Although startup flops are everything but uncommon, it’s always hard to see an exciting and innovative product go down with the ship and its captain. That being said, there’s hardly anything in this world that can stop the entrepreneurial spirit.
Go Global World encourages it through its startup pitch and networking events where we aim to connect founders with the top investors from around the globe. Our platform is all about matchmaking like-minded visionaries and simplifying the funding process.
The current unstable venture market climate has brought many inspiring startups to its knees. But a loss for a founder is just a lesson learned. They continue their quest fueled by the motivation to create something brilliant and make an impact.
The first half of 2023 brings us hope for a brighter future. Read on to learn from the noisiest company setbacks in H1 of 2023. We’ve rounded up these startup upsets in no particular order:
IRL’s demise proves the importance of a live user base
The unicorn for event discovery and planning, IRL, closed its doors in June admitting that 95% of its users were fake accounts.
The app allowed users to form social circles where they could share their outgoing plans, take part in events, and visit them in groups, offering personalized event suggestions and discussions among friends.
How it failed
Prior to its closure, the company and its directors boasted about their success, claiming they had 20 million monthly active users with a 63% retention. An eye-catching metric for investors who immediately took the bait.
Some IRL employees began doubting these claims, so the Securities and Exchange Commission (SEC) had to step in and investigate whether the founders were misleading their investors and violating securities laws. These events led to the company's eventual shutdown.
Funding history
The closure was a huge upset after IRL’s impressive 5-round funding streak garnering a total of $197 million raised. Most of this capital, however, was captured during the company’s latest Series C investment round on June 15, 2021, pulling in $170 million at a staggering $1.1 billion valuation.
Founder’s Journey
IRL’s creator, Abraham Shafi is a UC Berkeley alumnus, a serial founder, and an Investor.
Before IRL’s uprising and downfall, he had a brief internship at Google while studying science, society, and technology at the university. After that, he went on to start his first company, getTalent.
The getTalent startup was born out of personal experience and aimed to eradicate bias in the hiring process. At the core lay an optimized resume sorting. The product was adopted by major brands, such as Walmart and Viacom. The company was sold to Dice in 2013.
He then created IRL also driven by personal issues: depression and an addiction to social media. They are what motivated Abe to make a social platform that’s healthier, less addictive and brings people together in real life.
These days, Abe mostly plays as an investor, dabbling in various projects aimed at personal development:
Magic Mind: a performance drink containing a combination of 13 active ingredients: vitamins, adaptogens, and nootropics scientifically designed to improve a person’s mood, increase focus, and relieve stress.
Maven: a new platform for group-based courses from the creators of Udemy, altMBA, and Socratic, offering live, online, community-driven courses aimed to advance a person’s career.
Copilot: a personal finance platform with a user-centric experience that helps people understand the essentials of their financial life, digging deeper than conventional apps.
Reforge: a career development platform for top-tier professionals in tech aimed to explore product development and growth opportunities.
Vedere Bio II upset: failure to hit a key milestone
Vedere Bio was an ambitious startup aiming to prevent vision impairment and restore eyesight for people affected by various conditions and genetic predispositions. The company made noticeable achievements in early research and was acquired by Novartis for $150 million in October 2020.
Shortly after that, in May 2021, the same founding team continued their work under the Vedere Bio II brand name. The team was happy to invite Gabor Veres, Ph.D., a renowned leader in gene therapy research as their CSO.
How it failed
Despite its early promise, a strong team, and significant efforts the company ceased operations in March due to its inability to deliver satisfying results in preclinical studies.
Vedere Bio II set a high bar for themselves saying they could achieve high retinal transduction for their protein shells which would mean they could deliver effective gene therapy. They also planned to scale the production process with a high-quality vector preparation. However, the preclinical studies showed little signs of progress.
Unfortunately, the startup failed to replicate its previous achievements and hit the milestones announced to its investors.
