Running a startup is the challenging ‘business’. A lot of internal and external factors influence the direction your startup is heading. And you, as the owner of your startup, sometimes do not have control over where your startup is heading, especially when the factors influencing the startups are the external factors. The situation gets worst when your startup is off coursing due to external factors, and you and your management team are busy dealing with internal factors or vice versa.
Many new entrepreneurs and of course their startups have already become the victims of most common goof-ups which can lead any startup to a dead end. So, if you do not want to be mentioned in a blog titled ‘lessons to learn from top failed startups’, learn from the already failed startups and prevent yourself from doing some of the most expensive goof-ups of the startup ecosystem.
In this blog, I will put forth top startups that went bankrupt (failed) even after raising millions of dollars.
Sienna Bio pharmaceuticals
Founded in 2010, Sienna Bio pharmaceuticals was the clinical-stage bio pharmaceutical company. It was focused on bringing innovations in biotechnology to the discovery and development of top-notch tropical products.
Though Sienna Bio pharmaceuticals had raised a whopping $74 million, they failed to gain the market share. In one of his interviews, co-founder and ex-CEO Dave said that they were more successful than others at the initial level. But it took great time and effort. Same efforts, they could have applied to grow and run the business.
- Why did Sienna Biopharmaceuticals fail?
One of the reasons why Sienna Bio pharmaceuticals failed is its two failed experiments of acne treatment. Many industry experts also quoted the lack of a backup plan as the reason for failure.
Always keep a backup plan!
Stratoscale was the Israel-based software company offering software-defined data center technology. It was founded by Ariel Maislos in 2013. After seizing a decent amount of funds from top investors like Cisco Investments, Bessemer Venture Partners, Intel Capital, and Qualcomm Ventures, the valuation of Stratoscale once hit the $90 million.
- Why did Stratoscale fail?
The product Stratoscale had built was amazing, but the merger was not successful.
So the company shattered after the failed acquisition.
Internal factors are more dangerous than external.
Hipmunk was one of the first meta search travel sites which allowed users to compare hotels, flights, and car rentals. It raised a total of $55 million but struggled a lot to keep the user retention rate high. Later, it was acquired by Sap Concur in 2016.
The GUI of the Hipmunk site was customer-friendly. But the site was providing very little information.
Content is (still) the king!
Omni Storage and Rentals
Omni Storage and Rentals was American tech-based on-demand storage and rental company founded in 2014 by Aaron Wiener, Adam Dexter, and Tom McLeod. It had raised a total of $35 million but halted all operations after struggling to make the economics of equipment rentals and physical on-demand storage work out.
- Why did Omni Storage and Rentals fail?
Omni Storage and Rentals required many costly resources to earn less profit.
As a startup, don’t come up with the business idea which is resource-heavy!
Juno was the transportation network company running its business in the United States. It is owned by Gett and compared to its rival, it was taking less commission from the drivers. It had raised $30 million from Jordache Ventures and Rakuten. However, Juno ceased all operations on November 18, 2019.
There are major two reasons responsible for the demise of Juno. First, Juno offered the beta app to 2000 drivers to use which later leaked all the information of drivers and second, Juno wasn’t prepared to cope up with the city regulations.
Be aware of government regulations and provide military-grade security to the user data.
Kettlebell Kitchen was the meal-kit delivery service. They used to produce and deliver a line of meals and snacks for athletes as well as individuals with health goals. But after losing $12 million in a year, they completely halted all business operations in November 2019.
- Why did Kettlebell Kitchen fail?
The meal-kit delivery market is the overly intensified market and Kettlebell Kitchen failed to compete bravely against other players like HelloFresh and BlueApron.
Don’t jump into the intensified market. And if you don’t have any option than jumping in the intensified market, keep a plan with you to outperform rivals!
Vaniday was the Singapore-based online beauty booking platform. Since the first investment in 2015, the company hadn’t been profitable. Their financial troubles continued even after they reported a 7 -figure funding round. And when they ran out of money and couldn’t close another funding round, they ceased all business operations in December 2019.
Why did Vaniday fail?
Despite losing money, they didn’t innovate the business model and relied only on the funding capitals.
What can you learn?
Innovate the business model and don’t let investors decide the fate of your startup!
Ofo was the Chinese bike-sharing company operating its business in many major cities of Southeast Asia and Australia. It was started as the university project and considered as the tech darling. The success of Ofo inspired many entrepreneurs to hire an e-scooter app development company to develop similar apps. But after tasting a massive success between 2014-2016, Ofo started being hijacked by the finance and a real business crisis hit Ofo in 2018.
When rivals of Ofo were raising millions of dollars, Ofo failed to tie up with Alibaba and failed to raise an additional funding round.
Keep an eagle eye on your rivals and never miss an opportunity to be a friend with their friends!
In the nutshell:
Here are the top lessons you can learn from the failed startups.
- Always keep a backup plan!
- Internal factors are more dangerous than external.
- Content is (still) the king!
- As a startup, don’t come up with the business idea which is resource-heavy!
- Be aware of government regulations and provide military-grade security to the user data.
- Don’t jump into the intensified market. And if you don’t have any option than jumping in the intensified market, keep a plan with you to outperform rivals!
- Innovate the business model and don’t let investors decide the fate of your startup!
- Keep an eagle eye on your rivals and never miss an opportunity to be a friend with their friends!