More from Author Rachel Maga here: https://globelivemedia.com/author/rachel-maga/
Even in a normal year with nothing, it takes a lot of power to successfully run a startup. After the 2020 Corona wreck, many startups that were already in a tight spot continue to run at the last minute. During the pandemic, some startups felt a growing interest in their products and services, but couldn’t get through to the end.
It’s been a few years since TechCrunch started making a list of startups that didn’t survive that year. It’s not a fun job at all, but it seems worthwhile to look back at the startups that collapsed that year (although some startups were bought by big companies before they collapsed). It also seems worthwhile to show that those startups are over). By looking at the problems of such a company from a distance, it is also an opportunity to consider whether there are any important points to remember for the entire community.
This year’s list is the most diverse to date. There are many cases, from the mundane demise of small businesses to the collapse of large startups such as Quibi and Essential. Some companies have been stabbed in this year’s pandemic, but in most cases various business model cracks have begun to surface long before the global economy suddenly stopped due to the new coronavirus.
Total Procurement:75 million dollars (about 7.76 billion yen)
Atrium, a 100-employee legal tech startup founded by Justin Kan, couldn’t find an efficient way to replace the messy, old-fashioned system of law firms. Closed in March. Atrium has even returned some of the $ 75.5 million it raised to investment firms such as Andreessen Horowitz.
Atrium went out of business a few months earlier after the company turned around, fired an in-house lawyer, and more clearly turned to SaaS. After all, the failure of the atrium shows how difficult and unprofitable it is to disrupt (creatively destroy) traditional complex systems.
Atrium was initially founded with the goal of building software to navigate startups, hiring, and acquiring, and to collaborate with the legal team. It was three years after the company was founded that the company’s business ended.
Total Procurement:330 million dollars (about 34,150 million yen)
Spectacular plans, big executives, and ample funding should have been enough to provide Essential with a long runway. Indeed, Essentials was about to enter a mature, saturated market. The company, which was funded by Playground, chose the difficult path with $ 330 million in funding and industry-leading executives. Because there were some innovative ideas in.
When I spoke to Essentials when it was founded, an executive gave an overview of its 10-year plan to become a top company in the mobile and smart home arena. After all, the company managed to survive only in less than three years after it came out. We’ve announced a handset that looks promising, but never realized a always-on home hub.
Timing, widespread marketing issues, and the nasty allegations of sexual misconduct all put an end to Essential’s grand plan.
Total Procurement:11.4 million dollars (about 1.18 billion yen)
Founded by Shruti Merchant, HubHaus was a long-term share-house platform rooted in the belief that adult dormitories would be popular. Targeting the white-collar workers in the city, it raised only about $ 11 million (about 1.14 billion yen) from a famous venture capital firm. When entering Series B funding, Merchant managed to make the round a success, but lost investor interest due to WeWork’s failed IPO.
After that, the pandemic of the new coronavirus occurred in the United States just before turning to a self-funded company and trying to lay the foundation, and the rental market was devastated (the magnitude of the hit is It also appears in the difficult listing of Airbnb). Eventually, Hubhouse decided to close in September, leaving landlords, members, and vendors half-baked, causing severe criticism and controversy.
The shortage of affordable properties continues to be an issue in the Bay Area, and the closure of the hub house is increasingly highlighting the current situation.
Total Procurement:55 million dollars (about 5.69 billion yen)
Founded by Adam J. Goldstein and Reddit co-founder Steve Huffman, Hipmunk was one of the first travel service aggregation platforms on the market. The company has put together information about flights, hotels, car rentals, etc. in one place, making it easy for users to compare and contrast prices.
Hipmank’s platform has received a lot of attention and was acquired by Concur, but four years later, the travel startup has closed. However, I should say that the closure of Hipmank is not necessarily related to the pandemic of the new coronavirus. The Hipmank site was officially shut down on January 23, a few months before the lockdown took place in the United States.
Total Procurement:51.4 million dollars (about 5.32 billion yen)
IfOnly has built a marketplace for invitation-only events such as “Goat Yoga” (Goat Yoga was just one of the businesses that faced challenges during the pandemic). If-only was acquired by one of its investors, Mastercard, at the end of last year, but the facts of the acquisition were not announced until if-only announced that it would close its business during the summer.
Mastercard said that if-only teams and technology are still part of the Priceless Experience Marketplace, “IfOnly platforms continue to help drive priceless strategies, and our collaborative teams around the world We are ready to give cardholders a unique experience in a better situation than ever before. ”
Total Procurement:520,000 dollars (about 53.9 million yen)
This year, Microsoft closed Twitch’s competitor Mixer and transferred its partnership to Facebook Gaming. The mixer originally started with Microsoft’s acquisition of Beam Interactive shortly after winning the 2016 TechCrunch Startup Battlefield.
Microsoft has made some big investments to make the mixer successful before the transfer. Most notably, they have signed exclusive contracts with streaming superstars Ninja and Shroud (they became free agents after the mixer closed). However, Microsoft’s gaming chief Phil Spencer suffered from mixers entering the market “much later” than the biggest in the streaming market.
Total Procurement:10.2 million dollars (about 1,057 million yen)
The news media platform was a busy year of innovation and speculation, but The Outline, which called itself “the next generation of The New Yorker,” has shut down. The company was founded by Josh Topolsky and had an explicit focus on providing millennials with a digital-first news media brand.
