You know what they say: if it seems too good to be true – it probably is. And this was certainly the case for the entrepreneurs behind these businesses. Start-ups are often the most exciting, fast-growing businesses as they are trying to attract investment, make their ambitions a reality and compete with established companies in the process. But with 70% of start-ups folding in their first 10 years, even the most promising companies can fail before they have the chance to turn their dreams into a reality. Read on to uncover the stories of the companies that fell at the first hurdle. All dollar amounts in US dollars.
Advent Corp was a small manufacturer of TVs and speakers in the 1970s that held a lot of promise but never quite got going. Its founder Henry Kloss was a visionary whose products, which included video and projection TV technology, were said to have come too early for the market. Other issues included a management personality clash and poor decision making. Despite sales of $30.7 million in 1980, Advent Corp fell into millions of dollars' worth of debt. After three years of making a loss, and going through five different presidents, Advent Corp finally declared itself bankrupt in 1981.
AllAdvantage was among the very first businesses to try to monetise the internet by offering people the chance to "be paid to surf the web". Launched in 1999, it offered users the opportunity to earn 50 cents an hour if they downloaded a bar on their browser that would show different adverts. Unfortunately it grappled with everything from fraudulent user activity to falling foul of anti-spam blocking tools. Advertisers also weren't too keen on the teenage audience AllAdvantage was attracting. The business collapsed in 2001 after online ad spend plummeted when the dotcom bubble burst.
Kozmo’s model was that it could deliver small goods, including games, magazines, Starbucks coffee, books, and DVDs within an hour to urban customers in the US free of charge. It was a popular idea around the turn of the Millennium and investors such as Flatiron and Amazon rallied around the concept, risking in excess of $250 million (£194m) on the business. But critics claimed the delivery model was far too expensive for Kozmo to turn a profit. It turns out they were right and the dotcom bubble bursting was the final nail in the coffin.
Pay By Touch is a sad story of lost potential. It aimed to introduce easy payments through biometrics and attracted over $340 million (£259m) in investment from everyone from Gordon Getty to NFL quarterbacks who had a passing interest in technology. It looked like a safe bet, but CEO John P. Rogers was the wrong man to have in charge, and was accused of everything from abusing investor money to drug abuse and domestic violence. Pay By Touch had a hard task convincing the public to use the tech and it eventually all proved too much. It was bankrupt by 2007, just five years after its launch. Biometric payment is having a resurgence at the moment, with big names in tech such as Apple and Samsung playing their part in getting the tech market-ready. Things could have been very different for Pay By Touch.
Terralliance Technologies attracted billions in investment from some of the world’s premier investors because of their claims that they could one day be the future of the oil industry. Terralliance’s plan was to use data gathered by its low-flying aircraft to inform algorithms that would identify oil fields. But the firm's downfall, perhaps, was its founder Erland Olsen’s tendency to spend money "like a Saudi Prince", spending that saw the firm referred to the US Justice Department for potential anti-bribery violations. The board eventually fired Olsen in 2009, but by that time oil prices had plummeted and Terralliance wasn't financially sound enough to weather the storm.
California-based solar technology company Solyndra collapsed when its competitors received a sudden windfall in the form of plummeting silicon prices. The firm touted its product’s unique cylindrical design as revolutionary. However, when the price of silicon, used in its competitors’ flat solar panels, fell by 89% from 2009, Solyndra could no longer compete and filed for bankruptcy in 2011. The management team were later found to have misled the US government when seeking a valuable grant and were also found guilty of financial mismanagement.
Another American solar panel manufacturer, Abound Solar, suffered a similar fate. What started in the manufacturing laboratory at Colorado State University in the early 2000s quickly developed into an exciting business that announced the construction of its very own factory in Indiana in 2010. The company used a chemical called cadmium telluride to create electricity from the sun, rather than silicon cells. It initially seemed attractive as it offered a cheaper type of solar energy, but then the price of silicon cells dropped. By 2012 Abound Solar had to close its factory and, after drawing down some $68 million (£51.8m) worth of loans guaranteed by the US Department of Energy, was forced to declare itself bankrupt in the same year.
Better Place’s owner Shai Agassi hoped to revolutionise the electric car industry with its battery swapping and charging technology. The US-Israeli start-up attracted around $900 million (£686m) in investment thanks to Agassi’s world-changing ambitions and he pledged to sell millions of electric cars in Israel and beyond. However, by 2013 it was all over thanks to the epic costs involved with setting up the infrastructure needed to make the dream even the slightest bit attainable. The firm filed for bankruptcy after selling fewer than 1,500 cars.
