The post was originally published in Polish on Artur’s LinkedIn profile. Artur kindly agreed that we repost what we think is of great value to our readers.
90% of startups fail. Here are 5 examples of such failures in recent months along with the lessons to learn from their failures:
- Health IQ – a health tech platform dedicated to health insurance. At one point, its valuation reached USD 450M, but eventually the company went bankrupt. What went wrong?
- Changes in strategy. The decision to introduce Medicare Advantage plans put a significant strain on their budgets.
- The controversial payouts to co-founders have raised many questions about the transparency of the company’s operations.
- The health industry is full of legal intricacies that the company neglected.
- There was a lack of a well-thought-out business strategy and financial management, which led to a huge hole in the budget.
- FrontRow – an Indian learning platform. They offered hobby courses taught by celebrities. Despite funding and a wide user base, the company collapsed. Why?
- They undermined their own growth at all costs. Despite raising a lot of capital and an ARR of $4 million, their margin was -250%.
- Initial success can’t compensate for a lack of sustained user engagement.
- The idea of releasing cohort courses was promising. However, it didn’t save the startup.
- If your product doesn’t meet the needs of the market, even a lot of funding won’t help.
- Braid – a fintech designed to manage a budget jointly. Despite securing USD 10M in funding, the project collapsed. What went wrong?
- They became dependent on many entities, which slowed down the decision-making and the progress and led to collapse.
- They relied on a single sponsoring bank, which paralyzed their operations for months.
- They relied on third-party software, which hindered their progress, lowered their margins, and eventually led them to create their own solutions.
- WeWork – Once valued at USD 47B, this is a notorious provider of coworking space. Currently, their shares are worth less than $1. What went wrong?
- They were doomed by a mismatch between long-term liabilities and short-term revenues.
- They weren’t prepared for the growing popularity of remote work after the pandemic.
- Lack of stability in management. Departure of co-founders, CEO, and CFO. Frequent changes in the company’s management can discourage investors.
- Artificial valuation by investors who have pumped billions of dollars into the company, inflating its valuation to unsustainable levels.
- Checkout X – They allowed Shopify merchants to integrate other payment providers that were not offered on Shopify. After reaching USD 600K a month in revenue, they had to go out of business. Why?
- Being deeply rooted in a single platform’s ecosystem can lead to sudden disasters if the platform changes its policies. Shopify has stated that the creation of public checkout apps is prohibited.
- Shopify later blocked Checkout X and the startup had to shut down.
- If your service becomes too popular, your host platform may become your competition.
Creator, entrepreneur and investor – I write about my experiences with startups, technology and business.
