why Did It Fail?

Crejo was an online platform offering extracurricular activities like yoga, chess, and dance for children. Founded in 2020, it quickly gained traction but shut down in 2022 due to funding issues and declining enrollments as schools reopened. Despite initial success, it couldn't sustain its operations.

What Was Crejo?

Crejo's main product was an online platform offering live, interactive extracurricular classes for children, including yoga, chess, and dance. Its unique value proposition lay in helping kids discover and nurture their passions through creative learning. Notably, Crejo raised $3.1 million and achieved high customer satisfaction ratings of 4.9.

What Happened to Crejo?

The story of Crejo is a compelling narrative of rapid growth followed by an abrupt decline, marked by several key phases:

• Founding and Early Success: Crejo was founded in 2020 by IIM Bengaluru alumni Ankit Agarwal and Vikas Bansal. The startup quickly gained traction by offering a variety of online extracurricular activities, benefiting from the increased demand for online learning during the pandemic.
• Significant Funding: The company raised $3 million in a pre-seed round from Matrix Partners and 021 Capital, with participation from several angel investors. This early financial backing allowed Crejo to scale its operations and enhance its platform.
• High Customer Satisfaction: Crejo achieved high customer satisfaction ratings of 4.9, reflecting the quality and appeal of its offerings. Parents appreciated the convenience and variety of classes available for their children.
• Challenges with School Reopenings: The reopening of schools post-pandemic led to a significant drop in enrollments. As children returned to physical classrooms, the demand for online extracurricular activities waned, impacting Crejo's revenue streams.
• Financial Struggles and Shutdown: Despite initial success, Crejo faced financial difficulties, with expenses far exceeding revenues. The lack of additional funding and high operational costs ultimately led to the decision to shut down, affecting over 170 employees.

When Did Crejo Shut Down?

Crejo shut down in June 2022, as announced by its cofounders during a townhall meeting. The decision affected over 170 employees, with the company ensuring that more than 90% of them found new jobs and providing severance pay to all.

Why Did Crejo Shut Down?

1. Lack of Funding:

   Despite efforts to secure additional capital, Crejo was unable to raise the necessary funds to sustain its operations. Co-founder Vikas Bansal noted that the company had been trying to raise capital for several months but faced challenges due to the current economic environment, ultimately leading to the decision to shut down.

2. Reopening of Schools:

   The return to physical classrooms post-pandemic significantly impacted Crejo's enrollment numbers. As children resumed in-person schooling, the demand for online extracurricular activities plummeted, which directly affected the company's revenue streams and contributed to its financial struggles.

3. High Operational Costs:

   Crejo's financials revealed a stark imbalance between revenue and expenses. In FY21, the company earned INR 19.3 Lakh but had expenses of INR 1.1 Cr, resulting in a substantial loss. This financial strain made it difficult for Crejo to maintain its operations without additional funding.

4. Broader Edtech Challenges:

   The edtech sector in India has faced numerous challenges, with several startups like Udayy and SuperLearn also shutting down. The market's saturation and changing consumer preferences post-pandemic created a tough environment for edtech companies, including Crejo, to thrive.

5. Employee Impact:

   The shutdown affected over 170 employees, but Crejo took steps to mitigate the impact. The company managed to secure jobs for more than 90% of its workforce and provided severance pay and July salary to all employees, demonstrating a commitment to supporting its team during the transition.

Lessons Learned from Crejo's Failure

• Adaptability: Be prepared to pivot your business model as market conditions change, especially in response to external factors like the pandemic.
• Financial Prudence: Maintain a balanced budget and avoid high operational costs that can outstrip revenue, ensuring long-term sustainability.
• Market Research: Continuously assess market demand and consumer preferences to stay relevant and competitive.
• Diversified Funding: Secure multiple funding sources to mitigate the risk of financial shortfalls and ensure steady cash flow.
• Employee Welfare: Prioritize the well-being of your team, especially during transitions, to maintain morale and loyalty.
• Scalability: Develop a scalable business model that can adapt to both growth and contraction phases without compromising quality.
• Customer Focus: Keep customer satisfaction at the forefront to build a loyal user base and positive brand reputation.
• Risk Management: Implement robust risk management strategies to navigate economic uncertainties and industry challenges.

We Shut Down Startups

Crejo's story is a stark reminder of how quickly a promising startup can face insurmountable challenges. If you're in a similar situation, Sunset can help you navigate the complexities of winding down your business.

Sunset takes care of all the legal, tax, and operational burdens, allowing you to avoid penalties and reduce liabilities. Don't let the stress of shutting down hold you back—book a demo today to see how we can assist you.