Failed Startups In India | Why Indian Startups Are Not Successful (2022)

Sustaining a startup is perhaps the most difficult phase for any entrepreneur. While everyone advocates entrepreneurship as a shortcut to mint money and get rich scheme, the uncertainty and constant pressure to perform is a huge responsibility even for the toughest of individuals. The team at StartupTalky decided to analyze some unsuccessful startups in India.

According to a 2019 report, more than 5 million startups are founded every year. However, only 10%, i.e., 500,000 of these startups, succeed in the long run.

The case study discussed below will give you insights into the failure of some Indian startups that were destined to reach new heights. Learn from the mistakes these Indian ventures did so that you don't end up repeating the same.

Failed Startups In India | Why Indian Startups Are Not Successful (1)

List of Failed Startups in India
Main Reasons why Startups Fail in India
How to Bounce back from your Startup's Failure

List of Failed Startups in India

Yumist
Dial-A-Celeb
Stayzilla
Roder
Turant Delivery
Finomena
MrNeeds
CardBack
Overcart
RoomsTonite
Doodhwala
Russsh
Koinex
DocTalk
LoanMeet

Yumist

Industry: Food Delivery

Failed Startups In India | Why Indian Startups Are Not Successful (2)

Serving home-cooked food is becoming a trend among today’s startups. Yumist was one such venture. It was launched in 2014 to cover the daily-meals segment in India, a largely untapped market. The founders were Alok Jain and Abhimanyu Maheshwari who managed to raise nearly $3 million in funding.

Reason for failure: A business model with a high burn rate that required extensive capital beyond Yumist’s reach for achieving growth. Enough funding was also not available to run the startup. So the startup had to shut down. The Yumist case study is often mentioned when one talks about famous failed startups in India.

Yumist: The start-up that failed to make it bigWe all have come across instances of startups making it big, in fact everybusiness is a startup in the initial stages. There is a lot that goes intoturning those intangible dreams into a tangible reality. The right investment,continuous performance, meeting short-term and long-term targets, all a…StartupTalkyAshutosh Roy Choudhury

Dial-A-Celeb

Industry: App

Failed Startups In India | Why Indian Startups Are Not Successful (5)

Let’s be honest, a chance to talk with your favorite celebrity is on everyone’s bucket list. Banking on this wish, Dial-A-Celeb was a short-lived yet exciting concept founded in 2016 by Gaurav Chopra and Ranjan Agarwal. In addition to video chats with actors and celebs, the platform also allowed customers to get autographed items such as toys and diaries. However, the startup closed its doors within a year.

Reason for failure: The major reason for Dial-A-Celeb's failure was that celebrities were coming up with their own apps to interact with fans. This trend resulted in immense competition for Dial-A-Celeb and a direct impact on profitability. Dial-A-Celeb was shut in 2017. Know your rivals well and also brace yourself for competition that may arise in the future.

Why Did Thomas Cook Collapse | A Case StudyThoman Cook Group was a British travel company which operated as both, anairline company and a tour and travel firm. The Group was founded after themerger of Thomas Cook AG and My Travel group in 2007. However, the brand “ThomasCook” is 178 years old and was trusted by travelers globally. Recentl…StartupTalkyLakshya Singh

Stayzilla

Industry: Real Estate

Failed Startups In India | Why Indian Startups Are Not Successful (8)

Once on the path of becoming the largest homestay network in India, Stayzilla is reminiscent of a riches-to-rags story. With around $33.5 million in funding and having established itself in the hotel-rental segment, this brainchild of Yogendra Vasupal, Rupal Yogendra, and Sachit Singhi started crumbling after it failed to repay vendors. The troubles were then aggregated and in February 2017, Yogendra Vasupal officially announced the closure of Stayzilla's operations.

(Video) What’s happening with the Indian Startup Economy?

Reason for failure: Stayzilla was way ahead of its time when launched. People were not ready for such Hi-Fi technology. However, the company somehow managed for sometime on the funding it received. But when people started becoming familiar with online booking, new competitors emerged with better discounts and deals. Stayzilla was unable to provide the same due to the unavailability of funds. Additionally, legal disputes and a lack of focus on growing the business destroyed Stayzilla.

Roder

Industry: Logistics

Failed Startups In India | Why Indian Startups Are Not Successful (9)

Inter-city travels have become a mainstream requirement— traveling 100 km or more every day is deemed as just another day to some. The reason may be anything: office location, excursion, meeting a friend, etc. These journeys can burn a hole in the pocket. Roder (earlier known as Insta Cabs) was founded by Abhishek Negi, Ashish Rajput, and Siddhant Matre in 2014 to ease inter-city rides. One of Roder's highlights was offering one-way rides at nearly half the market price.

