⚰️ 15 Startups We Lost in 2023

Convoy, Zume, and HealthIQ... 2023 hit different.                                                                                                                                                                                                                                                                                                                                                                                                                 December 28, 2023 | [Read Online]( [fb]( [tw]( [in]( [email](mailto:?subject=Post%20from%20Failory&body=%E2%9A%B0%EF%B8%8F%2015%20Startups%20We%20Lost%20in%202023%3A%20Convoy%2C%20Zume%2C%20HealthIQ...%202023%20hit%20different.%0A%0Ahttps%3A%2F%2Fnewsletter.failory.com%2Fp%2F15-startups-lost-2023) Together With Hey — It's Nico. This is the last issue of the year. 2023 was a great year for Failory. - 2.5M+ entrepreneurs visited our website. - Our articles and stories got read 5.5M+ times. - 30K+ founders subscribed to our newsletter. Whether you came across Failory this year or you’ve been following the project since we launched in 2017, I really appreciate your support 😉. It’s the time of the year when businesses and people do year recaps. I’m also doing a year recap. But one about failed startups. In today’s issue, I’m analyzing the top 15 startup failures of 2023. This issue is brought to you by Auth0 (by Okta). AI Startups, Leave Authentication (And Much More) To Us Eligible AI startups can use Auth0 by Okta’s Identity platform free for one year. By joining Auth0 for Startups, you’ll get access to the full, rich feature set of Auth0, including SSO, MFA, and Universal Login. Read about why Hypotenuse AI chose Auth0 to streamline their user onboarding. [Check it out →]( I’ve written before about how [more than 90% of startups fail](, with lack of funding — alongside lack of product-market fit, team problems, and marketing problems — being one of the main reasons so many startups shut their doors during different stages. Over the past year, we’ve seen a marked decline in venture funding for startups, meaning a lack of funding could become an even bigger reason for startup closures in the years to come. Despite a slight quarter-over-quarter uptick in startup funding in 2023, third-quarter funding was still 15% below that invested in the same quarter of 2022, [according to Crunchbase](. Along with all the usual culprits behind startup failure, this slow-down in the venture capital market has no doubt played a role in shutting down [approximately 3,200 VC-backed startups in 2023 so far](. Some [experts predict a mass extinction of startups]( looming on the horizon, and we’ll see startups shutting down in even higher numbers towards 2024. That being said, it’s more important than ever for startup founders to keep looking at and learning from the mistakes of failed startups in 2023. Top 15 Failed Startups in 2023 1) Convoy Industry: Logistics Start date: 2015 Amount raised: $1B+ Reasons for failure: Industry Recession, Debt, Lack of Funding Launched in 2015 and once backed by Amazon’s founder Jeff Bezos, Convoy was a truck transportation startup that aimed to revolutionize the trucking side of the logistics industry by matching truckers with shippers through an Uber-like system. Despite raising over $1 billion in funding over the years, including $260 million in 2022, and once valued at $3.8 billion, [Convoy shut down in October 2023](. In a memo, Convoy’s CEO cited an ongoing freight recession and a contraction in the venture capital markets as the primary reasons for shutting down operations. Even with its successful technology and massive revenue, Convoy wasn’t yet profitable, and investors were no longer interested in sinking more money into such a late-stage venture. The company ultimately couldn’t withstand outside market forces, causing it to take on debt and forcing it to shut down due to lack of funding. 2) Zume Industry: Food Tech/Robotics Start date: 2015 Amount raised: $445M Reasons for failure: Operational Issues, Failed Pivot Zume Pizza was a startup that aimed to revolutionize the pizza industry by using robots and technology in the pizza-making process, coupled with a unique cooking-on-the-way delivery model. The startup raised $445M in funding from investors, including $375 million from Japanese investment firm SoftBank. The company’s main product, The Doughbot, aimed to enhance pizza-making speed and delivery efficiency, preparing five times faster than traditional methods. However, it was unsuccessful and failed to work. As a result, Zume decided to pivot away and [focus instead on]( sustainable packaging. Zume’s venture was hit with high operational costs, technical challenges in automating the pizza-making process, and difficulty scaling its unique business model efficiently across different locations. Moreover, the company failed to make a successful pivot into another market. 