Startups sound sexy. Unicorns sound sexier. Look closer and you will see the ugly reality of failures and heartbreaks. There are tons of ongoing research on the actual success rate of startups. Collecting data is tricky as not all startups are registered with any central authority. However, the consensus is that over 90% of startups fail. Of the rest, 7-8% make nominal profits while the remaining 2% become winners – earning 10X or more.
So, while we do intend to inspire more and more folks to enter the world of startups, we will focus on the failures too as these provide valuable information that others could use.
Let’s look at 5 interesting startups that failed in Q1 (January-March) 2020.
Closure: January 2020
Funding: USD 55 million
Investors: Oak Venture Partners, Institutional Venture Partners (IVP), Ignition Partners
Reason: Acquired by SAP Concur 4 years ago, Hipmunk was supposed to be integrated with the Concur product line. However, the SAP Concur team could not align Hipmunk with its product line-up and finally decided to call it off.
Closure: February 2020
Funding: USD 330 million
Investors: Tencent Holdings
Reason: The controversial superstar ‘Andy Rubin’ created a new phone company – Essential Phone, the first notched phone, gaining mostly favorable reviews. Everyone was waiting for the next big thing, which never came. Essential was seen working on multiple things – a ‘remote’ looking phone, next-gen email service, and the rest is history.
Closure: March 2020, acquired by ClaimCompass in July 2020
Funding: USD 5.1 million
Investors: Founders Fund, and Menlo Ventures
Reason: Service offered flight compensation for delays and cancellations and similarly also helped with hotel reservations. It ran out of cash in March and was done for all matters until it was acquired and rejuvenated by ClaimCompass.
4. Starsky Robotics
Closure: March 2020
Funding: USD 20.3 million
Investors: Y Combinator, Shasta Ventures, 9Point Ventures
Reason: Robotics and Automated trucking didn’t work as efficiently as the founders expected. This poor ROI led to its fall eventually.
Closure: March 2020
Funding: USD 5 million
Investors: Kleiner Perkins, Bedrock Capital
Reason: Consider was looking to provide a new enterprise email platform in an already crowded area.
Which startup(s) were you sad to see vanish? Tell us in the comments section or reach us at contact@booleanideacom.