Reason for failure: The inability to cope with customer acquisition costs and not keeping up with the user retention rates. Moreover, increased competition from experienced ventures like Ola and Uber added to Roder's woes. Having a bigger competitor that is more aggressively funded makes the entrepreneurs lose their zeal. And this is one of the major causes of entrepreneurial failure.

OLA Success Story - Full Form, Story, Founder, Business Model, Funding History, Team, News‘Ola’, the company needs no introduction. The first Indian cab aggregatorcompany, Ola has made availing cab services a smooth experience. Owned by ANITechnologies Pvt. Ltd., and formerly known as OlaCabs, Ola was started in Dec2010 by two IIT Bombay [/mumbai-startups/] graduates. Ola serves as an…StartupTalkyShubham Kumar

Turant Delivery

Industry: Logistics

Failed Startups In India | Why Indian Startups Are Not Successful (12)

The B2B based startup was an intra-city logistics-provider that was launched in 2015 to bring a new flavor in the Indian logistics industry. The algorithm followed by Turant Delivery permitted it to offer services at a price as much as 15% less than what fellow competitors charged for the same trip (as per the endeavor’s claim).

Reason for failure: The company did not have the funds to sustain itself for the long run. A logistics service provider needs intensive cash flow to run. Hence, funding is essential for any logistics startup.

Finomena

Industry: Fintech

Failed Startups In India | Why Indian Startups Are Not Successful (13)

Students are the new target audience when it comes to offering small loans. Acting on this, Finomena came out with an app that provided ‘EMI without cards’. The aim was to allow students purchase mobile phones and other electronics on a loan. In March 2016, Finomena raised its seeding funding and then made quick strides before going down in 2018.

Reason for failure: Finomena is counted amongst those Indian startups that failed unexpectedly despite having enough funding. It was a fintech startup that focused on providing loans, a segment already dominated by the established players before its entry. Fierce competition from rivals like ZestMoney was the major reason behind Finomena's failure. Also, burning cash where it was not needed was another cause. Before you launch your startup, check if the target segment has has reached its saturation levels. Also, use your funding wisely!

MrNeeds

Industry: Grocery Delivery

Failed Startups In India | Why Indian Startups Are Not Successful (14)

MrNeeds was a grocery delivery startup founded by Hitashi Garg, Yogesh Garg, Ravi Wadhwa, and Ravi Verma. It provided a subscription-based grocery delivery service. People could easily pay for their subscriptions and receive their groceries on the set date. MrNeeds, a Delhi-based startup, did well with more than 10,000 deliveries in Noida alone.

Reason for failure: MrNeeds was a subscription-based startup. Hence, turnover might not have been that great given how frugal Indians 'usually' tend to be. So it is possible that the startup had a lack of funding to sustain itself. The entry of funded grocery delivery startups like Grofers and Big Basket can also be another reason for MrNeeds' failure.

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20 Biggest Startups that Shut Down in 2020 | StartuptalkyIt’s the age of insane confidence and risk-taking tendencies. And by that, Imean delving into the field of business. Referred to as startups in thepremature stage. Everyone wants to found’ a startup today. Unfortunately, noteveryone is successful. Here is a list of twenty Indian startups that shu…StartupTalkyGorish Dua

CardBack

Industry: Fintech

Failed Startups In India | Why Indian Startups Are Not Successful (17)

A fintech platform founded by Nidhi Gurnani and Nikhil Wason, CardBack lets credit and debit cardholders with multiple cards know which card provider would offer the best rewards and points on transactions. The venture was funded by famous angel investors such as Alok Mittal and Sunil Kalra and managed to raise $170k in five years.

Reason for failure: CardBack could not secure funds after 2014, and the number of multiple cardholders in India was less than what the fintech startup had expected. Hence, the main reason for CardBack's failure was its over-expectation on market growth. The plan to shift the headquarters to Singapore, where the multiple credit card culture is abound, also failed. The failure to move to Singapore was the final nail in the coffin for CardBack.

Overcart

Industry: Re-Commerce

Failed Startups In India | Why Indian Startups Are Not Successful (18)

Overcart was the first Indian fintech player to provide a platform for purchasing refurbished, over-stock, and pre-owned items. It was founded in 2012. People could buy and sell their electronic devices on the website. Overcart received substantial angel investment; however, the company failed to capitalize on it.

Reason for failure: Overcart did not seem to be very focused on its business. Unsatisfactory services such as late delivery, poor quality of purchased items, and bad customer services led to customer rebuke, thereby causing Overcart to shut down in 2017.

