Not every startup It was FTX or Theranos that crashed. They don’t all burn so brightly and explode so spectacularly. Typically, there aren’t some high-profile court cases and jail time. Amanda Seyfried won’t play you in a movie being made for Hulu.
Most entrepreneurial failure stories are far less exciting. The timing was wrong, the funding dried up, and the runway ran out. Recently, a number of macroeconomic factors have also come into play. The past few years have been particularly brutal for new startups. According to a recent PitchBook survey, “approximately 3,200 U.S. companies backed by private venture capital have failed this year.”
Together, these companies have raised more than $27 billion. Even more tellingly, this number does not include companies that failed to go public or were able to find buyers. After all, this does expand the definition of “new venture.”
It’s also worth noting that “failure” is subjective. Does bankruptcy qualify? This certainly doesn’t bode well for the health of companies, but many have bounced back to some degree. This particular issue has generated a lot of discussion surrounding the old TechCrunch virtual water cooler.
For the purpose of writing an article titled “Startups We Lost,” I chose to limit the list to those startups that, as far as we know, have reached the point of no return. Push up the daisies. Longing for the fjords.
As the final days fade from the calendar, let’s take a moment to remember some of the startups that didn’t make it.
braid
Established in 2019
Raised $600 million
Image Source: braid
In October, Braid, a four-year-old startup that aimed to make shared wallets mainstream for consumers, announced it was closing. San Francisco-based Braid was founded in January 2019 by Amanda Peyton and Todd Berman (who left in 2020) to provide friends and family with an FDIC-insured multiple User accounts are designed to allow you to easily “pool, manage and spend” money together. ” Braid has raised a total of $10 million in funding through “multiple rounds” from Index Ventures, Accel and others.
What’s refreshing about this closure is Payton’s honesty about what led to Braid’s demise. Payton said in a blog post that Braid closed in September, outlining her experiences and mistakes in building the company and ultimately realizing it wasn’t going to be a viable business venture. An estimated 91% of new startups fail. If more founders like Peyton shared their experiences so that others could learn from them, maybe that number would go down.
Cloud Nordic
Founded in 2007
Image Source: TechCrunch (screenshot)
CloudNordic may not be a household name, but a devastating ransomware attack on its systems thrust the company into the spotlight and ultimately led to its demise. The Danish cloud hosting provider shut down this year after nearly two decades in business after a ransomware attack destroyed the company’s systems and compromised all customers’ data. The company said it did not have the money to pay the hackers and would not pay even if it did. With no other choice, the company closed its doors.
convoy
Established in 2015
Raised over $1 billion
Image Source: convoy
The digital freight broker suddenly shut down in October 2023, just eight months after the Seattle-based company raised $260 million in new funding, pushing its valuation to $3.8 billion. Convoy, founded by former Amazon and Google executive Dan Lewis and CTO Grant Goodale, will continue to exist to some extent.
Supply chain logistics platform Flexport has acquired the assets of the closed digital freight network and plans to restore Convoy’s freight logistics services for customers. Flexport is not acquiring the business or any of its liabilities, but its CEO said it does plan to retain “a small number of team members from the core product and engineering teams.”
sunlight
Founded in 2020
Raised $20 million
Image Source: sunlight
In May 2023, LGBTQ+ banking platform Daylight, which raised $20 million in funding, announced that it would shut down and cease operations on June 30. A few months ago, New York Magazine published an explosive feature story about Neobank. This article is for Daylight, whose seed and Series A funding rounds were reported by TechCrunch here and here respectively. The New York Magazine article details a lawsuit filed by three former employees and alleged fabrications and misconduct by co-founder and CEO Rob Curtis.
Curtis said in a blog post in May that he felt “now is the best time to exit this market.” We heard in October that the lawsuits were dismissed in federal court and that Daylight was acquired, but Curtis declined to comment further when we contacted him. It’s a disappointing result but highlights the challenges faced by neobanks targeting specific groups. At the beginning of the COVID-19 pandemic, we saw a large number of these startups raising funds, but things have been relatively quiet since then. Part of the challenge is providing differentiated services that are actually unique to a given community. Since Daylight closed, Curtis has pursued tequila-related businesses.
Vague
Founded in 2016
Raised $80 million
Image Source: Vague
Some startups die long and long-term. Not blurry. The pet care telemedicine startup was here one day and gone the next. In February, the company reportedly touted its growth during an internal Zoom call. Within months, the company closed. Fuzzy’s website went down without any warning to customers.
