Theranos, Beepi, Juicero, Blippar, Jawbone, Wonga — if you are reading this blog post, there is a good chance that you enjoy your career in tech and know what is common about this list of weird names above — these are some of the biggest startup failures in history. One can easily find profound research papers and articles online about the reasons behind the biggest startup flameouts, including the ones above. Also, the Internet is full of shallow stories and “insights” about typical reasons why startups fail in general. While at Leta Capital we invest in Seed and Series A startups, I was searching on the web for some good exemplary stories about startup failures at Seed and Series A stages. Surprisingly, all I could find was generic, obvious and pretty much useless reasons for startup failure such as “no market need”, “not the right team”, “ran out of cash” and other blah-blah-blah. In fact, when one fails a startup at a relatively early stage (pre-Seed, Seed or Series A), they wouldn’t shout out about it publicly, that is why readers won’t find much online.
“…[while searching for exemplary reasons behind Seed startup failures] all I could find was generic, obvious and useless notes [..] such as “no market need”, “not the right team”, “ran out of cash” and other blah-blah-blah.”
One of the major advantages of being a VC is that we can see the ups and downs of each startup from the inside, as well as respective reasons behind every success and every failure. As a result, such accumulated knowledge becomes priceless, is kept strictly private by VCs and is mainly shared internally with portfolio companies.
That is why with this blog post I decided to draw the curtain open a little bit and share 20 cases of real early-stage startups which I have met throughout my career in VC and who eventually shut down or became zombie. In each case, I included some background information (case), outcome and learnings of why these startups failed. Due to obvious privacy & ethical concerns, I chose not to share real companies names but mentioned their respective sector and business model.
I hope that founders of pre-Seed, Seed and Series A tech startups will find this blog post most useful, as well as VC peers and other interested parties.
At Leta Capital, we invest in most disruptive post-revenue tech startups at late Seed and Series A. Please send us your pitch to firstname.lastname@example.org