At Least $1.48 Billion in VC Funding Has Gone Up in Smoke This Year as the List of Dead Startups Grows (businessinsider.com) 166
An anonymous reader shares a report: We're halfway through 2017 and already a group of startups that together raised $1.48 billion have shut down. Some of these startups are: Beepi, the website that brought together car buyers and used-car sellers, shuttered in February. Quixey, a mobile search engine that was able to crawl apps, laid off most of its staff at the end of February. Yik Yak -- the anonymous social media app that was at the center of several college harassment scandals -- announced its closure on April 28, after struggling to keep users on its platform. Maple, a New York City-based food delivery service, closed down on May 8. Sprig, a San Francisco-centric service that delivered high-quality meals on demand, made its last delivery on May 26. Hello was the company behind the Sense sleep tracking sensor, which was designed to sit in users' rooms, rather than on their wrists. It closed in June after failing to find a buyer. Jawbone was a pioneer in wearable devices, with a focus on fitness trackers and portable speakers, but it struggled to pay its vendors.
Good! (Score:2)
The hookers and illegal drug companies need to make a living too!
Re: Good! (Score:2)
Risky? (Score:3)
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Is it just me, or does investing in a startup seem more like gambling?
It's not just you. That's exactly what it is. It's just a little more complex and time consuming that going to a casino.
Re: Risky? (Score:2, Insightful)
But with much better odds of winning.
The stock market is just a casino for the rich.
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Ridiculous. The stock market is the greatest wealth creation device, for ANYONE.
Invest money in an S&P500 tracking fund with the lowest fees, for the long long term, and you'll likely beat the return on other investments.
As for the original topic of this item, at least the summary doesn't describe how much VC money USUALLY disappears in a year. This is more well known (to tech people) companies than usual, I guess. However, VCs do live in a different wor
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Depends on your definition of "wealth creation" I guess. Sure you can get 8-10% on some relatively safe tracking funds, but that's not exactly going to bring you into the realm of the elite if you weren't already there.
You used to be able to get filthy rich by playing the market to be sure.. but that's not really plausible anymore. I mean it was always difficult since you were essentially betting against people who traded stocks for a living.. but with some dedication and some luck you could do so. The w
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VC and startups aren't the stock market. The stock market comes later, usually after the company is making a profit, or at least has sales; by which time it isn't a startup any more.
Investing in a startup is a gamble. Don't gamble with money you can't afford to lose. If you want to know the odds before you place your bet, go to Vegas.
This is Econ 101 or Finance 101 stuff. Risk/Reward ratio. High risk = High return (i.e. interest rate). A low risk investment like a CD or a Money Market mutual fund returns 1
Re:Risky? (Score:5, Insightful)
Normal gambling is a zero-sum game.
There is a set pool of money between the players and the house, and that money is redistributed within that group---generally in the house's favor.
Investment is a non-zero sum game, but it is very risky. Between this and the real-world consequences, it is quite different in spite of a superficial similarity.
That said, only risk-takers would find either gambling or VC investment appealing.
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You have 100 units to spend gambling. You can spend 100 units at the casino, and will eventually end up with nothing, or extremely lucky. OR you can spend 10 units on 10 different startups, and if only ONE is successful (likely), you'll get your 100 units back and own a large % of a successful company. If you're better than that, you'll get your 100 and then some back.
10% success rate looks terrible, but in High Risk, there is High Reward for success.
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Only you need 1,000,000 units to invest in any one of those 10 different start ups. 10,000,000 to invest in all 10 of them.
The casino will let you lose your money in pieces as small as 1/20 of a unit at a time.
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10% success rate looks terrible, but in High Risk, there is High Reward for success.
I'm not sure 10% is really called "high risk" for investing in start-up. You forgot that you also have a risk of picking wrong investments (often times due to bias) that will turn your investment into 0% return (and 100% loss)...
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All analogies break down at some point. The casino one fails here because that could never happen in real life. The wider repercussions if that went wrong mean that no sane government would even consider thinking about allowing it.
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numbers work out to 5/10 you will lose your money, 2-4/10 you will break even or make a small profit when they go public or get sold and the last one you will make all your profits on when it IPO's and becomes the next MS, Google, or facebook or SalesForce
Particularly Risky (Score:1)
Is it just me, or is investing in a new used anything sale site, social media app, or anything tracker particularly risky? Seriously, anyone who hands over money to someone who says "I've got this great idea for a web site that'll kill Facebook", or (in this day and age) says "people are going to pay me money to put a device in their room that watches them sleep" deserves to flush that money down the toilet.
