Startups are all the rage these days, with many startups getting tens of millions of dollars in funding from venture capitalists. However, the way venture capitalists do business is a little bit like gambling. They invest money in a lot of different startups, and bank on the chances of just one of them turning into the next billion dollar enterprise. A single success story can justify all of the investments that a venture capitalist has made over the course of their career because it can result in staggering returns.
This is why venture capitalism still works in spite of the fact that 90% of startups end up failing, in spite of the fact that they often get tens of millions of dollars in funding. After all, when a startup goes belly up it means that all of the money that was invested in said startup ended up getting lost as well. There are many startups that failed over the past year. We are going to look at a dozen of them in order to better understand what went wrong. It is important to note that the funding that these twelve startups received was close to a billion and a half dollars in total.
This startup was founded back in 2003, and by the end of its tenure it was employing around fifty to sixty employees. The company manufactured blood sample collectors meant to rapidly collect and analyze samples, thus revolutionizing the medical industry. They were also researching individualized therapy meant to make it easier for people to get the medical care that they specifically needed.
Their pitch was clearly very endearing because over the course of their active period they ended up being valued at about nine billion dollars. They have received close to a billion dollars in funding before having to liquidate. The liquidation occurred because of the fact that the technology ended up not being as effective as it was claimed to be, as well as a number of scandals that the company’s CEO ended up being embroiled in.
We have all imagined a world where human beings don’t work anymore because robots do everything for us. One of the areas where robots are going to take over first is the world of manufacturing, mostly because these are all things that can be more or less easily mechanized. Rethink Robotics was one of the companies at the forefront of this automation revolution.
Established in 2008, over the next ten years the company managed to secure over a hundred and fifty million dollars in funding, and was valued at nearly twice that amount. In spite of a solid idea in line with the zeitgeist of the time as well as a number of venture capitalists that believed in their execution of the idea, Rethink Robotics is now out of business and will no longer be a part of the aforementioned automation revolution.
Shyp seemed to have it all. The snazzy name, the on point idea, the only place they were lacking in was execution. Shyp was a company based in the logistics industry. On demand delivery to be more precise. Much in the vein of Amazon Prime, Shyp was intended to make it easier for merchants to deliver the items they were selling anywhere in the world.
Much like every other startup on this list, Shyp had a lot going for it initially. It was valued at a hefty 275 million dollars, and had secured 60 million dollars in funding. In spite of all of this, Shyp is no longer in business. The company managed to fight it out for five years, but in the end it just wasn’t enough to topple the chokehold that Amazon and eBay already hold over this market, not to mention the fact that market is pretty saturated right now.
Coders and developers are a big part of the world economy. In a lot of ways they are what allow businesses to grow and maximize their potential, the only problem is that the delivery of their finished products is often haphazard and there are a myriad ways in which things could go wrong during the delivery process. Developers often lack access to the right tools to do the job as well.
Apprenda wanted to solve this using cloud based technology, creating a hub for all developers to use. The software was valued at around ninety million dollars, and had already received over fifty million in funding before it eventually had to go out of business. While useful, the software failed to bring anything new to the table, as there was already software out there that did most of the things this software was supposed to.
We have all heard of Amazon Prime experimenting with drone based delivery, with plans to normalize such systems very soon. Drones aren’t all about making deliveries, though. They are an excellent way to get information about a particular place. As it were, drones are basically the ideal way to get a bird’s eye view of a location.
Airware was working on drone technology that would do this. Their main focuses were businesses that wanted to gather some kind of aerial intelligence, and to prove that such intelligence could be genuinely actionable. Airware’s intentions of focusing on defense contracts in the future valued it at over fifty billion, but the truly incredible thing is that this tech company ended up receiving over twice the amount it was valued in funding. This was clearly done under the assumption that the company’s value would continue to grow.
Not all startups provide groundbreaking ideas. Some just improve upon an existing concept. Alta Motors had a simple product: an electric motorcycle. However, it was one that was lightweight and above all else battery powered. This clearly made it an excellent choice for anyone that wanted speedy transportation in an environmentally friendly manner.
