TL;DR - A list of 14 once-promising or successful startups that failed in 2019 even after raising lots of outside capital
Helpfulness - 4
Tags - startups failure, outside capital, outside investment, venture capital, Anki, Chariot, Daqri, HomeShare, Jibo, MoviePass, Munchery, Nomiku, ODG, Omni, Scaled Inference, Sinemia, Unicorn Scooters, Vreal
- What are some examples of startups that failed even after raising lots of outside capital?
- Anki (2010 - 2019, raised $180 million):
- Released Cozmo (AI toy robot) as a result of large investment, including the hiring of ex-Pixar and Dreamworks animators to craft a high range of emotions in the robot’s eyes
- Shut down despite selling 1.5 million robots and “hundreds of thousands” of Cozmo models.
- Chariot (2014 - 2019, raised $3 million, acquired by Ford in 2017)
- A shuttle startup hoping to reinvent mass transit with a fleet of vans for commuters
- Shut down by Ford two years after the acquisition - “in today’s mobility landscape, the wants and needs of customers and cities are changing rapidly.”
- Daqri (2010 - 2019, $132 million)
- A high-flying, heavily funded AR headset startup
- Shut down and completed an asset sale - one of many in the sector that failed to court enterprise customers and compete with Magic Leap, Microsoft, and others.
- A large PE was considering financing Daqri ahead of a potential IPO, but backed out as the technical realities facing other AR companies came to light.
- HomeShare ($4.7 million)
- Aimed to tackle the challenge of rapidly rising housing costs by matching roommates who shared apartments split into “micro-rooms”.
- Jibo (2012 - 2018/2019, $72.2 million)
- Another consumer special robots manufacturer after Anki
- Shut down despite a successful crowdfunding campaign and a healthy amount of venture capital raised
- MoviePass (2011 - 2019, $68.7 million, acquired by Helios and Matheson in 2017)
- A ticket subscription service
- “There seemed to be a new disaster for MoviePass every week; it hemorrhaged money, limited its service, experienced outages, borrowed even money, was forced to enter a kind of zombie state and had a massive data breach.”
- Munchery (2010 - 2019, $125 million)
- A meal delivery startup
- Accused of taking advantage of its vendors in its final hours, knowingly allowing them to continue making deliveries that it could not pay for.
- Nomiku (2012 - 2019, $145,000)
- Bay Area-based food startup which helped pioneer the consumer sous vide category, only to see the market flooded by competing devices
- In multiple successful Kickstarter (competitor) campaigns totaling $1.3 million, the backing of Samsung Ventures, and an attempted pivot into meal plans, the company just could not survive.
- ODG/Osterhout Design Group (1999 - 2019, $58 million)
- A pioneer in the AR glasses space
- Burned through its $58 million funding in less than a year and could not pay employees.
- Lost half of its workforce as it sought loans to pay back employees by ealy 2018.
- Acquisitions from several large tech companies such as Facebook and Magic Leap fell through (ended up selling its patent).
- Omni (2014 - 2019, $35.3 million)
- Began as a physical storage company and attempted to pivot after selling off its physical storage operations to Clutter (competitor).
- Failed to build a white-label software platform that would allow brick-and-mortar merchants to operate their own businesses for renting and selling products.
- Scaled Inference (2014 - 2019, $17.6 million)
- Founded by former Googlers Olcan Sercinoglu and Dmirtry Lepikhin
- Made headlines in 2014 with a plan to build machine learning and AI technology similar to what’s used internally by companies such as Google and making it available as a cloud service that anyone can use.
- Attracted investors such as Felicis Ventures, Tencent, and Khosla Ventures.
- Shut down as a result of a lack of funding due to insufficient commercial traction.
- Sinemia (2015 - 2019, $1.9 million)
- Seemed at first to be a more sustainable competitor than MoviePass.
- Announced its ending of US operations after being plagued by subscriber complaints, lawsuits around app issues, hidden charges, and policies for shuttering accounts.
- Did not say it was shutting down entirely; much of its staff was based in Turkey, however, its website has since been offline.
- Unicorn Scooters (2018 - 2019, $150,000)
- One of the first fatalities of the electric scooter craze of 2018
- Reportedly spent too much money on Facebook and Google ads.
- Shut down with no money left over to issue refunds for over 300 of its $699 scooters that had been ordered.
- Had completed the Y Combinator startup accelerator only a few months before its shutdown.
- Vreal (2015 - 2019, $15 million)
- An game-streaming platform which aimed to let VR users explore the worlds in which live-streamers were playing
- “Unfortunately, the VR market never developed as quickly as we all had hoped, and we were definitely ahead of our time.”
Follow up links:
- Common reasons why startups fail, https://www.forentrepreneurs.com/why-startups-fail/
- Why many startups fail and how to prevent startup failure, https://medium.com/swlh/why-90-of-startups-fail-and-what-to-do-about-it-b0af17b65059