It’s no mystery that many startups and small businesses eventually fail. If there is life, there is death; similarly, for every billion-dollar unicorn company, there is a humongous number of startups that have gone onto the other side.
More often than not, startups go bankrupt for reasons that go beyond the viability of their products. In most of the cases, startups fall prey to missteps that ultimately dry up their cash flow.
The top 3 reasons are — No market demands the product (42%), shortage of capital (29%) and lack of team enthusiasm or understanding (23%). Other reasons include pricing/cost issues, poor marketing, ignored customers and much more.
As 2018 comes to a close, it’s time to take a look at some of the startups that went bankrupt this year.
#1 Waka Waka
Back in June, WakaWaka filed bankruptcy due to lack of investors. The company has tried raising funds with other investors in recent months but didn’t receive the necessary resources on time. According to Groen, the company is no longer able to meet its payment obligations.
Founded in 2013 by entrepreneurs Maurits Groen and Camille van Gestel, WakaWaka developed an economical yet eye-catching LED flashlights, which can be charged with solar energy. This company also sold power banks with heavy batteries that allow electronic devices including mobile phones and laptops to get charged. In fact, the company has achieved a turnover of around 4.9 million euros last year and now it’s bankrupt!
Swoop, the provider of refurbished and used Apple products filed for bankruptcy a couple of months back due to rapid growth. As per the reports, the company did not get enough financing, which led to bankruptcy. Moreover, there were reports that the market for the refurbished products is down. Eventually, this has made it tough for Swoop to stay successful in the market and keep its head above the rising difficulties.
Just like Swoop, Amsterdam-based retailer Leapp, who sells used and refurbished Apple devices declared bankrupt earlier this year. The company announced bankruptcy due to financial problems, however, Nobel Capital pulled out Leapp from this mess, giving them a chance to relaunch themselves. Having said that, the new owner of Leapp owns a majority of the shares in the company.
Dutch sports e-tailer Athleteshop filed for bankruptcy earlier this year due to abysmal service and debt problems. To be more specific, the Athleteshop suffered from poor delivery services, where postal service companies including PostNL and DHL refused to deliver the products for the e-retailer.
In addition to it, the company endured insurmountable debt of around €5 million as well, which resulted in empty storage spaces in stores, since suppliers are no longer delivering to Athletheshop. Moreover, an attempt was made by an investor to rescue the company if in case 85% of the creditors would be ready to accept a delayed payment till 2019. However, the majority of them declined the offer.
#5 Twitter Counter
TwitterCounter, a popular tool for analysing Twitter followers filed bankruptcy a few days back after it got hacked. During the hack, official Twitter account of prominent organisations like Forbes, and regular users were compromised to post swastikas and other Nazi-related messages. During this hack, the attackers gained access to TwitterCounter’s service, which was then used to send the tweets.
Stay tuned to Silicon Canals for more updates in the tech startup world.