How to Avoid Facebook Ads Bankrupting Your Company, as Taught by this Startup’s Shutdown

How great would it be if someone handed you $150k to spend on Facebook ads to grow your business? It would magically solve ALL of your growth problems, wouldn’t it?

While that may have been the case 10 years ago, that’s simply not the case in today’s age of rising digital advertising costs — as shown by the latest shutdown of Unicorn, a direct-to-consumer e-scooter company that claims to have spent the majority of its incoming revenue on Facebook ads.

“A large proportion of the revenue went toward paying for Facebook ads to bring traffic to the site,” an email from founder Nick Evan states, following the closing of a $150k seed funding round.

“Unfortunately, the cost of the ads was just too expensive to build a sustainable business.”

While this steep digital advertising budget may seem insane to some, it’s certainly not unheard of with emerging tech and D2C companies that have raised funding rounds. In fact, 40% of venture capital raised by today’s startups gets spent on Facebook and Google ads, according to Clearbanc co-founder and investor Michele Romanow in a recent interview with Business Insider.