Hold your breath, we are gonna talk about some of the most expensive startup flameouts across the globe. And few of them might make you go WT*! In this article, there is a compilation of the most well-funded startup companies that ultimately failed or had an undesirable exit, such as an asset sale or an acquisition for less than the total funding raised by the company. The reasons for failure are varied. But a few common threads do emerge, such as an inability to generate sustainable revenue, bad product-market fit, losing to competitors, and (of course) simply running out of money.
Select VC investors: Redpoint Ventures, US Venture Partners
Total disclosed funding : $1.22B
Even industry heavyweights such as China’s Suntech Power Holdings Co Ltd and U.S.-based First Solar Inc are struggling with dwindling profits, while small, up-and coming solar companies are finding it increasingly difficult to stay afloat. Solyndra said it was evaluating options, including a sale of the business and licensing its copper indium gallium selenide (CIGS) technology.
Select VC investors: Khosla Ventures, Sequoia Capital, Kleiner Perkins Caufield & Byers
Total disclosed funding: $929.9M
In July 2017, device maker Jawbone became one of the most spectacular failures in the history of startups. The company’s the announcement that it was selling off its assets was long coming: despite grabbing $930M in funding during its 17-year lifespan, Jawbone failed to hold on to significant market share for its line of headsets, fitness trackers, and wireless speakers. With its demise, Jawbone becomes the second-costliest VC-backed startup failure of all time.
3. REVISION OPTICS
Select VC investors: Technology Partners, DCM Ventures, BP Alternative Energy Ventures
Total disclosed funding: $614M
Revision Optics developed an implantable corneal device to treat presbyopia, a vision a condition which results in the loss of the eyes’ ability to focus on nearby objects. In an interview with OIS Weekly, ReVision president and CEO John Kilcoyne called the presbyopia segment “very challenging.” He said the reason for shuttering ReVision was that the company “could not get the business to grow fast enough.” The firm would have needed significantly more capital to achieve positive cash flow, and the investors were reluctant to put more money in. Corneal inlays may yet find their place in ophthalmologists’ business models, but as of now, they require more time and effort in a practice than either refractive or cataract surgery, which typically involves the operation itself and one follow-up visit. “Ophthalmic surgeons do not want to keep seeing their patients,” Kilcoyne said.
4. ABOUND SOLAR
Select VC investors: InterWest Partners, Canaan Partners, Domain Associates, ProQuest Investments
Total disclosed funding: $172M
Abound Solar was the manufacturer of cadmium telluride thin-film photovoltaic modules for solar panels. During its run, the company received support from institutions like Colorado State University and the National Science Foundation. In addition to its VC investors, the startup was heavily backed by a loan from the US Department of Defense and a grant from the US Department of Energy. With $614M in total disclosed funding when it went under in 2012, the company is the third costliest startup failure in our database.
5. PRIMARY DATA
Select VC investors: Battery Ventures, Lightspeed Venture Partners, Accel, Pelion Venture Partners
Total disclosed funding: $103M
Primary Data’s problem from the outset was that its technology was never quite as compelling as it needed to be, given that it was trying to sell mission-critical software. If it’s not up to snuff, data virtualization software can create challenges with manageability, usability, data quality and performance. Immediately upon joining Primary Data, former CEO Lance Smith realized that its burn rate was out of control, particularly for a company with no revenue. But while the processes Smith instituted helped, they didn’t change the fact that Fortune 500 companies weren’t prepared to buy Primary Data’s technology.
Select VC investors: Qualcomm Ventures, Rho Ventures, VantagePoint Capital Partners
Total disclosed funding: $102.6M
Advertising revenue declined sharply in 2016, leaving the company unable to service its debt, and no suitors took a bite. So its secured lender, which founder Scott Jones didn’t name, recently emptied ChaCha’s bank accounts. “We sold some assets, but not enough to sufficiently cover all of our obligations,” Jones said in an email Monday morning. “Unfortunately, our debtholders and shareholders, including me, will be writing off their investment.”
7. AOPTIX TECHNOLOGIES
Select VC investors: Kleiner Perkins Caufield & Byers, Lehman Brothers, Clearstone Venture Partners Total
Total disclosed funding: $107.9M
Long-time Free-Space Optics (FSO) player AOptix shut up shop and sold off its assets at auction in June 2018 and the company is currently trying to shop around its intellectual property. A source tells that AOptix’s hybrid radio-FSO units were expensive, selling for up to $80,000 a link. Carriers in the US and beyond are looking at wireless backhaul as an alternative to fibre, but the expectation is that it should be cheaper and easier to install as well.
Select VC investors: AMMA Private Investment
Total disclosed funding: $102.6M
Australian music streaming company Guvera has reportedly stopped operating, with its co-founder
and biggest financial backer walking away from the project. The startup, which was established in 2008, privately raised $185 million before its $100 million initial public offering was blocked by the Australian Securities Exchange last year. Guvera’s IPO prospectus was widely criticized and the company was forced to issue an updated version with 45 amendments after scrutiny from the Australian Securities and Investments Commission. The company had lost $81 million in the 2016 financial year with revenue of just $1.2 million.
9. MODE MEDIA
Select VC investors: Accel Partners, Draper Fisher Jurvetson, Greycroft Partners
Total disclosed funding: $229M
“The general consensus of the employee base is that there was mismanagement of finances,” said one former company executive. The day after the shutdown the announcement, one Mode manager of an overseas office described receiving frantic emails from headquarters requesting immediate transfer of all funds and assets back to the US. “It was the most unprofessional, unethical experience imaginable. A confirmed catastrophe,” another exec said about the shutdown. “It’s so catastrophically unethical. No one can believe it.”
Select VC investors: SAIC Motor, Foundation Capital, Gil Penchina, Redpoint Ventures
Total disclosed funding: $147.7M
Riding on the hype of transportation startups and marketplaces, Beepi may have raised too much, too soon. “They were running the business to raise money, and then to get someone else to take it on,” was how one person described it. One investor in the startup said that the founders were too aggressive in pushing for higher valuations. Indeed, co-founder Alejandro Resnik, the CEO, told in 2015 that it was looking to raise a “monster round” of $300 million at a $2 billion valuation to fuel its national expansion.