Home » Here are 10 of the biggest startups that shut down as part of an industry-wide ‘mass extinction event’

Here are 10 of the biggest startups that shut down as part of an industry-wide ‘mass extinction event’

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December 29, 2023December 29, 2023
Here are 10 of the biggest startups that shut down as part of an industry-wide ‘mass extinction event’
Over 3,000 startups shut down in 2023 after a drastic pullback in venture capital funding.

Christian Charisius/Getty Images

  • About 3,200 startups failed this year, according to PitchBook data.
  • The shutdowns come as VCs continue to be careful with funding amid economic uncertainty.
  • Business Insider has compiled a list of some of the notable startup shutdowns in 2023.

The startup "mass extinction event" has been well underway.

After abundant venture capital funding in 2021 and parts of 2022, startups have experienced a cash crunch for the past 18 months due to a significant funding pullback. Funding remains more difficult to come by, resulting in startups doing multiple rounds of layoffs to cut back expenses.

But for many startups, budget cuts haven't been enough: more than 3,200 startups, which collectively raised $27 billion, closed up shop this year, The New York Times reported, citing data from PitchBook.

Startups could once raise funding rounds while "largely ignoring the underlying economics of their businesses," Sri Chandrasekar, a managing partner at Point72 Ventures, previously told Business Insider. But they're now under more pressure from investors to improve their unit economics.

It's already too late for many companies, and they have begun to fail. VCs predict that this will continue in 2024.

But the shutdown numbers alone don't paint the overall bleak picture of the startup industry. Some were forced to sell at a major discount or are actively seeking a buyer, while others filed for bankruptcy.

The pace of startup shutdowns is so fast that even other startups are trying to capitalize. Some are finding success by offering wind-down services to their industry peers, like SimpleClosure, an AI startup that helps other companies shut down correctly.

Here are 10 of the biggest startups — based on their valuation or how much they fundraised — that shut down in 2023. Our list is organized chronologically, beginning with the one that shut down most recently.

Hyperloop One
FILE PHOTO - Hyperloop One co-founder Shervin Pishevar speaks before a propulsion open-air test at Hyperloop One in North Las Vegas, Nevada, U.S. May 11, 2016. REUTERS/Steve Marcus
Hyperloop One cofounder Shervin Pishevar.

Thomson Reuters

Hyperloop One, a transportation startup that was working to build a hyperloop transit system in the US, championed by Elon Musk, raised $450 million from investors including Richard Branson, Khosla Ventures, and David Sacks, according to PitchBook data.

Founded in 2014, Hyperloop One shut down in December, Bloomberg reported, after running into financial difficulties and pivoting away from passenger travel in recent years.

Olive AI
sean lane Olive
Olive AI founder and CEO Sean Lane.

Olive

Once valued at $4 billion, Olive AI — the buzzy healthcare startup that sold revenue cycle automation tools — shut down in November, 11 years after it was founded. The startup had raised more than $800 million from investors, including General Catalyst, Oak HC/FT, Drive Capital, and Khosla Ventures, according to PitchBook data.

But less than six weeks after Olive AI folded, founder Sean Lane has already announced his next venture: a security-focused web browser called Ghostdog.

Convoy
Dan Lewis - Convoy
Convoy founder and CEO Dan Lewis

Convoy

Backed by Jeff Bezos, Mark Benioff, Greylock, and other tech all-stars, shipping logistics startup Convoy went from boom to bust in October after raising more than $1 billion from investors, according to PitchBook data. The startup was founded in 2015 and operated a digital freight network connecting shippers and carriers.

The former unicorn's tech platform was acquired in November by industry peer Flexport.

Zeus Living
Zeus Living Founders
Zeus Living's cofounders, CTO Joe Wong, COO Srini Panguluri, and CEO Kulveer Taggar.

Zeus Living

Proptech startup Zeus Living told landlords in November that it had begun to wind down operations after financial struggles, The Information reported.

Founded in 2011, the startup raised over $160 million, according to PitchBook data, and was backed by investors including Airbnb, GV, and Initialized Capital.

Recur
NFT
NFT

NurPhoto

NFT startup Recur announced it was shutting down in August after being valued at $333 million, according to PitchBook data. The startup, which hosted branded NFTs from companies such as Nickelodeon and Hello Kitty, was founded in 2021 and is one of many startups that have bit the dust thanks to the enduring crypto winter.

Zume
julia collins zume pizza
Zume cofounder & CEO Julia Collins.

Steve Jennings/Getty Images for TechCrunch

Founded in 2015, robot pizza delivery startup Zume raised more than $500 million from investors including SoftBank's Vision Fund and AME Cloud Ventures. But while it sought to revolutionize the pizza-building process, Zume was plagued with tech issues. A pivot was unsuccessful, and the startup shut down in June, The Information reported.

IRL
IRL
IRL's app.

IRL

IRL abruptly shut down in late June after an investigation by its board of directors revealed that its supposed 20 million active monthly users were actually automated or from bots, The Information reported.

The startup had raised $200 million from SoftBank's Vision Fund, Founders Fund and Kleiner Perkins, among other investors, and was valued at over $1 billion. The startup's founders are now suing its investors, claiming that they intentionally foiled the company with the information from the board's investigation, Techcrunch reported.

Wyre
What is crypto and is it making a comeback?
Crypto payments startup Wyre announced it was shutting down in June.

Getty

Crypto payments startup Wyre announced in June that it was winding down its business operations after almost 10 years due to "difficult market conditions."

It has been a difficult year for crypto startups in the aftermath of FTX's downfall, and investors are no longer writing lavish checks to companies building in the space. For Wyre, the startup raised over $50 million in funding, according to PitchBook.

They were set to be acquired by payments startup Bolt — which, according to reports, recently came under the scrutiny of the US Securities and Exchange Commission — for a reported $1.5 billion in early 2022. But Bolt dropped the deal later that year.

Bitwise Industries
Fresno, California.
Tech startup Bitwise Industries was headquartered in Fresno, California.

Shunyu Fan/Getty Images

Fresno, California-based startup Bitwise Industries was once considered a beacon of tech hope in the state's Central Valley. It offered workforce training to underserved communities, software services, and helped create coworking spaces to revitalize downtowns in smaller California cities like Fresno, Bakersfield, and Merced.

But that all came to a halt after the startup furloughed and then laid off nearly 900 employees and subsequently filed for bankruptcy. Its founders are now accused of misleading investors while fundraising in 2022. The startup had raised over $100 million from investors like Kapor Capital, Arlan Hamilton's Backstage Capital, and big banks, including JP Morgan Chase, Goldman Sachs, and Citigroup, according to PitchBook.

Medly
Medly delivers prescriptions to your door.
Medly, which delivered prescriptions to users' doors, shut down in February.

Medly Pharmacy

Pharmacy startup Medly had once hoped to disrupt the space and take on giants like Walgreens and CVS. But in February, it permanently shut down, after declaring bankruptcy and selling off assets to Walgreens Business Insider previously reported.

Medly had raised more than $300 million in venture funding from firms like Lerer Hippeau and Greycroft, according to PitchBook data.

Read the original article on Business Insider