Bad startup investments are par for the course. There’s even a commonly used term for them: lemons. Thus the VC adage, “lemons ripen faster”. Meaning, bad investments tend to become apparent faster than good ones.
Last week, Paytm*, the $7 billion payments and e-commerce giant, figured out a way to get rid of a particularly pesky lemon it had ended up with—Little Internet, a two-year-old hyperlocal deals startup.
In a clever bit of financial engineering (followed by strategic posturing), it engineered a merger between Little Internet and Nearbuy, coincidentally another two-year-old hyperlocal deals startup, and ended up controlling over 50% of the merged entity.