3) HealthIQ Industry: HealthTech Start date: 2014 Amount raised: $200M+ Reasons for failure: Financial Mismanagement, Operational Issues Health IQ was a health insurance marketplace startup valued at $450M. It raised $139.5 million across five funding rounds in 2019 alone. In a significant strategic shift, Health IQ began offering Medicare Advantage plans in 2019 to secure substantial commissions. [Health IQ filed for bankruptcy in August](, revealing debts of $256.7M and only $1.3M in assets. In the wake of the bankruptcy, creditors' lawsuits surfaced, alleging contract breaches and fraudulent practices. Health IQ's failure highlights the challenges of innovating in highly regulated sectors like healthcare insurance. The company lacked a sustainable business model and failed to prioritize financial prudence and compliance. 4) Mindstrong Industry: Digital Mental Health Start date: 2014 Amount raised: $160M Reasons for failure: Industry Difficulties, Slowing Funding, Acquisition Mindstrong was a digital mental health tech company, initially focused on developing digital biomarkers to spot early signs of mental illness and adding virtual therapy and other digital mental health services to its offerings. However, the company could not profit, leading to workforce cuts and sales of its digital assets in 2023. As of March, digital mental health company SonderMind began acquiring Mindstrong’s technology and some employees. Mindstrong failed because of difficulties making profits from its digital mental health offerings. Digital mental health services are notoriously difficult to get users to pay for, and that, coupled with slowing funding, forced [Mindstrong to shutter its operations and accept the acquisition deal from SonderMind](. 5) Lummo Industry: SaaS Start date: 2019 Amount raised: $149M Reasons for failure: Failed Pivots, No PMF Lummo, formerly known as BukuKas, was an Indonesia-based startup backed by Jeff Bezos and other investors, who funded it with almost $150M across three funding rounds. The SaaS startup had two main avenues of business; e-commerce enablement and bookkeeping software. As of April 2023, Lummo had ceased operations and was [considering its options]( between a total shut-down and an acquisition, citing four pivots in four years with all of the attempts failing to gain traction in any direction as the reason. While it could not find PMF through all those pivots, Lummo remains well-funded and has stated that it will be returning the remaining funds to investors if it shuts down completely. 6) Plastiq Industry: FinTech Start date: 2012 Amount raised: $141M Reasons for failure: Lack of Funding, No Liquidity Plastiq was a B2B credit card payment FinTech company last valued at an impressive $480 million. The company’s market consisted of small and medium-sized businesses and individuals whom it enabled to make credit card payments to vendors who didn’t otherwise accept them. Despite its high valuation and plans to go public, Plastiq was unable to maintain a minimum cash balance and [filed for bankruptcy in May 2023](. Plastiq had problems with liquidity, and its plans to go public (via a merger with Colonnade Acquisition Corp. II), which would have provided the company with approximately $320 million in funding, fell through, causing the company to file for bankruptcy. 7) Buzzer Industry: Consumer Tech Start date: 2020 Amount raised: $44M Reasons for failure: Fundraising Difficulties, Failed Pivot Buzzer was a streaming startup that aimed to captivate Gen Z sports fans through its mobile app, launched in 2021. The app enabled users to stream live parts of sporting events directly to their phones, with micro-payments starting as low as $1. Buzzer raised a total of $44M investment, backed by an impressive lineup of athletes and team owners. Buzzer attempted to pivot from a B2C model to a B2B streaming technology provider but was unsuccessful. This resulted in the shutdown of its consumer app and ultimately led to its demise. This failed pivot and challenges in securing additional funding and navigating a turbulent market underscored the startup's difficulties despite its substantial backing and initial accomplishments. 