Approximately 90% of startups fail within their first year, and the common reasons are lakc of market research, insufficient funding, poor management…
List of 15 Biggest Startup Failures of All Time
List of 15 Biggest Failed Startups
1 WeWork - $12.8 Billion Raised
Most of you guys already know about the WeWork failure, once it was the biggest coworking company in the world.
- Year Founded : 2010
- Type of Business : Coworking Spaces
- Peak Valuation : $47 billion
Why WeWork Failed?
According to experts, the primary reason for WeWork’s failure was its unsustainable business model. They were signing long-term leases while subleasing office space on a short-term basis which was financially unstable particularly during the COVID-19 pandemic when demand for office space shrunken as many companies adopted remote work policies. Additionally, co-founder Adam Neumann management style and corporate governance created challenges for the company.
2 Theranos - $1.9 Billion Raised
Theranos comes second on the list of 20 biggest startup failures in the history of the business.
- Peak Valuation : Approximately $10 billion
- Funding Secured by Theranos : $724 million from various investors and venture capitalists including notable investments from high profile backers like Walgreens and Rupert Murdoch.
- Type of Business : Health technology company (Blood Testing Technology)
Why Theranos Failed?
The main reason for Theranos’s failure was the false claims made by its leadership team particularly CEO Elizabeth Holmes regarding the efficacy and accuracy of its blood-testing technology.
3 Juicero - $120 Million Raised
Juicero comes third on the list of our 20 biggest startup failures. Juicero was a maker of a $400 juicing machine which raised around $120 million.
Funding Secured : Juicero raised around $120 million from notable investors, including Google Ventures, Kleiner Perkins and the Campbell Soup Company.
Peak Valuation of Juicero : $700 million
When Was Juicero Founded : 2013 by Doug Evans
Why Juicero Failed?
- High price of juice machines which was priced at $400 compared to other cheaper alternatives.
- Product redundancy exposed when consumers discovered juice packs could be manually squeezed so there is no need to buy a machine.
4 Jawbone - $1 Billion Raised
Jawbone, a maker of fitness trackers and speakers, raised $1 billion but failed to gain traction and went out of business.
Year Founded : 1999
Funding Secured By Jawbone : Jawbone successfully raised around $1 billion from multiple investors throughout its operational years.
Peak Valuation of Jawbone : Approximately $3 billion
Main Reason for Failure of Jawline
- Unsuccessful transition into the fitness tracking market.
- Product malfunctions and manufacturing issues.
- Ongoing legal disputes and deteriorating customer service.
5 Zume - $446 Million Raised
Zume (commonly known as Amazon of Pizza) was a robotic pizza delivery startup which shut down due to technological difficulties and a failed business model shifting strategy comes in 5th position in our top startup failures list.
Founding Year of Zume : Zume was founded in 2015 by Alex Garden and Julia Collins.
Funding Secured : Zume raised around $446 million from multiple investors including SoftBank.
Peak Valuation of Zume : $2.25 billion following its funding round in 2018.
Why Did Zume Failed?
- Technological challenges in maintaining pizza quality during transport ( melted cheese sliding off pizzas in moving trucks) which led to unsatisfied customers.
- Zume’s diversification to sustainable food packaging and delivery logistics did not generate enough revenue.
6 Quibi - $1.75 Billion Raised
Quibi was a short form video streaming service which raised around $1.75 billion. Despite securing funding it failed to have enough users and shut down just 6 months after launching in April 2020.
Founding Year of Quibi : Quibi was founded in August 2018 by Jeffrey Katzenberg and Meg Whitman.
Funding Secured : Quibi raised around $1.75 billion from multiple investors including major entertainment and technology companies like The Walt Disney Company, NBCUniversal and Alibaba Group.
Peak Valuation : $2 billion.
Reason For Failure of Quibi
- Struggled to compete with free platforms like YouTube and TikTok, failing to justify its existence in a saturated market.
- Despite investing in high-profile talent, Quibi’s shows were often criticized as mediocre.
- Launched at the onset of the COVID-19 pandemic.
