Despite so many startups aiming to become the next unicorn with funding alone. It doesn’t guarantee success.
In the case of these businesses, massive boosts and funding were not enough to make them work, proving that not all problems can be solved by throwing cash at it.
In this article we’ll dive into 15 businesses that failed even with millions in the bank from funding.
1 – South African Airways
South Africa’s national airline SAA has had a past littered with near bankruptcy and then huge government bailouts. You might think people ride around on elephants in Africa, but that’s not true.
South Africa is a fast developing largely cosmopolitan country with plenty of other airlines successfully competing in the capitalist economy. The most recent bailout was $1.8 billion from the deep pocketed government.
This is to help the airline resume operations. Now that national COVID-19 travel bans have lifted, but before takeoff SAA has to settle creditors’ debt to the tune of three quarters of the payout, the rest will be used toward retrenchment packages and for working capital.
2 – Essential Products
You might think all your start-up needs is an injection of funding and you’ll be a market competitor. Well, if Essential Products is anything to go by, then no amount of funding will help some startups after a total of $330 million of funding and only bringing one smartphone to market.
The company is closing down the Essential phone. They didn’t get the sales figures expected and the lukewarm reception to the device didn’t help. The Essential smart home devices and an operating system didn’t make it off the draft sheets either. Despite funding, the whole thing was essentially a bust.
3 – LeSports
LeSports scored high in the funding department, but it was only an early lead with no follow through. The Hong Kong based sports streaming company is part of Le eco a mainland China based conglomerate with 99 problems and cash flow.
A big one, LIS sport has mounting debt from unpaid rent, which eventually forced their sudden closure. But it’s also confirmed that LeSport had 30 subscription related complaints filed with the consumer council.
So exactly how much funding had they received before this big bust. Well, a whopping $1.7 billion was secured from funders, and yet it still wasn’t enough to secure a touchdown.
4 – Solyndra
One way to erc your investors is to fudge figures to attract their money and then fail to deliver. If Solyndra was a movie, this would be their trailer.
Solar energy is a tough game to be in even China’s Suntech power. And the US’s First Solar are struggling to make a and stay afloat, but their struggles are nothing compared to the mistakes made by Solyndra.
They drummed up funding to the tune of $1.2 billion, and then went after a $535 million loan guarantee from the US department of energy. However, after a four year investigation in 2015, the inspector General’s office released a scathing report showing that Solyndra officials gave inaccurate information to mislead the energy department to secure their loan.
Solyndra did continue to make money moves. One being looking into licensing out its copper indium, gallium selenide or CIG S technology.
5 – Theranos
Now a company that will need an official trailer for their movie. There are notes which will start Jennifer Lawrence as Elizabeth Holmes, Forbes named homes, the youngest and wealthiest self-made billionaire. All thanks to a revolutionary blood testing tool.
The company was valued at $9 billion and now nothing. The concept was incredible. A simple pinprick could detect a plethora of illnesses except it didn’t work. Sadly, People received tragic news of having cancer or leukemia only to be told they were false results.
6 – Roadstar.ai
Dreams of getting 1500 self-driving cars on the road in China by 2020 are clearly not going to materialize. They didn’t foresee this prediction, not panning out and invested a total of $128 million.
CEO, Sean kowtowing, CTO, Liang Heng, and chief scientist Guang Sho formed the company in 2017. All three had experience in this field. Having worked at Google, Tesla, Apple, and the nVidea things look promising when roads star.ai provided self-driving shuttle service at the 2018 Shanghai world AI conference and 2018 world internet conference in Washington.
But the brakes were put on quickly when Tom and Heng announced they had fired Shu. They accused him of receiving kickbacks during fundraising hiding codes and entering false data into government regulatory reports.
7 – Better Place
Venture backed business developed and sold battery charging and battery switching services for electric cars. Shai Agassi launched the better place electric car company in Israel in 2007.
He had a big dream to help end the global auto industry’s reliance on oil and big investors love the idea from HSBC group Morgan Stanley general electric vantage point capital partners and the conglomerate Israel Corp it’s biggest shareholder between them.
They invested 850 million. The idea was excellent. The batteries on electric cars are hellishly expensive, which drives the cost of the vehicle up to a better place. They invented a removable battery that could be swapped out at a battery switching station within five minutes by robots.
This means that you wouldn’t have to wait for your car battery to charge. The company was faced with all sorts of hurdles though from local authorities. The assumption that all car manufacturers would develop cars with removable electric batteries wasn’t the smartest. They filed for bankruptcy in 2013.
8 – Seven Dreamers Laboratories
Imagine a machine that’s a washing machine, dryer, ironing and laundry and folding robot all rolled into one. Well, Seven Dreamers decided to turn imaginary wonderings into reality.
They developed the Laundroid and it was meant to do all that and more. Despite $104 million in funding, it was a failure and seven dreamers filed for bankruptcy in Japan.
They had a less ambitious device, which just sorted and folded laundry, but at times couldn’t even do this task on a simple t-shirt.
Since then a California based company has launched FoldiMate, which also is a machine that folds laundry. And apparently it works.