Launched in 2014, China's Aiwujiwu was labelled the "fastest growing unicorn in the industry" and its online property listing business was going from strength to strength. Raising capital wasn’t a problem and a valuation of $1 billion came within 18 months. After establishing a 28% market share in Shanghai’s rental market at its peak, the online realtor crashed and burned, after facing stiffer competition and increasing financial pressures.
This Japanese company developed a highly ambitious clothes-folding machine called the Laundroid, and revealed a prototype to much praise in 2015. Perhaps too complex for its own good, it utilised scanners, AI and Wi-Fi technology to fold each item in a laundry load, with a T-shirt taking several minutes. Not only that, but the tech, which was shaped like a piece of furniture, was set to carry a hefty ¥1.85 million ($16.9k/£12.9k) price tag. The business had generated ¥10 billion ($91.4m/£69.6m) in funding but it wasn't enough to support research and shipment costs and the business found itself in ¥2.2 billion ($20m/£15.3m) of debt before it had even managed to launch the Landroid to the commercial market. In the end the only thing that folded was the business.
Founded in 2005, ChaCha was a human-guided search engine service. Users in the US could go to the ChaCha website and ask questions, or could use a mobile app to find the answers they were looking for, while in the UK users could use SMS to contact one of the hundreds of freelance ‘guides’ who were paid small amounts to answer each question as quickly as possible. The effectiveness of search engines and the mass take-up of smartphones put an end to ChaCha's moment in the sun and it officially closed in 2016.
UK-based Powa Technologies attracted a record $76 million (£59m) in its initial funding round and was said, by its CEO Dan Wagner, to be worth $2.7 billion (£2bn) a year later. But by 2016, it was dead in the water after funding was pulled. The company had spent over $200 million (£155m) of investors’ cash. Its main product was PowaTag, a mobile payment technology that would allow users to scan an item or advert on their phone and buy the product there and then. Some 1,200 businesses were reported to have immediately signed up for the tech, but it later emerged that they had only signed letters of intent.
Arrivo was founded by rocket engineer Brogan BamBrogan, who used to work for Elon Musk's SpaceX and Hyperloop One, and had grand plans for his own hyperloop transportation scheme that would see the end of traffic jams forever. He launched his ambitious business in 2017 but it was dead in the water by the end of the following year after he failed to attract enough investment to realise his vision.
The collapse of Theranos is one of the most notorious cases of misrepresentation in recent business history. Fronted by the seemingly impressive entrepreneur Elizabeth Holmes, who started the company during her freshman year at Stanford University, Theranos had attracted a valuation of $10 billion (£7.8bn) by the time Holmes was in her late 20s. But the tech behind the business, which could supposedly perform blood tests with only tiny volumes of blood, simply didn’t exist. Not only that, but Holmes was using money from the company to fund a very luxurious lifestyle including private jets, personal security and a $25,000-a-month personal publicist.
After a whistleblower exposed that the company was secretly outsourcing its tests in 2018, Holmes was charged with nine counts of wire fraud and two counts of conspiracy to commit wire fraud. Unsurprisingly, Theranos ceased trading the same year. Holmes' trial came to a close in January 2022 after the jury found her guilty of four counts of fraud, with each count carrying a maximum sentence of 20 years behind bars. Her business partner, and former boyfriend, Sunny Balwani will also go on trial later this year.
ReVisions Optics also closed its doors in 2018 after failing to make a go of its technology business to treat presbyopia, a form of long-sightedness often caused by ageing. Despite having performed 1,000 procedures using its Raindrop Near Vision Inlay treatment, the business said it couldn’t “get the business to grow fast enough" in what is a "very challenging" segment.
Even the addition of Apple co-founder Steve Wozniak to its management team couldn’t save failing start-up Primary Data. After previous successes, investors were eager to feed David Flynn and Rick White, the brains behind Primary Data, the cash needed for their next big idea. However, this idea was data virtualisation technology that simply wasn't compelling enough couldn’t sell to other companies. The business collapsed in early 2018 despite generating over $100 million (£77.7m) in funding.
Everything seemed to be going great for Silicon Valley juicing start-up Juicero when it launched in 2016, attracting $120 million (£93m) in funding from investors keen to back the latest healthy innovation. However, reporters at Bloomberg exposed the company’s $400 (£311) juicing machines as practically useless after they demonstrated that Juicero’s pre-prepared fruit and veg packs could be squeezed with two hands to make juice faster than the machine could do it. The firm collapsed less than 16 months after its launch.