RoomsTonite

Industry: Real Estate

Failed Startups In India | Why Indian Startups Are Not Successful (19)

Last-minute hotel bookings usually end up in a mess and utter disappointment. RoomsTonite was launched to deal with this issue. It received around $1.5 million in funding and ceased functioning by September 2017. The startup rose and crumbled within three years!

Reason for failure: Having strong rivals in the form of Makemytrip and OYO was one reason for RoomsTonite's failure. Credit crunch also added to RoomsTonite's woes. Facing a sudden reduction in the loan's availability is called a credit crunch. Roomstonite faced credit crunch by 2016 which didn’t allow it to flourish.

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Doodhwala

Industry: E-Commerce

Failed Startups In India | Why Indian Startups Are Not Successful (22)

Founded in 2015, Doodhwala was a subscription-based platform that delivered milk and grocery items directly at the customer's doorstep. Founded by Ebrahim Akbari and Aakash Agarwal, Doodhwala claimed to complete about 30,000 deliveries in a day.

Reason for failure: According to experts, lack of funds and tough competition from the big shots like BigBasket, Milkbasket, and SuprDaily caused Doodhwala to shut down. It is a prime example of startups that failed in India that failed due to strong competitors.

Milkbasket’s founder don’t support subscription modelWhat is Milkbasket?Milkbasket is an e-commerce company which deliver you daily products. Although,the company was started as an online aggregator for fresh daily products onlybut now you can buy all the grocery products and other daily fresh products. Thecompany was founded in 2015 by Anant Goel…StartupTalkyShubham Kumar

Russsh

Industry: On Demand Delivery Services

(Video) The Reality Of Unicorn Startup In India| Why Startup's Are Falling?

Failed Startups In India | Why Indian Startups Are Not Successful (25)

Russsh was founded in 2012 by Bharat Ahirwar. Russsh offered both first mile and last mile on-demand delivery services to individuals and businesses. The company claimed to have a database of over 50,000 loyal clients and completed 500,000 transactions. However, on June 3rd, 2019, the company announced its closure.

Reason for failure: The major reason for Russsh's failure was the lack of funds. It was a self-funded startup and in the absence of enough funds, Russsh was unable to resist the intense competition from its rivals. Bharat Ahirwar also admitted that being a single founder venture and the absence of a strong team were equally responsible for Russsh's shutdown.

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Koinex

Industry: Largest Cryptocurrency Exchange

Failed Startups In India | Why Indian Startups Are Not Successful (28)

Rakesh Yadav, Rahul Raj, and Aditya Naik founded Koinex in August 2017 and in no time the company established itself as India’s largest cryptocurrency exchange. With a user base of over 1 million, Koinex claimed to have a trading volume of over $3 billion and the successful execution of 20 million+ orders.

Reason for failure: Koinex suspended its services from 27th June 2019. The cryptocurrency trading business has seen many ups and downs in India and this instability affected Koinex. The founders stated the lack of a clear regulatory framework for cryptocurrencies in India to be a major deterrent that prevented them from running Koinex's operations smoothly.

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DocTalk

Industry: Health-tech

Failed Startups In India | Why Indian Startups Are Not Successful (31)

Founded in 2016, Krishna Chaitanya Aluru, Akshat Goenka, and Vamsee Chamakura, Doctalk connected doctors with patients. Through the Doctalk app, one could find good doctors in the vicintiy and after just one in-person visit, the patient could connect to the doctor through the Doctalk app for further consultation and queries.

The patients had to pay a subscription fee, whereas the doctors were charged an initiation fee. In 2018, Doctalk pivoted to a new business model wherein it built an electronic medical record (EMR) solution to help doctors write digital prescriptions on customized prescription templates. The EMR business was launched under a new brand name 'Pulse' and was sold to the doctors as a tool that let them digitalize the entire consultation, and share the same with the patients.

Reason for failure: Doctalk's pivot from its initial business model into the electronic medical record solution (EMR) business was not successful; it is often cited as the cause of DocTalk's closure by the company insiders.

LoanMeet

Industry: Fintech

Failed Startups In India | Why Indian Startups Are Not Successful (32)

P2P lending platform LoanMeet was started in 2015 by Ritesh Singh and Sunil Kumar to help small businesses grow through ultra short term loans (for 15, 20, or 30 days) for buying inventories. LoanMeet's services included B2B marketplace financing, working capital financing, cash credit line, and channel financing in the range of Rs 5,000 to 5 lakh for a period of 15 days to 9 months. The company claimed to have an average lending ticket size of Rs 50,000 at around 18% interest rate.