8) Cana Technology Industry: Food Tech Start date: 2018 Amount raised: $30M Reasons for failure: Lack of Funding Cana Technology was a US-based startup that wanted to bring 3D-printed beverages to peoples’ home kitchens, invoking images of Star Trek’s replicator machine. In fact, in March 2023, the company announced that Sir Patrick Stewart himself (Star Trek’s Captain Picard) was to be a brand ambassador. Cana Technology’s first product announced was a “molecular beverage printer” with an $899 price tag, which was planned for launch at the end of 2023. However, the startup didn’t make it long enough to release its first product — it ceased development of the beverage printer in June 2023 due to a lack of funding. 9) Food Rocket Industry: Food Delivery/Tech Start date: 2021 Amount raised: $27M Reasons for failure: Lack of Funding San Francisco-based Food Rocket was a rapid grocery delivery startup with an impressive goal — 10-minute grocery deliveries. It employed a fleet of bicycles and scooters and had its own micro-warehouses and dark stores. Food Rocket secured $22 million in a Series A fundraising round in 2022, allowing it to expand operations to Chicago, implement software upgrades, and provide full-time employment and benefits to delivery drivers. However, the success was short-lived, and [Food Rocket closed its doors in March 2023](. Despite its early success, leading to the company being profitable just two years after launching, Food Rocket encountered difficulties securing additional venture capital from investors. The startup’s CEO and founder, Vitaly Alexandrov, stated that current economic conditions and changes in the tech market had significantly affected the venture capital market, and the company could not stay afloat without further funding. 10) Sendy Industry: Logistics Start date: 2014 Amount raised: $22M Reasons for failure: Lack of Funding, Operational Difficulties Sendy was a Kenyan logistics company that helped retailers purchase fast-moving consumer goods (FMCGs) and offered end-to-end fulfillment services. The startup, valued at $80 million at the end of 2022, had aimed to raise $100 million last year but ultimately only reached a fraction of its goal due to issues with investors backing out. This led to major cost-cutting layoffs, and Sendy eventually closing down in August 2023. Sendy shut down because of various financial problems, including increased operational costs and a lack of new funding from investors. Because it was unable to achieve its funding targets in 2022, Sendy struggled with maintaining operations in the months leading up to its closure. It lacked funds to cover salaries and was forced to start [selling off some of its assets](. 11) FrontRow Industry: EdTech Start date: 2012 Amount raised: $17M Reasons for failure: Unsustainable Business Model, Loss of PMF FrontRow was an India-based startup offering a hobby-learning platform where users could take courses in various genres, such as cricket, music, and comedy, taught by Indian celebrities. Over four years, the company raised $17 million, acquired 2 million users, and experienced significant growth and challenges. Frontrow founder shared in a [blog post]( that they had a -250% contribution margin. Growth solved this, but at some point, it started to plateau again. They spent months working on their unit economics and managed to break even at $1.5M ARR, but they didn’t feel they had PMF anymore and decided to shut down. 12) Clim8 Industry: FinTech Start date: 2019 Amount raised: $15M Reasons for failure: Lack of Funding, Slow Growth London-based Clim8 was an app for making sustainable investments. It allowed users of all ages and experience levels to quickly invest any sum of money into eco-friendly projects and climate change solutions aiming to make the world a better, more sustainable place. The app also featured an impact calculator that showed users an estimate of how CO2 had been saved and how much clean energy had been generated by their investments. [Clim8 shut down its app in March 2023](, with CEO Duncan Grierson citing changes in the venture capital environment over the past year as the reason. The company was unable to scale its customer base quickly enough to show enough traction to potential investors and, therefore, could not secure enough venture capital to continue covering costs. 