Top 3 biggest recent failures of technology startups

Many technology startups are being studied as success stories, which have enriched their founders and investors. Examples are countless: Uber, Zoom, Cloudflare, DocuSign or Zscaler.

But there are also cases in which companies that promised a lot have suffered spectacular collapses. A recent study by CB Insights looked at more than 200 of the largest and most costly startup failures.

The most costly failure is that of a Chinese company that was little known in the West. It’s about LeSports, the streaming arm for live sports events of the once Chinese giant LeEco. In 2014, the company attracted $ 1.7 billion in funds from a group of well-known investors, including HNA Capital, Caissa Travel, Zhongtai Securities and Fortune Link. In 2019, Jia Yueting, the founder of LeEco, filed for bankruptcy. Because LeEco is little known in the West, we did not include it in our selection.

Here are three recent major failures of Western tech startups:
Theran

Elizabeth Holmes
Perhaps the most spectacular failure in recent years was that of Theranos, a startup that promised to do blood tests cheaper and faster. The company, founded by Elizabeth Holmes in 2003, has raised more than $ 500 million in funding and is valued at $ 9 billion. Among those who injected money into the startup are media mogul Rupert Murdoch and the pharmacy chain Walgreens. Holmes was considered the female equivalent of Steve Jobs.

The firm ceased operations in September 2018 after U.S. financial market arbitrator U.S. The Securities and Exchange Commission (SEC) accused her of “massive fraud.”

It was discovered that Theranos did not have a technology for more efficient blood tests, but used existing equipment. His miraculous devices were pure fantasy. Holmes reached an agreement with the SEC in 2018, but is still accused of fraud by federal authorities. Her trial will begin in March 2021.

jawbone

The San Francisco startup enjoyed great interest from the media and investors. The company was valued at $ 3.2 billion in 2014. Its first product was a fitness bracelet called UP. Investors in Jawbone included Sequoia Capital, Kleiner Perkins Caufield & Byers and Andreessen Horowitz.

Although it attracted investments worth 900 million dollars, the technology company managed to capture only 3% of the portable devices market in 2015. Its products were sold by the telecom operator Orange in Romania as well.

His bracelets had no screens and had reliability issues. Jawbone began liquidating its assets in July 2017.

Better Place

Renault Laguna electric made by Better Place
Founded by Israeli entrepreneur Shai Agassi in 2007, Better Place develops purely electric cars and technologies for them. The company competed with Tesla and attracted more than $ 900 million in investments from VantagePoint Capital Partners, General Electric and HSBC and Morgan Stanley. Better Place proposed the innovative idea of ​​stations in which to completely replace the batteries of electric cars in a few minutes with some ready charged to avoid long charging time at that time.

However, the logistical problems and high costs for the construction of the necessary infrastructure could not be overcome by the startup. Better Place produced about 1,000 electric cars (based on traditional models produced by other car companies) before going bankrupt in 2013.

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