As things stand, even some senior executives are wondering what happened to the startup. That certainly hasn’t stopped competitors from trying to profit from Fuzzy’s failure.
IRL
Founded in 2016
Raised $200 million
Image Source: IRL
The debacle IRL was a mess. In 2022, the activist social app laid off a quarter of its 100 or so employees. Co-founder and CEO Abraham Shafi put the blame on extremely volatile markets while saying the company’s cash runway will last until at least 2024. The company then closed in June of this year.
No social network is completely free of bots, but an internal survey by its board of directors found that such accounts account for about 95% of its 20 million monthly active users. In a lawsuit filed last month, IRL’s co-founders accused their investors of fabricating the figure to undermine the company, which was previously valued at $1.17 billion.
iron mesh
Established in 2014
Raised $400 million
IronNet founder Keith Alexander spoke at TechCrunch Disrupt in 2017. Image Source: Noam Galay/Getty Images
Founded by former NSA Director Keith Alexander, IronNet was a once-promising cybersecurity startup that raised more than $400 million in funding at its peak. But ultimately, IronNet couldn’t contend with market forces (and poor leadership). After a bumpy listing and several rounds of layoffs, Alexander resigned as CEO in July and was replaced by the chairman of the company’s largest investor. IronNet struggled to stay afloat, but it only lasted a few weeks before it laid off everyone else and filed for bankruptcy.
mandolin
Founded in 2020
Raised $17 million
Image Source: mandolin (Opens in new window)
Many new startups are struggling amid the pandemic. Others thrive. Founded in June 2020, this concert live streaming platform is a new startup company at the right time. After all, it’s only been a few months since venues across the United States closed indefinitely. Mandolin quickly rose to prominence, playing big-name events with artists ranging from Lil’ Wayne to the Lumineers.
A year after its founding, the Indianapolis-based company raised an additional $12 million in Series A funding, following a $5 million seed round last October. In 2022, even as venues across the country have reopened, the platform appears to be still thriving. Mandolin has diversified into other aspects of the live music experience, including venue partnerships and merchandising.
However, in April this year, the startup announced on Instagram that it would be closing stores. “After three incredible years,” it noted, “we are sad to announce that Mandolin will no longer deliver the digital fan experience you have come to love.”
Viev
Founded in 2008
Raised $597 million
Image Source: Viev
Veev, a real estate developer turned tech-enabled prefabricated homebuilder, was on the verge of bankruptcy last November, according to multiple reports. Calcalist reported on November 26 that the company, which had raised a staggering $600 million in total, $400 million of which was due in March 2022, would have to close shop after “the sudden cancellation of its financing plans.” Later that week, reports emerged that Veev was “going through liquidation.”
This turn of events is a bit shocking considering how much money the company raised less than two years ago. For Veev co-founders Heller and Ami Avrahami, the closure is not the first entrepreneurial failure. Another of their real estate tech ventures, Reali, began closing in August 2022 after raising more than $290 million in debt and equity financing. Zeev Ventures is an investor in both companies.
passion money
Established in 2015
Raised $121 million
The founder of ZestMoney has resigned as the Goldman Sachs-backed fintech firm struggles to raise capital. Image Source: passion money
In mid-May, Manish reported that ZestMoney’s founder had resigned from the startup. The Indian fintech company offers small loans to first-time online customers and has been backed by a number of high-profile investors, including Goldman Sachs. By December, Manish reported that ZestMoney was closing after failing to find a buyer.
The Bengaluru-based startup’s backers also include PayU, Quona, Zip, Omidyar Network and Ribbit Capital. The company employs about 150 people and has raised more than $130 million over its eight-year journey.
juice
Established in 2015
Raised $445 million
Image Source: juice
“Pizza was our prototype,” co-founder and CEO Alex Garden told me in 2018. Three years after its founding, Zume made a major shift. While it will always be remembered as the pizza robot startup (an identity that’s hard to shake), the Southern California company casts a much wider net. First, it’s exploring non-pizza delivery trucks. Two years later, it switched to sustainable food packaging.
We certainly can’t blame Zum’s ultimate demise on a failure to adapt throughout its many lives. It’s not a lack of funding, either, as the company has raised nearly $500 million in its eight-year history. This includes SoftBank’s $325 million financing round in 2018, which valued the company at more than $2 billion.
Zume liquidated its assets in early June.