The closure of The Outline was part of an extensive layoff of Bustle Digital Group, which acquired the company in 2019. But before the acquisition, The Outline had cut editorial staff and turned to freelance-written articles (Techsite Input, which Topolsky founded under BDG, continues to operate).
Rather than suddenly collapsing, Periscope feels like it’s gone out of business, whining. Periscope was acquired by Twitter before launching the product. That year, Meerkat became a hot topic in South by Southwest (SXSW), and Twitter was hunting for startups to build its own live video service.
Periscope was a decent live video broadcast app. The technology will survive as part of Twitter’s video service after the Periscope app officially shuts down in March next year. But after all, Periscope was the shell of the previous Periscope. In fact, this is a rare case where a pandemic could actually delay the suspension.
The company said: “Without the various projects that had been postponed due to the 2020 Corona disaster, we would have decided to shut down earlier.”
Total Procurement:15.1 million dollars (about 1.56 billion yen)
PicoBrew built a coffee pod-shaped PicoPaks brewer and expanded it to other categories such as coffee and tea, but it didn’t attract enough customers to keep the business alive. It was. Pico Blue sold its assets to PB Funding Group earlier this year, a group of lenders recruited by then-CEO Bill Mitchell to keep Pico Blue from going bankrupt.
Pico blue may survive in some way. According to the PB Funding Group, the group is looking for buyers of Pico Blue patents and intellectual property, and keeps the website up and running in the short term to prevent the company from shutting down altogether. That is.
Total Procurement:$ 1.75 billion (about 180 billion yen)
Quibby’s presence feels more like a dream than any tech company (perhaps with Theranos) in recent memory. The works that I was able to see after raising a huge amount of $ 1.75 billion (about 180 billion yen) are “Fierce Queens” (nature documentary about female animals), HGTV style program “Murder House Flip”, And, of course, “The Shape of Pasta”.
I think the early coverage of Quibby’s closure was premature, even if it didn’t seem like there was a way to use up that much money so quickly. However, at the end of October, Quibby was closed. “The rest is just a sincere apology for disappointing you,” founders Jeffrey Katzenberg and Meg Whitman wrote in an open letter.
Some of the reasons startups fail are bad timing and just bad luck. In the case of Quibby, the causes of failure can be summarized in one word, “all.”
Total procurement amount: 15 million dollars (about 1.55 billion yen)
Rubica, a spin-out of security firm Concentric Advisors, was more sophisticated than antivirus software, but aimed to provide tools that, like antivirus software, could be used by individuals and small businesses. According to CEO and co-founder Frances Dewing, “We changed our target to a large company because our customers cut spending in a pandemic, but we told investors that we could do business with large companies. I couldn’t convince him. ”
“Given that this tool is a good fit for today’s needs and is in demand, I’m surprised at this result,” Deweing said. “Investors either disagreed with that or were different from us.”
Total procurement: 104 million dollars (about 10.8 billion yen)
ScaleFactor was a sought-after startup that provided AI tools that could replace the accountants of small businesses. The company claims that the pandemic has halved its bottom line and forced it to shut down. However, the story that a former employee and a former customer told Forbes magazine is different. The scale factor actually had human accountants (including teams outsourced in the Philippines) do the work.
It’s almost unprecedented for startups to cheat the level of automation for human labor, but this has led to a lot of mistakes in the accounting of scale factor customers (former CEO Kurt Rathmann). He sent him a fact-finding email, but refused to comment, saying the email was “full of false and inaccurate statements and false statements.”)
Total Procurement:20 million dollars (about 2.07 billion yen)
In an article posted to Medium in March of this year, Seltz-Axmacher, co-founder and CEO of Starsky Robotics, said, “In 2019, our trucks are actually fast. It became the first fully unmanned truck on the road, and in 2020 we will close. ” The self-driving truck company, which raised $ 20 million in its five-year history, closed that month. There was no lack of ambition or demand. It’s safe to say that self-driving trucks still have a bright future.
Eventually Star Sky will not participate in that future. Seltz Axmach says timing is the number one cause. In a crowded market, countless companies are currently competing to put autonomous driving technology to practical use.
Total Procurement:10 million dollars (about 1,035 million yen)
Founded by former Google employees in 2018, Stockwell AI was closed because it couldn’t get its business on track with an indoor smart vending machine that could sell everything from condoms to lacroix carbonated water. .. The company attributed the closure to the “current situation” (the global pandemic we are experiencing now).
Stockwell AI (formerly Bodega) is perfect in terms of funding and name recognition, from NEA, GV, DCM Ventures, Forerunner, Forerunner, First Round, Homebrew, etc. 4500 Raised more than $ 10,000 (about 4.65 billion yen). Still, even venture capital couldn’t get the vending machine to work well.
Total Procurement:2.5 million dollars (about 250 million yen)
Another travel-centric startup has been shut down as the new coronavirus limits opportunities to explore the world safely, not to mention the neighborhood. The tourist photo-sharing hub Trova, which was acquired by Expedia, closed in August. Trova was founded by Rich Barton and Jason Karas and aimed to connect people traveling in the same place. The history of the birth of this company is exactly life. Starting with the wreckage of travel review site TravelPost, the company was picked up by its parent company, but raised only $ 2.5 million. Unfortunately, that nine-year journey is over.
Rachel Maga is a technology journalist currently working at Globe Live Media agency. She has been in the Technology Journalism field for over 5 years now. Her life’s biggest milestone is the inside tour of Tesla Industries, which was gifted to her by the legend Elon Musk himself.