The genius of the startups certainly isn't in their ideas. Its in finding VC funders who have that
It's just you (Score:3)
This is why socialists exist. We're realists. We don't honestly believe we're
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if all else failed you'd be Too Big to Fail and get a government bail out
That one's not really true. "Too big to fail" only gets applied when the government suspects that your collapse would have serious and widespread economic impact. A venture capital investment, no matter how big, its pretty unlikely to have that sort of impact and thus wouldn't get covered.
Car companies keep getting them because, even with all of the bitching about manufacturing being moved to Mexico, they still employ tens of thousands of American workers across the country. If GM shut down that would be
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Central banks don't create wealth. They create digital and paper representations of wealth. If I have a village with 10 people and the the money supply is 100 dollars, representing all the goods and services in that village, then I, as king, can appropriate a bit of that wealth by printing up a few extra dollars and either keeping it or giving it to my favored associates.
The Fed redirected wealth to the sectors and companies it deemed fit, by diluting the pool of money. That's all it can do - redistribute.
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Depends. Is it some guy you were at college with & a former work colleague, plus some other people they know well and you've at least met, based in a garage in Akron ? Or some random norkwads who met on Fuckbase with a plan for a dog walking service (but with an app!!!!) that runs out of a penthouse overlooking the golden gate bridge?
That's not a lot of money (Score:5, Insightful)
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America is broke! We can't afford this anymore!
Re: That's not a lot of money (Score:1)
They're taking our jobs! We have to build a wall!
Quick! Swing by home depot, pick up some illegals, and put them to work!
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Not only that, but how has the number varied compared to other years? It might really sound like a drop in the bucket if a typical year was say 10 billion, or might sound like a lot more if a typical year was only a million. A lot more context is needed...
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1.5 billion is a drop in the bucket in America's economy much less the global one. This is /., I'd like to think we understand numbers well enough to know that.
If you spent 1.5 billions dollars on some kind of think tank that would just focus on asking the right freakin' questions about where humans are going....the result might be more than that drop of water vapor.
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1.5 billion is a drop in the bucket in America's economy much less the global one. This is /., I'd like to think we understand numbers well enough to know that.
And we're still waiting for the big ones to go bust.
Uber alone is likely to double that figure in loses this year.
For each one that flops (Score:2)
For each one that flops there's a million Facebooks. Or is it the other way round?
But hey, what do I know, I'm just playing with pother people's money.
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There is a wide gulf between successful and facebook.
If an investor puts say 500,000 into a startup, lets assume for simplicity its just an idea and there is no current capitalization and the company grows to having a market cap of 10 million or so, said investor has done pretty well.
That is the sort of thing that happens probably fairly often but you don't hear about it, because 10M cap companies rarely get a lot of press. Yet almost any one would be pretty happy to sell 10M worth of shares in something t
The Basic Test (Score:5, Insightful)
In order to have a business which ONE item of the following do you need?
I learned the correct answer over 30 years ago and to this day I see endless startups and investors still get it wrong. People who should know better. So it doesn't surprise me much that $1.5B goes up in smoke.
Re:The Basic Test (Score:4, Funny)
Everyone in Silicon Valley knows the real answer:
f) Someone stupid enough to believe your bullshit and lucky enough to have money.
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a: Smoke
b: Established business relationships
c: Acquired market expertise
d: Developed technology
e: Amazingly comfortable office chairs
There's a reason why the VC community is build to lather, rinse, repeat. What motivates you to get one of these right, but not the other?
Some startup venture
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You could have all of those things and still fail.
Google and Microsoft both came from behind and buried numerous competitors in their primary markets. These companies all had tech, customers, and mindshare.
Sometimes it takes a long time to go from a proof of concept to an actual, deliverable product. This is where most VCs come in---they provide the money to build the consumer-ready product. This is the scenario we're looking at.
In that case, you don't even really have the technology yet, and you could stum
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I like that you didn't tell us the answer, and to me it's obviously D. Customer.
Here's my logic. Let's say you have a business plan. Great. You've got a plan to sell sand to Bedouin. It's not going anywhere.
Now let's say all you've got is B, an innovative new product or service. This one is tempting. You'd think the world would beat a path to your door... except when it doesn't. This happens more than some of us would like to admit.
OK, C. Capital. Surely that makes a business, right? Wrong. Any
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I have worked at a number of SMBs some of doing well today some are gone. You a dead right about the customer thing. You have to have customers. To some extent you have to let those one or two fact customers tell you who you are.