This was why the company ended up getting over forty million dollars in funding. All of those tens of millions of dollars went to waste, however, because of the fact that the product just didn’t distinguish itself enough to make the public want it. The idea was unique but it was one that should have caught on immediately, because it would not have been able to make a mark in a long term plan. The startup was valued at over fifty million dollars two years ago, though it is unknown what it’s valuation was prior to its liquidation.
This startup was established in the year 2013, and it ended up receiving nearly a hundred million dollars in funding over the next five years. It was based in the area of enterprise data management, and it was essentially supposed to facilitate the transmission of vast amounts of data in order to maximize the efficiency of the various corporations that operate on a global scale and need to be able to communicate with each other in an effective and brisk manner.
However, the field of enterprise data management is heavily saturated because of the fact that it has proven to be so profitable for those that have managed to find some kind of success with it. It is because of this fact that Primary Data did not manage to make its mark in this sector, in spite of its gorgeous and intuitive user interface.
This is one startup that perhaps should not have failed as badly as it did. It had received over twenty million dollars in funding because it tackled a problem that nearly everyone faced: diagnosing random symptoms. CareSync was basically a vast compendium of medical information provided to consumers in an accessible user interface that would allow them to figure out if they were suffering from some kind of disease based on the symptoms they were experiencing.
This is something that the internet already does but it is notoriously unreliable. CareSync was supposed to be different, but it ended up falling into the same trap. A lot of symptoms are difficult to describe and happen across a wide variety of medical conditions, so it was difficult to get an accurate reading of what someone might be suffering from. This is why the technology failed to succeed in spite of the potentially revolutionary changes it could bring.
This startup sounds like a textbook pitch that would be taught in universities. A unique idea tackling an often underrated market, stylish execution, all of this came together to make a pitch that ended up netting the founders of this startup thirty million dollars in funding. This was because of the fact that this company was working on suitcases that had built in gps tracking technology that worked over local data networks.
The idea was great but it ended up falling flat after a little while. Low overall public interest meant that Bluesmart eventually got bought out, ostensibly so that its GPS tracking technology could be used for some other purpose. The idea was interesting but clearly not unique enough to justify the millions that had been pumped into the company for the purposes of funding and executing it.
Hundreds of millions of people around the world suffer from mental illnesses of some kind. Lantern was an app meant to help them. It is for this reason that this company ended up being valued at thirty seven million dollars, and received over twenty million dollars in funding. It was basically a mental health coach that you could keep with you in your pocket.
It failed to provide any genuine results however which is why it ended up going out of business. The general style of therapy was not approved by any actual professionals, so the app ended up being more of a gimmick than an actual way for people with mental illnesses to attempt to get some kind of benefit from it. It still got a lot of funding though because it provided a very profitable opportunity that could have earned a lot of money if it had gone right and had perhaps been executed a little more professionally.
This is another startup that tried to make smart suitcases for the public to consume. These suitcases offered a lot of features. GPS tracking was a feature of course, but there were also a bunch of other features such as the phone charging capability. One of the most useful features of Raden suitcases was the fact that they could weigh their contents and send this information to an app. This could easily allow you to see if your baggage was over the weight limit.
In spite of all of the features and a few million dollars in funding, Raden went out of business earlier this year. This just proves that a startup with all the right features isn’t guaranteed any kind of success. There are a lot of other factors at play that can affect whether or not a startup will be able to make it big.
This is one of the dryer startups on this list, but that does not mean that it did not provide a number of unique benefits to consumers. After all, it was valued at eleven million dollars, and had received three million dollars in funding. This is not a small amount of money, and it was given because Fieldbook was focused on a software that transferred spreadsheet data directly into a database.
There are a number of uses for this kind of functionality. It can help companies maintain records of transactions and employee performance as well as the various other bits of data that companies need to keep stored for later use. Fieldbook didn’t really offer a lot that was unique, though, which is probably why it was never that highly valued and ended up going out of business this year.