Reason for failure: LoanMeet raised funding from Chinese investors Cao Yibin and Huang Wei in 2017 failed to secure any funding after that. LoanMeet's shutdown is attributed to the lack of funds and tough competition from players like Capital Float, Loan Frame, and Happy Loan.

Main Reasons why Startups Fail in India

The above mentioned examples shed light on major issues that are responsible for the failure of nearly 90% of the emerging startups in India:

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  • Lack of funds: On close observation, it is evident that insufficient funding or the lack of it caused most of the startups to shut down.
  • Highly anticipated model not in sync with the nature and lifestyle of the Indian population: Some of the startups listed above failed because their highly anticipated models were not appropriate for Indians. Startups should either wait for the right time or educate their future consumers about their technology in advance. Also, the company should pivot only after a thorough market study.
  • Poor customer service and sub-par quality of the products offered: Be it an online startup or a brick-and-mortar store, customer service is of utmost importance. Some startups compromise on customer service and the quality of their products; the compromise always results in the closure of business.
  • Lack of focus and legal disputes: It is imperative for any startup to focus on building a solid foundation and then growing it further. Entrepreneurs should also focus on the legalities which may cause disruptions in the future. What if you ignore these two factors? You cease to operate like Stayzilla.

How to Bounce back from your Startup's Failure

Panic doesn’t help in failure; relaxation and progressive thinking will prove to be useful. Successful people have seen failures and have overcome all challenges.

Here are some tips to bounce back from your startup's failure:

Don’t think that life ends after a failure. Don’t spend time criticizing yourself or anyone else, but feel proud of the takeaways from that failure. Keep in touch with friends, family, and relatives to stay calm and relaxed in the time of failure. Find a mentor or a group of experienced people. Learn from them. Seek guidance and mental support from mentors and entrepreneurs who have seen both success and failure.

Find Different Sources Of Income To Recover Your Loss

Failures will lead to financial difficulties. So work on expanding your income stream. Contact mentors and entrepreneurs for suggestions on income generation. Do not get depressed because money is meant to come and go. Calculate how long your savings will last and plan accordingly. It will be great if you already have a secondary source of income. If not, spend some time creating a source of income through freelancing or consulting.

Prepare And Plan With Consciousness

A lot of lessons are learnt after hard times. Use these lessons to prepare and prioritize. Make a survival plan. Startup founders are very comfortable with planning and execution. Appoint suitable founders and workers to assist you. Hard work always pays off, so work until you achieve success. If your startup fails, create an excel sheet, and write down the skills in one column and potential income from those skills in the second column. By doing this simple exercise, one will get some clarity on how to keep the business running for a few more months.

Wait For The Right Time To Get The Right Opportunities

Don’t take any important decision at the time of failure because the mind is depressed at such a time. Wait and then plan for the future. Take whatever time is required to make up your mind but once he thought-process is in place, do not go back to thinking about the failure. Great opportunities do not come frequently. So wait for the right moment. It is better to wait for several months for the right kind of work than to get stuck on the wrong assignment.

Actions Speak Louder Than Words

Be mindful of your actions after a bout of failure. The right attitude is important during stressful moments. Take the right action with the right attitude. Say no to poor opportunities. Work to the best of your abilities. Aim high and let your failures be the stepping stones to success.

Failure is not an end. It's the first step to success. Whether you are running a startup or are planning to launch one, note down the mistakes discussed in this post. Nothing hurts more than committing a mistake you were already aware of. If this case study on the failure of some promising Indian startups was useful to you, let us know in the comments.

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Frequently Asked Questions About Failed Startups

How many startups fail in India?

According to a 2019 report, more than 5 million startups are founded every year. However, only 10% of those startups succeed and the rest break down.

What happens when startups fail?

The startup may gather outstanding accounts, take up loans to settle outstanding debts, sell resources for paying debts, and cater to the investors who funded the startup. Venture capitalists and other investors usually end up in a loss when a startup fails.

Why do 90% startups fail or why do most of the Indian startups fail?

Here are some of the major reasons:
1. Lack of funds.
2. Highly anticipated model against the nature and lifestyle of the target audience.
3. Poor customer service and low quality products.
4. Lack of focus and legal disputes.

What is the hardest business to start?

Businesses that require huge funds to start off with are hardest to start. Businesses pertaining to logistics, restaurants, travel agencies are deemed as some of the most difficult bussinesses to start.

What is the safest business to start?

Businesses that require low investment are the safest. Things that can be done entirely from the comfort of your home are the easiest. Some examples are logo designing, digital marketing, website building, online tutoring, virtual assistant and so on.