This is a dangerous game however you need the revenue but you can't let them turn you into something that isn't appealing to the broader market or you will only ever have them as a customer, until you don't and than you are doomed. The game must be played and the tight rope must
The Basic Plan (Score:5, Funny)
1. Start Up
2. Cash In
3. Sell Out
4. Bro Down
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The correct answer is that it's a trick question. You need A, C & D at least.
Although, if I had to pick only one, it's C. With enough capital, you can afford to buy the rest.
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The correct answer is that it's a trick question. You need A, C & D at least.
Although, if I had to pick only one, it's C. With enough capital, you can afford to buy the rest.
Hell, with enough capital you can prop the thing up long enough to take it public, then dump it on the market and walk away with millions.
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The correct answer is that it's a trick question. You need A, C & D at least.
Although, if I had to pick only one, it's C. With enough capital, you can afford to buy the rest.
Hell, with enough capital you can prop the thing up long enough to take it public, then dump it on the market and walk away with millions.
That's what most startup companies do when they realize they don't have customers. The startups that actually have customers are too busy trying to mortgage their future to keep their customers and they get way less capital than they generally need.
When you want something, getting it is easy. When you need something you'll pay through the nose [neatorama.com] to get it.
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In many of these cases, the customer is the VC and the business is selling something to them. Repeat business is hard to generate though, and it's a pretty crowded marketplace.
This is a very good observation and if I could vote in this thread I would vote Insightful+. Thinking back to the text so long ago that I read that posed this question that might not have been considered a valid point. Since then, however, it has been a practice of quite a few start ups to specifically generate enough hype of a "business-like" entity" such that that their stock can be obtained by the first VC to sell to the bigger fool a short time later. In that sense the product being sold is hype-ab
You're wrong (Score:2)
It's a whole new world of 'sharing'. And by sharing, I mean you get to share your meager capital resources with the richest people in the world. Oh what a brave new world and what not.
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A business needs PROFITS. With profits a business insures it will be in business tomorrow.
How many of those companies that failed were profitable?
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Actually you don't need profits. A business can operate for years or decades on zero profits (and we have an entire class of business -- non-profits -- which intentionally do exactly that.)
You just can't have negative profits (ie: losing money.) Breaking even is fine.
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The correct answer is D: customer.
It is possible to work around each other answer. For example a sex worker, lawyer, or mega-church do not need capital or a business plan to go into business. Nor do they need a product as such. Even if you manufacture something if you have a customer that is willing to pre-pay an order you don't need capital or a business plan. The job of Marketing is to generate customers and if it does not then it gets de-funded.
At the end of the day to have a business you need a cus
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If fraud is a business, a whole bunch of con artists will show you that capital alone suffices.
If, on the other hand, fraud isn't a business, the stock markets are funding an awful lot of amateurs.
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d: Customer. It isn't sufficient by itself, but you _need_ a customer. The others you can 'find another way', but someone _has_ to pay you. With only a customer, plan on rough seas. You want a plan, but you can find that on the way.
If they're not paying, they aren't the customer...see Google.
A shit business plan is worse than useless.
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'Perfect execution' of a 'shit business plan' is still shit.
Execution is everything. But you have to 'execute the planning' before you can 'execute the plan', even if that means stopping 'the plan' when you realize the problem(s).
When you're in charge of executing a broken plan and their is nothing you can do about it, it's time to move on, ASAP. Execute the job hunt.
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It's a trick question. No single one is sufficient. But customer is the only one that's absolutely required.
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I'd agree that they are all important. However, the importance of the customer may be smaller than in traditional businesses, if we consider "startups" to be an investment vehicle rather than a normal phase of business development.
There's probably more than one reason why there's so much talk about startups as something separate from normal companies or businesses. In my view, for many startups, the idea is to build something that gets the attention of some big spender willing to acquire the whole company.
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If you're selling a pile of bullshit to a VC. The bullshit is the product and the VC is the customer. Your _exorbitant_ salary is the payout. Everybody knows the VC won't let anybody cash out stock before them, that's just how they roll.
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The answer should be D - customer. Without a customer you don't actually have a business yet.
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it's d dumbass
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Do you want to look as happy as AlanObject? Do you want the answer to the question? Send one dollar to Happy Dude, 742 Evergreen Terrace, Springfield.
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It's d: customer(s).
Headline: A majority of busniess fail! (Score:1)
More at 11 PM.
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While it's true that given enough time all businesses fail, we're talking about startups here, not speculating about the heat death of the universe.
Actually, about 80% of new businesses survive their first year; 69%, their second year; 61%, their third year. After 5 years it's down to just under 50%, and after 20 years it's around 20%. Of course, that's ALL new businesses, not just the Silicon Valley unicorn-hunter variety. More info here. [bls.gov]
1.48 billion is chicken feed (Score:2)
It is like a 9$ an hour worker spending 1.5$ on a lottery ticket. Or a poor household with just 90K in net assets spending 1.5 $ on a bottle of shampoo.