13) Braid Industry: FinTech Start date: 2019 Amount raised: $10M Reasons for failure: Industry Difficulties, Technical Issues Braid was a consumer payments app that aimed to popularize shared wallets among users. The app offered FDIC-insured, multi-user accounts that friends and family could use to pool money together and collectively pay for shared expenses, like vacations or nights out. Even though Braid had found product-market fit and was experiencing growth, a series of outside market factors led to the company shutting down in 2023. First, in mid-2022, Braid had issues with its sponsor bank, which essentially froze its operations until it could migrate to another sponsor bank. However, just six weeks after relaunching, the financial industry was shaken up by the sudden failure of several major banks. Then, a list of technical issues had the company facing the prospect of rebuilding its technology from the ground up. According to a post-mortem [blog post written by Braid CEO Amanda Peyton](, this was the nail in the coffin. 14) TenureX Industry: FinTech Start date: 2020 Amount raised: $5M Reasons for failure: Lack of Funding TenureX was an innovative software platform that aimed to streamline correspondent banking relationships or the authorizations financial institutions give to one another to provide services on their behalf. Though the company did find PMF, it faced fundraising challenges and [closed its doors in February 2023](. According to the company’s CEO, the sole reason for TenureX’s shutdown was a lack of funding. The startup had already secured a total of $5M in funding and had a goal of fundraising an additional $15M in the latter half of 2022. However, the company was unable to meet this goal due to the downturn in the venture market that has led to so many startup failures in 2023 and was forced to shut down. 15) Pebble Industry: Social Media Start date: 2022 Amount raised: $1M Reasons for failure: Low Usage, No PMF Pebble launched as an alternative to Twitter after Elon Musk’s takeover, which would lead to massive layoffs and the renaming of the platform to X. In fact, the startup was founded by ex-Twitter employees and was essentially a replica of Twitter’s original format. The company was able to raise a small amount ($1M) of outside seed funding but ultimately never took off and [announced it would be shutting down]( and returning what was left of the funding to investors in October 2023. Pebble shut down because it simply could not attract a big enough user base. At its height of operation, it had just 20,000 registered users, with only 3,000 active daily users. A big part of the reason for this was a massive explosion of Twitter copycats after Musk’s acquisition shattered the original’s popularity, and Pebble just couldn’t stand out in the sea of competition. What Can We Learn? Looking at the above list of this year’s notable startup failures, we can see that everything from outside market factors and industry difficulties to lack of PMF and failed pivots have caused various startup failures in 2023. However, fundraising difficulties and lack of funding far outnumber other causes as the reasons why there have been so many failed startups in 2023. Indeed, many of these failed startups’ founders expressed that the venture capital landscape has changed so significantly over the last year that it became impossible to secure the additional funding required to continue business operations, regardless of whether they had found product-market fit or not. Even some profitable companies need venture funding to sustain their operations, and being unable to entice investors to provide that funding has led even up-and-coming startups to close their doors this year. It’s not all doom and gloom, though — failure is part of the startup environment, and looking at the challenges faced by 2023’s failed startups can still provide prospective founders with valuable insights into what they can expect and what they should prepare for when considering launching a startup in 2024 and beyond. 📰 Classifieds 📞 Struggling with your startup? [I offer 60-minute strategy calls]( to discuss idea validation, MVPs, growth strategy, and more. 💡 Struggling to validate your startup idea? [I've created a course]( on how to use pre-sales to validate it. 📈 Struggling to achieve PMF? I've [written an eBook]( about the exact strategies used by Slack, Intercom, and Airbnb to achieve it. 💰 Struggling to raise funding? I've curated lists of [2,100 accelerators and incubators]( and [1,000 VC firms](. 📊 Looking to get in front of +40k startup founders? [Sponsor this newsletter](.​ 👂 How Was Today's Newsletter? - [🔥 Great]( - [😒 Meh]( - [👎 Not Interesting]( That's all of this week and for the year. Once again, thanks so much for your support. Cheers, Nico Update your email preferences or unsubscribe [here]( © 2023 Failory 1309 Coffeen Avenue Ste 1200, Sheridan, Wyoming 82801, United States of America [[beehiiv logo]Powered by beehiiv](