(Video) No, not all can do start-up in India! Startup India | Why Startup India Failed | startup guru

Am I too old to start a business?

Nope! There is no age limit for starting a startup. You can be 50 and have a unique idea that might take off in the market.

FAQs

Why are many startups failing in India Group Discussion? ›

Some startups are failed due to implementing their operations on a large scale, without testing it on small scale first. Venture Capital firms tend to pressurize startups to maximize profits. This is leading to unnecessary stress and leading to shutting down of startups.

Why startups fail in India PPT? ›

Slowness to launch • Every idea dies if it is not implemented on time. Secondly, your product may actually leave behind the competition, which leads to product failure. 8. CEO / founder(s) unable to make decisions • Clear vision about startup.

What are the causes of startup failure? ›

Key Takeaways. According to business owners, reasons for failure include money running out, being in the wrong market, a lack of research, bad partnerships, ineffective marketing, and not being an expert in the industry. Ways to avoid failing include setting goals, accurate research, loving the work, and not quitting.

Are startups successful in India? ›

"Startups in India have grown remarkably over the last six years. The number of new recognised startups has increased to over 14,000 in 2021-22 from only 733 in 2016-17," the survey said. India has become the third-largest startup ecosystem in the world after the US and China, it said.

Why do Indian companies lack innovation? ›

The second great reason why Indians do not innovate is the doctrine of contentment or santosha. Innovation demands that we are constantly improving, constantly trying to do better, not being satisfied with what we have. So every software and hardware in digital economy is constantly upgrading itself.

What is the conclusion of startup India? ›

Conclusion. In present times startups in India are witnessing a golden chapter in the history of Indian entrepreneurship. However, still the indian government has a crucial role to play in positioning India as the Tech Garage of the World.

Why most startups fail in India Quora? ›

Lack of Innovation: Startups in India fail to cater the customers problem and solve them with Innovative methods. The lack of Innovation is the major issue in Indian Startups and this is the reason there is no Indian Company to dominate the Global Market.

What percentage of startups fail in India? ›

About 90% of startups fail. 10% of startups fail within the first year. Across all industries, startup failure rates seem to be close to the same. Failure is most common for startups during years two through five, with 70% falling into this category.

What is your opinion on failure and success of any startup? ›

Failure Is Inevitable For Any Successful Startup

That doesn't mean you shouldn't try to build something amazing; in fact, you should be afraid of not trying at all. Your idea — whether it's an app, product or technology service — is worth pursuing even when you may take financial hits, or you may strain relationships.

How many startups are there in India? ›

NEW DELHI: The total number of recognised startups in India rose from 471 in 2016 to 72,993 as on 30th June 2022, helped by proactive government interventions, Minister of State for Commerce and Industry Som Parkash said on Friday.

How many startups shut down in India? ›

As many as 12,889 companies and startups were struck off from the official records in FY 2020-2021. 2021 was a glorious year for the Indian startup ecosystem.

Which startup is best in India? ›

Top 20 Startups in India – 2022
  • CRED.
  • Vernacular.ai.
  • PharmEasy.
  • Digit Insurance.
  • Meesho.
  • Groww.
  • Nykaa.
  • Udaan.
Jul 25, 2022

What could be the top reasons for startups failing Mcq? ›

Here is a list of most common reasons for startup failures and methods to avoid them from taking on your dream.
  • Market Problems. ...
  • Business Model Failure. ...
  • Poor Management Team. ...
  • Running Out Of Cash. ...
  • Bad Product Experience. ...
  • Poor Marketing. ...
  • Lose Focus. ...
  • Disharmony Among Team Members.
Apr 24, 2018

What percentage of startups fail in India? ›

About 90% of startups fail. 10% of startups fail within the first year. Across all industries, startup failure rates seem to be close to the same. Failure is most common for startups during years two through five, with 70% falling into this category.

What are the reasons for failure of entrepreneurial ventures in India discuss? ›

10 Reasons for Failure of New Ventures in India
  • Lack of Experienced Management: ...
  • Few Trained or Experienced Manpower: ...
  • Poor Financial Management: ...
  • Rapid Growth: ...
  • Lack of Business Linkages: ...
  • Weak Marketing Efforts: ...
  • Lack of Information: ...
  • Incorrect Pricing:

Which startup is best in India? ›

Top 20 Startups in India – 2022
  • CRED.
  • Vernacular.ai.
  • PharmEasy.
  • Digit Insurance.
  • Meesho.
  • Groww.
  • Nykaa.
  • Udaan.
Jul 25, 2022

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