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There's a recession on the horizon and the whisperings of whatever bubble is popping are coming out. The narrative recently has been a start-up bubble; I haven't quantified it. All I know is we're consistently entering recession, at peak recession, or recovering from recession for years and years; and then we settle, coast for two years, and enter a new recession. It's about time for the next one, so I guess I'm not the only one who noticed; folks want to be able to tell you they saw it coming.
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And people have been predicting the next recession since 2009. Eventually they will be right, but that doesn't mean they can predict the future. The people who listened to them and sold their stocks or stayed out of the market missed all the gains that have happened since then. There are ALWAYS people predicting doom in the markets and most of the time they are wrong. Timing the market is a sucker's game, the best policy is to be widely diversified and stay the course (and buy stocks at a lower price) w
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I haven't been predicting the next recession on the horizon since 2009; the Zero Hedge guy is a raving lunatic.
Take a look at month-to-month unemployment, go back a while, like 1970. [bls.gov]
There are a few wars in there, so this gets messy. In general, if you take a look at the non-reentrant spikes in unemployment, you'll see the outline of recessions. (They're all recessions, but not useful for pattern-matching.) That's great and all, but we need to identify a few things, like when is a new recession coming?
Regulations (Score:4, Insightful)
Useless Ideas and Nonexistent Innovations (Score:2)
A lot of start ups try to repackage something mundane into something sexy (ex Juiceroo). It doesn't work. It's hard, but when I find a startup with some patents, I take notice.
Actual innovation is hard which is why there's so much BS out there.
And? (Score:2)
Most people know that most businesses fail. There are numerous reasons why this can happen but that's not being discussed, what is being discussed is that "shit doesn't work out for everyone" which is kind of a "well duh" type statement.
No it hasn't (Score:5, Insightful)
Money is like energy. Unless there is some huge devaluation event or you actually burn physical notes this money has not gone up in smoke.
What has really happened is that this $1.48 billion has instead ended up in the hands of people other than the VCs or the companies they were funding.
In the words some other group of people is now collectively $1.48 billion richer.
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Money is like energy. Unless there is some huge devaluation event or you actually burn physical notes this money has not gone up in smoke.
Arguably burning physical notes evenly distributes the value to all other holders of the same currency, even. Further strengthening your point: it's very hard to destroy money.
Re:No it hasn't (Score:5, Insightful)
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The economy is a competition for resources. I put my widgets up for sale, hoping to entice people to give me resources in the form of money, for them; a panhandler hopes to accrue resources by playing on my empathy, and induce me to give him some money; stockbrokers attempt to sell dreams of riches to stock buyers; startups attempt to sell dreams of riches to investors.
Whoever "wins" the most resources is not necessarily smarter, but a) a better economic competitor and b) perhaps a bit luckier.
Being a bette
That ain't how it works (Score:2)
The important thing isn't the money spent. It's the value obtained from spending that money. I spend $5 on a hammer and use it to fix something that would've cost me $20 if I hired someone, then I gained $20 of productivity for the $5 purchase, for a net gain of $15. My economic productivity increased by $15. It's the productivity increase which is impo
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The Enron trick (at least how you've laid it out.. I'm sure it was more complicated in practice) doesn't work because revenues is a useless concept beyond marketing BS. If I tell you I have a billion dollars in revenues you might think that I'm doing great. Until I tell you that I also have 1.2 billion dollars debt. Then I suddenly don't look quite as fantastic.
That's the problem with the Enron trick.. that false revenue would have had an equal debit on some other ledger (assuming they at least did prope
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No no no no no. The world has become collectively $1.48 billion poorer by allocating those resources poorly. Sure, those $1.48B did actually go to leasing offices and buying ping pong tables or whatever, and that money went to perfectly good businesses supplying those things, but on a larger scale it was not spent in the best possible way.
Anyway, that's always the nature of progress -- humanity tries things, some succeed, many fail. Iridium spent billions on a satellite network that no one wanted, those bil
Beepi, Quixey, Yik Yak, Maple, Sprig... (Score:3)
People are too embarrassed to buy from companies with names like that.
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People are too embarrassed to buy from companies with names like that.
I wasn't sure about that so I had to google it.
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Google and Axa are on the edge of stupidity. The other three are ok.
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The word "maple" has to be paired with another word to sound right.
Definition of 'startup' (Score:4, Insightful)
Definition of 'startup' (Score:2)
startup, n.:
An otherwise normal business which is not making money.
