One of the most reported reasons for startups to fail, is running out of cash. This can even happen to auspicious startups. According to a Fortune article, only one in every ten startups will succeed. The year 2017 was no exception to this; many startups were forced to close up shop. We will look at five noteworthy bankruptcies that transpired last year.
Built as a plugin for web browsers, Yippie! was designed to help its users with online shopping. During checkout, it browsed the internet to see whether you could get a better deal on the products in your cart. Yippie! would get a small commission if customers bought this better deal. After receiving a whopping 60ok of funding in 2015, the company grew fast. Too fast according to founder Maurice Kroon. “We made a few stupid and classical corporate mistakes,” Kroon told Emerce, without discussing the details. The bankruptcy did not stop him, though. Kroon was determined to fix the problems and reboot Yippie! in the summer of 2017. Therefore, their website said: “Yippie! is having a break.” But today, the website is unresponsive and it appears Yippie! has officially ceased to exist.
Another company that raised a significant sum of money in 2015 is Printr. After starting with a failed Kickstarter campaign, they managed to get a total of 750k worth of investments by the end of that year. Printr planned to use this money to develop the platform ‘Formide’. This was going to be a digital library where users could find and edit 3D-models and print them straight from there when done. Even though the 3D-printing market is growing fast – market outlooks vary, but a global market in the tens of millions is expected – consumers do not seem eager to adopt 3D-printing technologies and Printr was forced to stop its developments last October.
In 2014 Tinker Travel claimed they would be cheaper than UberPOP, which announced trials in Amsterdam for that year. Though they indeed were cheap and UberPOP still is banned in the Netherlands, Tinker’s business model did not turn out to be viable. In June of last year, the company went belly up and it became clear Tinker still owed tons of money to many taxi companies that drove their customers for them. The most important issue seemed to be that Tinker wanted to expand their services to the sky. They invested in IATA-codes – the two letter codes airlines use to label flights, like KLM uses KL for their flight numbers. This investment proved too high and not profitable enough for Tinker.
Red Tulip Systems
How difficult things can be for startups was also shown by Red Tulip Systems. Despite receiving a grant of 300.000 euros in February last year, they had to declare bankruptcy just five months later. Their WorkFone was supposed to be a system with which law enforcement and emergency services could access multiple phone numbers with just one device, eliminating the need for two or more phones. In a post of their website, founder Rob Sutter states: “The biggest contributing factor was complexity. I thought we had minimized it. I was wildly wrong.” This just shows how fast things can go south.
However, sometimes the end is not the end. This was demonstrated perfectly by Cocoon, a tinder-like service for companies to find new employees. In October, they announced they would stop by the beginning of November. But then, early November – instead of saying goodbye – they posted a positive message on LinkedIn. It said: “Good News! We’re not shutting down, but will be joining Mindscape – Advanced Online Recruiting and change our name to CareerMatch.” Mindscape has been making new plans and will continue developing the app later this year. This only shows that you do not have to give up when your first plan fails.
Bankrupt image by Shutterstock