Funding history
The company snatched a total of $98 million over 2 rounds. Their last round brought them $77 million in Series A financing.
Founder’s Journey
Vedere Bio’s founder, Cyrus Mozayeni holds an M.D., MBA, and FAWM. Starting with a Sc.B. in neuroscience from Brown University, he went on to become an industry veteran in biotechnology.
Before spearheading Vedere Bio, Cyrus served as VP and global head of business development and alliance management at Bluebird Bio, a company developing gene therapy products for severe genetic disorders. His efforts yielded a clinical-stage product and Bluebird’s successful IPO.
After that he co-founded CODA Biotherapeutics, and Oncorus, where he served as President and CBO, transforming outcomes for cancer patients.
Vedere Bio’s demise doesn’t stop the serial entrepreneur as he currently serves as CEO of Pheon Therapeutics, discovering and developing ADC products to improve cancer treatment and providing strong alternatives to brutal chemotherapy. The BioTech startup has already reached clinical stages.
Cana Technology fails, unable to secure funding
Cana, an innovative startup brandishing its extravagant molecular drink printer had to shut down in May. Their flagship product was able to produce personalized beverages based on user preference, such as low-alcohol or reduced-sugar drinks.
The startup got the attention and managed to get the renowned ‘Star Trek’ actor Patrick Stewart on board as a brand ambassador. What attracted Patrick and the investors (at the seed stage) was Cana’s effort to create a more sustainable way for people to produce and consume goods.
How it failed
Despite the huge media attention and the early signs of a unicorn-in-the-making, Cana, like many other startups in 2023, faced difficulties in securing a follow-up investment.
Their original promise to investors was that Cana products would be able to print thousands of beverages a day. The founder planned to deliver their customized carts directly to customers. The provided ingredients combined with water would allow the creation an unlimited variety of beverages.
The company struggled to secure enough funding to complete its objectives. Eventually, the poor financial status led to the company’s inability to establish a production line and shipping infrastructure. The team decided to cease operations.
Consumer hardware startups usually require much more effort and capital infusion than software projects. In recent years, the fatality rate of these kind of companies has grown exponentially. Creating a consumable product is a highly risky endeavor, and, unfortunately, Cana did not escape the fate of many.
Funding history
Cana managed to raise $30 million in seed funding before the unfortunate demise.
Founder’s Journey
Lance Kizer was the mastermind behind the groundbreaking molecular beverage printer. A UC Berkeley alumnus with a Ph.D. in Chemical Engineering, Lance’s portfolio spans multiple ventures, including The Production Board, Ripple Foods, Amyris, and even the U.S. Navy.
Lance’s motto was always creating a more sustainable future. As VP of Ripple Foods, he led the team to create plant-based dairy alternatives good for the people and great for the planet.
Unstoppable in his pursuit, after Cana’s fallout the daring entrepreneur continues on his path to change the world as CTO of VitroLabs, manufacturing slaughter-free cultivated leather and other innovative products.
Mindstrong struggles to cope in a frigid venture climate
The unicorn mental health startup, Mindstrong, shared a similar fate with Cana, failing to keep up with the changing state of the global venture market. On the bright side, however, the startup was acquired by another digital mental health company, SonderMind.
At its inception, Mindstrong was focused on creating digital biomarkers to pinpoint early signs of mental illness. Further on the company introduced virtual therapy and mental healthcare services.
How it failed
The mental health tech industry is very competitive: Mindstrong faced off against prominent players like Pear Therapeutics and Lyra Health. They had to fight their way through to retain customers by improving their products and services.
The problem was that Mindstrong did not have a comprehensive plan to scale and adapt to the changing market. The user experience on the platform was sub-par. Plus, the company lacked the required resources for scientific research needed to prove their methods were actually effective outside of clinical settings.
Mindstrong announced it would discontinue providing its services in February, laying off most of its staff. Come March, its sale to SonderMind marked the ultimate demise of the mental health platform.