FuckedCompany 2.0 (Score:2)
Someone needs to resurrect Fucked Company [wikipedia.org]. We're missing a prime opportunity for comedy.
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Twitter smoke... (Score:2)
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Twitter as a technology company was an afterthought as the founders squabble over who would be CEO, spent investors' money out the wazoo and didn't bother finding a way to make money.
And let me guess: They're all billionaires anyway.
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And let me guess: They're all billionaires anyway.
Noah Glass got pushed out early even though Twitter was his idea. Biz Stone who was in the right place at the right time is a multimillionaire. Jack Dorsey (first and current CEO) and Evan Williams (second CEO) are billionaires.
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And let me guess: They're all billionaires anyway.
Noah Glass got pushed out early even though Twitter was his idea. Biz Stone who was in the right place at the right time is a multimillionaire. Jack Dorsey (first and current CEO) and Evan Williams (second CEO) are billionaires.
Is that what happens when you take a company that makes no money and dump it on the stock market?
why did these well-known startups fail? (Score:2)
beepi: never heard of it ... ... ...
quixey: never heard of it
yik yak: never heard of it
1.48 Billion (Score:2)
At Least $1.48 Billion in VC Funding Has Gone Up in Smoke This Year...
And that's just Uber! ;-)
Not if, but when... (Score:4, Insightful)
Having lived through the last Dotcom Bubble, I'm very surprised it's taking this long for the current one to pop. This time, it's mainly situated in Silicon Valley, but last time there was an East Coast bubble outpost in NYC. This was because traditional media publishers and TV networks were desperate to buy into the bubble as well. I saw lots of huge 3-story Times Square billboard ads for companies like Beenz and Webvan as I walked to my "boring, old school" sysadmin job. I always wondered where these companies got their money from...I mean obviously from VCs, but do they just dump $40 million in the company's bank account and say "go buy Nerf toys, Aeron chairs and all the advertising you can book!"?
I'm sure the pop for this current bubble will be coming pretty soon. There are just too many copycat companies out there trying to squeeze the last few drops of blood out of the bubble. I've seen no fewer than 6 meal kit delivery services (like Blue Apron,) at least 4 clothing delivery subscriptions (like Stitch Fix,) and 10,000,000,000,000 magic DevOps tool vendors. (Guess what line of work I'm in these days...I can't tell you how many 5-person startups have offered to solve 100% of my application problems using their One Cool Trick.)
A favorite phrase back then was "this time it's different!" Indeed it is -- this time we have The Cloud. A startup doesn't have to spend millions to buy or rent a data center, and they can coast on VC fumes for much longer than Bubble 1.0 startups. They can also advertise on Facebook and Google instead of those Times Square billboards. So I imagine this will continue for a while, but just like the last bubble, this one isn't sustainable either.
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As someone who was stuck in the middle of the 'Silicon Alley' Dot-Com bubble in NYC, it certainly did seem like companies would appear overnight, flush with cash for a little while, throw outrageous parties, and then disappear as quickly as they came. And every company had a stupid name like Muffinhead, Razorfish, or Funny Garbage.
We had a company go out of business owing us $28,000 for work we did for them. The CEO was trying to give me chairs and computers in lieu of payment. Ridiculous.
Seems like we have ... (Score:1)
Names. (Score:2)
What IS it with the infantile names? It's a plague. I know, I'll start up AppNameli to help people name their startupslies.
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not up in smoke... (Score:4, Insightful)
It is Trickle Down.
VC is the ONLY way to get the rich to part with money, by appealing to their greed. Without VC there would be no trickle down at all.
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And where do the VC get the money? They get the money from your retirement funds. They do seeding investment and they turn a profit by selling at an IPO. The big buyers at an IPO are retirement funds. The retirement funds have a real problem as some of the tech funds have a billion to invest every week and not enough places to go around. There are popular UK retirement packages that only can invest in about 20 companies and I suspect everyone one of them is way over valued.
So? VC is risky. (Score:2)
If anything, this is a positive story about booming investment in entrepreneurship.
The money has NOT gone up in smoke (Score:2)
Most startups fail (Score:1)
Re:A fool and his money... (Score:5, Funny)
Just call it the Rich paying their fair share.
Given that they'll use these as write offs (Score:2)
Now, if we stopped letting them write off Business As losses for Business Bs profits...
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It is traditional to use the last million on coke and whores.
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Not a fiction but an extremely durable logical construct. As long as any individual can only see their sliver of the economy, and everyone else values the money as they value it, and it's able to provide the holder with the necessities he requires, the construct continues.