7 Better Place - $850 Million Raised
Better Place, an electric vehicle charging startup, raised $850 million but failed to sell enough cars and filed for bankruptcy.
When Did Better Place Founded : Better Place was founded in 2007 by Shai Agassi.
Funding Secured : Better Place raised around $850 million from different investors including top players like General Electric, HSBC and Morgan Stanley.
Peak Valuation of Better Place : $2.25 billion.
Why Better Place Failed?
- Building and maintaining battery-swapping stations were very costly (each costing around $500,000).
- Better Place had limited automaker partnerships which hindered their progress (only Renault agreed to manufacture cars compatible with Better Place’s system).
- Along with the two reasons listed above, lack of consumer demand resulted in disappointing sales (selling less than $7 million worth of cars in 2012).
8 Solyndra - $1.1 Billion Raised
Solyndra was a solar panel manufacturer which raised around $1.1 billion but still after getting the funding they were unable to compete against cheaper chinese panels and went bankrupt.
Year Founded : Solyndra was founded in 2005 by Chris Gronet in Fremont, California.
Funding Secured : Solyndra raised about $1.1 billion from multiple investors including notable backing from the U.S. government in the form of a $535 million loan guarantee from the Department of Energy.
Peak Valuation : At its peak, Solyndra was valued at around $2.9 billion.
Reason Behind Solyndra Failure
- They were unable to compete on price due to Solyndra’s cylindrical solar panels being more expensive than traditional flat panels especially the prices of Chinese solar panels dropped.
- Manufacturing Solyndra’s panels was complex which increased its production costs.
- Overestimated market demand led to a revenue shortfall as projected sales based on aspirational contracts did not materialize.
9 Webvan Overview
Webvan was an online grocery delivery service from which customers can order groceries online. Despite raising approximately $800 million, the company failed to achieve what they set out to do and went out of business in 2001.
Year Founded : Webvan was founded in 1996 by Louis Borders.
Funding Secured : Webvan raised around $800 million from multiple investors including major venture capital firms like Sequoia Capital, SoftBank, Goldman Sachs and Yahoo.
Peak Valuation : At its peak, Webvan was valued at approximately $6 billion.
Why Did Weban Failed
- Webvan diversified its business by rapidly entering 26 markets within 24 months without first establishing a solid customer base.
- The company heavily invested in state-of-the-art warehouses, each costing around $35 million, but these often operated at only one-third capacity due to slow customer growth.
- Webvan operated on an ineffective business model that relied on owning its distribution infrastructure.
Pets.com Overview
Pets.com was an online pet supply retailer that became one of the most infamous failures of the dot-com bubble.
Pets.com raised approximately $300 million and despite this the company failed to achieve profitability and shut down just nine months after its initial public offering (IPO) in February 2000.
Year Founded : Pets.com was founded in 1998 and began operations in November of that year.
Funding Secured : Pets.com raised around $300 million including $82.5 million from its IPO. The company received remarkable attention and investment from major players like Amazon which owned about 30% of the company at one point.
Peak Valuation
At its peak, Pets.com was valued at around $1.2 billion shortly after its IPO.
Why Did Pets.com Failed?
- Pets.com’s business model has a weak business model which made it difficult for them to compete against established brick-and-mortar pet supply stores.
- High operating costs including losses of approximately $147 million in the nine months.
- Despite heavy investments in advertising, Pets.com failed in marketing their business.
11 MoviePass - $75 Million Raised
MoviePass was a subscription-based service which offered unlimited movie tickets for a monthly fee, aiming to transform the way people experienced cinema.
Even after raising approximately $75 million, they faced unsustainable business practices that led to massive losses and its eventual shutdown in September 2019.
Year Founded : MoviePass was founded in 2011 by Stacy Spikes and Hamet Watt.
Funding Secured By Movie Pass : MoviePass raised around $75 million from various investors (Helios and Matheson Analytics).
Peak Valuation : At its peak, MoviePass was valued at around $1 billion.
Main Reason for Failure of Moviepass
- Unsustainable pricing model led to financial losses, with cash expenses exceeding revenues.