Funding history
Mindstrong acquired its unicorn status in 2020 by concluding a $100 million Series C round. Overall, the company raised $160M over 5 rounds from 2017 to 2022.
Founder’s Journey
Mindstrong’s creator, Paul Dagum, does not like to box himself in and dabbles in multiple domains. Dr. Dagum has:
A Ph.D. in theoretical computer science from the University of Toronto
MSc in theoretical physics from the same University of Toronto
An M.D. and surgical residency training at Stanford University.
Having this expansive knowledge base, Paul went on to manage four successful venture-backed companies putting on the hats of founder, CEO, CTO, and CSO. His products bring innovation to healthcare, cybersecurity, and supply chains.
A computer scientist, physician, and entrepreneur, Dr. Dagum’s research and design activities span three decades of work in AI and medicine. One of his prime pursuits was digitizing the brain using human-computer interaction patterns.
Dagum remained CEO of Mindstrong until 2020 when he was replaced by an ex-Uber executive as the company was transitioning from an R&D startup into a commercially attractive product. The new CEO was appointed to make the platform more consumer-focused.
After leaving Mindstrong, Paul went on to start Applied Cognition, a new project aimed at improving mental health through digital solutions. Specifically, the company creates wearable devices and develops treatments for age-related declines in cognitive function. Paul continues on his path to improve mental healthcare.
Mandolin unable to retain post-pandemic audience
Mandolin launched its online concerts and event streaming platform just months into the pandemic, filling the live entertainment gap during lockdowns, and they definitely struck a chord. A year later it was proclaimed the best streaming platform at the Pollstar Awards (beating the likes of LiveXLive and Veeps).
Anticipating the challenging transition into a world without lockdowns, the team at Mandolin tried to diversify its offering palette with ticket sales to meet-and-greets, after-party perks to shows, online food and merch orders (without the waiting in line), and recordings of live shows available to rewatch later.
How it failed
The company’s shift to exclusive digital merchandising and partnerships with major venues and artist management teams were supposed to solidify its presence in the music entertainment and streaming market.
Instead of just providing a streaming platform, the team was aiming to create a comprehensive solution to make live music performance events and shows more successful. They were also planning to introduce the ‘music industry’s first all-in-one recommendation platform’ with fan navigator features.
Despite the efforts, Mandolin took a final bow in April failing to fully engage and retain its users in post-pandemic times. No doubt, the slumbering venture activity also played a part in its demise.
Funding history
Mandolin has raised a total of $17 million over 2 rounds. Their last funding came in June 2021 from a $12 million Series A round.
Founder’s Journey
The visionary behind Mandolin was Mary Kay Huse, a seasoned technology executive and passionate live music fan with experience working at some of the largest software companies in the world, including ExactTarget and Salesforce.
During her time at Salesforce, Mary went from Senior VP of Customer Success to COO of Marketing CloudEVP & COO of Marketing Cloud divisions.
Mary was named “Agent of Change” to Billboard’s Women in Music Top Executives List 2022. And it wasn’t the first time she appeared on the billboard power list.
Her vision for Mandolin was to relieve the struggle of both the artists and the fans, providing a platform to help artists and venues build connections with fans and flourish by bringing the music they produce to people’s homes, and performing it live.
Since the company's closure in April, Mary has yet to find her next passion project. It's safe to assume it will be music or creative-related.
Conclusion
We hope these startup setbacks will serve as somewhat of a warning sign, so other entrepreneurs will not make the same mistakes. Anticipating the pitfalls is an important part of strategic planning and roadmapping.
Sometimes it’s good to have a wise serial founder or experienced investor in your corner to guide you on your journey. Networking is one of the key aspects of becoming a strong decision-maker. You won’t always have all the answers.
We invite founders to join our Go Global World founder-investor relationship hub. Our curated matchmaking will help you find like-minded entrepreneurs as well as open the door to new funding opportunities. You can also connect with experienced advisors and seek professional guidance from the top minds across the globe.