KiOR’s meteoric rise was largely the result of massive investment from famous venture capitalist Vinod Khosla (pictured). He invested hundreds of millions of dollars in the biofuels business, and his support attracted other high-profile investors including Bill Gates. But this only fuelled the fire of KiOR’s enormous overspend. By the time KiOR filed for bankruptcy in 2014, just a few years after the business’s inception, it had spent some $600 million ($466m) and only generated $2.3 million (£1.8m) in revenue. Not only that, but the business was subject to an investigation by the Securities and Exchange Commission over potential false statements. As many as 23,000 private shareholders sued KiOR and were awarded $4.5 million (£3.4m) in a settlement in 2017, while the state of Mississippi also sued the business over a $75 million (£57.2m) state loan.
This British start-up has become known as one of the most high-profile UK failures of the past few years. When Enigma Diagnostics launched in the early 2000s as a groundbreaking provider of mini diagnostic kits, which could be used by medical professionals to cut diagnostics time significantly, it attracted more than $105 million (£80m) in investment. Its peak came in 2012 when it generated $14 million (£10.9m) in revenues, but it still didn't make a profit. It hung on for a few more years before going into liquidation in 2017.
After a spate of selling wireless speakers and Bluetooth products, it was Jawbone’s launch of the UP3 fitness tracker band that saw it reach unicorn status. However, no amount of funding – and this firm had no trouble attracting investors with its $3 billion (£2.3bn) valuation – could enable Jawbone to deliver a quality product on schedule. From 2016 it was a case of the beginning of the end for this start-up that never quite reached the heights expected of it. After it finally folded in 2018, Jawbone owners could no longer use their fitness trackers.
Drone start-up Airware was one of the most exciting and well-funded new businesses in the drone industry, attracting well over $100 million (£77.7m) in investment. However, the business moved from producing drone software to hardware, which it tried to sell through strategic investor Caterpillar, in a move that spelled the end for Airware. The company couldn't compete with larger drone companies and investors pulled their cash, which led to the firm's collapse in 2018.
Auctionata was a live-streaming online auction platform that specialised in selling luxury goods, art and collectables. Its reputation was left in tatters in 2016 when allegations were made that the owner Alexander Zacke and his board members were bidding on their own auctions. The business, which had attracted tens of millions in investment in the year prior to the allegations, was suddenly without funding and announced its insolvency in early 2017.
This company had been working for nearly a decade on the manufacture of renewable chemicals when it lost the backing of its main investor in 2018. The California-based firm was just about to open its first commercial facility in Malaysia when Sime Darby pulled the plug on its investment and the other investors decided that liquidating the business was the right response. Verdezyne is one of a number of recent failures in the bio-based industries as they struggle to meet the costs of scaling up while competing with fossil-based rivals.
Hong Kong-based Tink Labs was a well-funded start-up promising to equip hotel rooms in the world’s biggest chains with smartphones for free guest use. One of Hong Kong's first unicorns, in 2018 its value reached $1.5 billion (£1.17bn) and had contracts with big names like InterContinental, Hyatt and Shangri-La Hotels and Resorts. However, it all fell apart in 2019, and by July Tink Labs had laid off staff from its cohort of 500 employees. This was the beginning of its closure, which the company blamed on unsustainable costs and fierce competition.
Anki worked for over a decade to take its robotics technology to the next level and develop useful robotic aides, such as maids and security guards. However, its success abruptly halted at a small toy robot called Cozmo (pictured) that cost $250 (£195). Despite generating more than $200 million (£155.5m) in venture capital funding, the company started to run out of money and it closed its doors in 2019.
Chinese self-driving car start-up Roadstar.ai launched in 2017 and secured a whopping $128 million (£99.5m) in 2018. By 2019, however, the company had collapsed. It released its first prototype car in January that year, but by the end of the month the management team had ousted its chief scientist Guang Zhou, against the wishes of the board. The decision ultimately led to investors requesting repayment and the founders’ dreams were shattered as quickly as they were conceived.
Unlike Theranos, science start-up uBiome wasn't lying about its tech, but fell into difficulty over billing issues. The gut health business drew attention when it accumulated $350,000 (£272k) in crowdfunding back in 2012 and also attracted more than $100 million (£77.7m) in venture capital investments, taking its total value to $600 million (£457m). uBiome was offering ordinary people the chance to test the bacteria in their microbiome through its diagnostic tests.
However, in mid-2019 the start-up was raided by the FBI over claims from users that they'd been unfairly billed for tests they'd taken or had simply been sent. In October that year, the company filed for Chapter 7 bankruptcy and later sold its patents to the only bidder – a DNA-testing business Psomagen – for $7 million (£5.3m), the equivalent of 1% of the company's original value.
Read more about Elizabeth Holmes and other bankrupt billionaires who lost it all