9 – WeWork
Valued privately at $47 billion at one stage, the company in its most basic form was a coworking company, which at one stage was Manhattan’s largest private tenant.
What worked well and WeWork’s success was they didn’t merely rent co-working spaces, but included financial, IT and everything else needed to run a successful business.
WeWork could have saved itself. If the board had stepped back to ask if they could deliver on its promises. And if they had the capability to execute at every stage of expansion, they needed to measure and quantify whether they had the people skills and resources to successfully carry out their initiatives.
The company is apparently doing better though. And just a week ago it was reported. They would be going to the public Haylock SIRS. Your guess is as good as ours as to how this will workout.
10 – Jawbone
Founded as Elif comm in 1999. Tech and wearable company Jawbone was once worth over $3 billion. They’d hoped to have a good go in the wearables market with their job own fitness tracker.
With stiff competition and lengthy legal battles with Fitbit, the company suffered severe financial losses. The company originally made military grade audio headwear, but branched out by Bluetooth speakers and wearable tech.
The company had inventory shortages, there was a departure of several executives and to finish off they offered terrible customer service. It was a recipe for disaster. They entered liquidation in 2017.
11 – Juicero
ELLs are not that juicy for this failure. In fact, it’s amazing. The company was able to squeeze out as much money from investors as they did really. They must have been bananas to think this was a great idea.
It all went to pulp in the end, along with $120 million in investors’ money. This $400 using machine worked with pre-packaged fruits and vegetables that you would pop into the machine and it would work to squeeze out the contents.
You could only buy the prepackaged bags. If you owned a Juicero machine. On a side note, the machine was originally selling at $699, but we digress turns out the machine wasn’t any more effective than using your hands to squeeze out the contents orange. You glad you didn’t waste $400 on them.
12 – GNC
It’s been a hard road for GNC specializing in health and nutrition related products, including vitamins, supplements, minerals, herbs, sports, nutrition, diet, and energy products. You would think a company like this would thrive during a pandemic, but sadly, no.
GNC has been around since 1935 when its first shop was opened by David in Pittsburgh, it was called Lac soon and specialized in yogurt and other health foods. The pandemic caused the business to shut down 1200 stores and they filed for bankruptcy.
In June, 2020 Bloomberg law.com confirmed GNC holdings, Inc one approval of its bankruptcy reorganization plan that cantered on a $770 million sale to its largest shareholder. Keeping open at least 1400 of its nutrition supplement stores and saving thousands of jobs.
13 – Abound Solar
We mentioned One solar company earlier Solyndra, and here’s another one called Abound Solar which received funding in the region of $614 million. And despite that they couldn’t brighten up their own future three key figures jumped ship.
Tom tiller, abound solar’s CEO, Russ can your ski VP of marketing and Julianne Hollins senior VP at a bound solar abound solar was the manufacturer of cadmium Telluride.
Ben filmed photovoltaic modules for solar panels. It’s a little sketchy as to the exact reasons behind the failure, but it was described as being caught between a rock and a hard place waiting for investor’s money to come through and needing to spend, to extend the company. The company shut down operations in 2012.
14 – Guvera
It’s more than three years since Guevara shut down operations. The Australian music streaming company wanted to take on Spotify and Apple, but since Darren Huffed and Claris Loberg started the company in 2008, they failed to do so.
The company raised over $180 million, but it’s unclear where all that money went. Hoeft has since been banned from managing an Australian corporation for two years, according to the music network.com.
The Australian securities and investments, commissions, or ASI stated that Hereford improperly used the Guvera group structure for his gain and the gain of others in circumstances where there were significant conflicts of interest and the operation of the companies within the group.His ban will end on the 21st of December, 2021.
15 – Arrivo
Though in November, 2018, roughly 30 employees were furloughed by Arrivo by the end of the month, more than half were informed not to return to the office. And according to two former employees of this futuristic transportation startup, they received this hard blow via SMS with funding from $1 billion from gene tech, America, what went wrong?
The company didn’t have a long run. Having started in 2017 by Brogan bam broken a former space X engineer. The company had hoped to commercialize a Hyperloop, which is a proposed mode of passenger and freight transportation.
According to Wiki reports suggest a Rebo had a very tense working environment, guidance wasn’t paramount, and there was a severe lack of planning. Eventually it was the inability to secure a series, a funding for their project that led to the company’s demise. And they did arrive at their projected destination.
We’ve looked at companies that had to close their doors, but what about companies that were at death store and managed to survive?
One of our favorite stories is that of Starbucks. The 2008 financial meltdown hit everybody, including Starbucks. Things were so bad that former CEO, Howard Schultz returned to the company to help them get back on their feet.
Business Insider says Starbucks grew too fast and just couldn’t keep up. Shults opened communication up to patrons and took suggestions to see how they could improve their stores. All locations were closed.
Briefly, staff retrained and more focus was put on social media and the right advertising campaigns, many stores were closed, but overall Starbucks pulled through.
Even in dark times if you have the vision and the focus in the right places you can pull through. Starbucks is just one that took the right direction, unlike our other 15 businessese that failed, even with the millions of funding we listed above.