A good number of startups are launched with some capital, good concepts, and a great vision. Only a few of the top startup companies survive the stiff market competition! With COVID-19 striking panic across the globe right at the start of 2020, it was miserable for most startups. Businesses were forced to close to stop the further spread of this disease, thus making startups gasp for breath.
The pandemic saw such companies increase their offerings to retain existing customers and attract new ones. The survival of the business became more important than making profits. But several of them simply fell prey to the pandemic and had to close down their shutters. Some had already experienced cracks in their business model, with the pandemic striking the last nail in the coffin. Startup shutdowns became more common due to a lack of finance, a poor economy, and a bad market.
Top Startup Companies shut down
Essential (2017-2020):
This playground-backed startup managed to raise $330 million to start the business. It was trying to enter an already oversaturated and mature market. It also boasted of having employed top industry executives combined with authentic innovative ideas. It also outlined a very clearly chalked-out 10-year plan for becoming the next industry giant. It did provide the world with a promising handset. But it never managed to supply a connected home hub. There were several reasons to experience startup failures. Some of them were allegations involving sexual misconduct, broader marketing issues, and timing.
Atrium (2017-2020):
It raised a working capital of $75 million. This legal tech 100-person startup is the idea of Justin Kan. But it had to close down business last March. This is because it failed to come up with an alternative plan to tackle the arduous systems followed by law firms. Investors were also given back some funding amount of $75.5 million including Andreessen Horowitz.
A month earlier, this platform had laid off its in-house lawyers to become a SaaS play. Such a startup fails to showcase how unprofitable and tough it is to disrupt a complicated, traditional system. Only three years earlier, it had announced to development of software meant exclusively for Startup Companies. This software was to be designed to navigate hiring, fundraising, collaboration with legal experts, and acquisition deals.
Hipmunk (2010-2020):
This travel company started with a capital of $55 million and was established by Steve Huffman, Reddit Co-founder, and Adam J. Goldstein. It gathered information on car rentals, hotels, and flights allowing users to contrast and compare prices without difficulty. However, it became one of the miserable Startup Companies shut down after four years. Its closure, however, is not because of the pandemic. Rather, its site went dark officially before the lockdowns on 23rd January 2020.
HubHaus (2016-2020):
It was counted among the top startup companies that failed recently. It managed to raise a capital of $11.4 million and was established by Shruti Merchant. This housing rental platform had a strong belief that there would be a demand for adult dormitories in the future. It targeted mostly working professionals located in cities. However, with the failure of WeWork’s IPO, investors lost their interest. Thus, the start-up suffered setbacks trying to raise new funds. It was further hit when the pandemic struck the world over hurting the overall rental market.
IfOnly (2012-2020):
It raised a venture capital of $51.4 million and a viable marketplace to hold exclusive events like ‘goat yoga’. But the pandemic created a mess leaving the startup on poor grounds. MasterCard, its earlier investor acquired this startup last year. According to MasterCard, the company’s existing technology and team were part of the Priceless experience marketplace. Such a startup failure has provided Mastercard with an investment opportunity.
The above are a few of the top startup companies that suffered setbacks in 2020-21 and had to announce permanent closure.