- High subscriber turnover due to frequent changes in service terms, leading to dissatisfaction.
- Operational challenges, including technical glitches and poor customer service, eroded trust.
12 Color - $41 Million Raised
Color was a photo sharing application which raised $41 million but later on struggled to gain user attention and ultimately shut down due to lack of demand.
Year Founded : Color was founded in 2010 by Bill Nguyen and Peter Pham.
Funding Secured : Color secured around $41 million in funding with notable investments from Sequoia Capital which invested $25 million, marking one of its largest investments in a pre-launch startup at the time.
Peak Valuation : At its peak, Color was valued at approximately $100 million.
Why Did Color Company Failed?
- Confusing user experience due to proximity-based sharing, limiting usability in less populated areas
- Insufficient user base despite initial hype, with active users rapidly declining after launch
- Poor launch strategy relying on close proximity of users, leading to frustration in low-density areas
13 Homejoy - $40 Million Raised
Homejoy was an online platform that connected customers with home service providers, primarily focusing on house cleaning. Founded in 2010, it raised approximately $40 million but ultimately shut down in July 2015 due to legal challenges and operational issues.
Year Founded : Homejoy was founded in 2010 by siblings Adora and Aaron Cheung.
Funding Secured : Homejoy raised around $40 million from various investors including Google Ventures and PayPal co-founder Max Levchin.
Peak Valuation : At its peak, Homejoy was valued at around $100 million.
Why Did Homejoy Failed?
- Legal challenges regarding worker classification created significant operational risks and financial liabilities for Homejoy.
- High customer acquisition costs, driven by steep discounts, made profitability difficult to achieve.
- Poor customer retention due to inconsistent service quality led to dissatisfaction and limited long-term growth.
14 Rdio - $125 Million Raised
Rdio was a music streaming service that offered both ad-supported and subscription-based streaming options. Founded by Skype co-founders Niklas Zennström and Janus Friis, Rdio aimed to provide an innovative platform for music lovers. Despite raising approximately $125 million, the company struggled to compete with larger rivals like Spotify and ultimately filed for bankruptcy in November 2015.
Year Founded : Rdio was founded in 2008, with its official launch occurring on August 3, 2010.
Funding Secured : Rdio raised around $125 million from various investors, including prominent firms like Google Ventures and Benchmark Capital.
Peak Valuation : At its peak, Rdio was valued at approximately $400 million.
Reason For Rdio Failure
- Intense competition from Spotify, which offered a free tier, limited Rdio’s ability to attract new subscribers.
- Ineffective marketing and distribution strategies.
- Delayed adaptation to market trends like introducing a free, ad-supported version.
15 Beepi - $60 Million Raised
Beepi was an online marketplace designed to facilitate the buying and selling of used cars. Founded in 2013, the company aimed to streamline the transaction process by providing inspections, delivery, and handling paperwork.
Despite raising approximately $60 million, Beepi ultimately failed to establish a viable business model and shut down in December 2016.
Year Founded : Beepi was founded in 2013 by Ale Resnik and Owen Savir.
Funding Secured : Beepi raised around $60 million that included a total of approximately $149 million over its lifespan.
Peak Valuation : At its peak, Beepi was valued at approximately $546 million.
Criteria for Compiling Our List of the Top 20 Startup Failures
The startups shortlisted as significant failures are based on two primary criteria:
Total Funding Raised
The companies included in the list are among those that raised substantial amounts of capital before failing. This criterion highlights the scale of investment that was lost when these startups collapsed, making their failures particularly notable in the entrepreneurial landscape.
Reasons for Failure
The selected startups exemplify common reasons for failure, specifically:
Lack of Product-Market Fit
Many of these startups failed to identify or effectively address a genuine market need, resulting in products that did not resonate with consumers.
Mismanagement or Poor Decision-Making
Several companies faced operational challenges, including ineffective leadership, strategic missteps, or failure to adapt to changing market conditions.
This criteria of selecting top startup failures in the history of business shows the border lessons we can learn from it.
subscribe
