From Argo AI to Freshly, 10 Promising Startups That Failed

Promising startups that shut down 

Some startup failures tell us that despite your best efforts, it's a challenge to turn it into a success. Looking at the fall of well-funded and well-conceived startups might make you second guess your decision to launch a business of your own. However, it is best to study these failures and know about the pitfalls when starting a new venture. Keep in mind that not all businesses fail because of mistakes but because of individual and global circumstances. 

1. Goldfinch Bio

The company that developed kidney disease treatments, Goldfinch Bio, shut down in January 2023 after it failed to raise funds. The company sold the rights to its medicines to Karuna Therapeutics. According to a source, Goldfinch Bio received $15 million from Karuna. "Unfortunately, we had funding challenges, just like I think the rest of the environment, particularly private companies, in the current macro environment," said CEO Tony Johnson. The CEO also said that they had reduced their workforce throughout 2022.

2. Zume

Zume, founded in 2015, shut down in 2020 after facing several issues. The pizza startup was struggling to cope with high operational costs, cash burn, and other financial problems. The company originally aimed to solve many technological problems that come in the way of pizza making but ultimately failed because of a non-sustainable business model. According to Business Insider, the company was "insolvent" and Sherwood Partners, a restructuring firm, was asked to sell the company’s assets. 

3. IRL

IRL was a social media platform that claimed to connect people and also helped them discover real events in real life, hence the name IRL, which stands for "In Real Life." The company sadly shut down after an internal audit was conducted that found that over 95% of its 20 million user base was bots. The company CEO was suspended for alleged misconduct. The board of directors conducted an internal investigation and confirmed that the allegation was indeed true. 

4. Mindstrong

The company said it used artificial intelligence and smartphones to diagnose and treat mental health conditions. The company was failing to generate profits and provide high-quality care as it had promised. The company apparently could not find a way to make money delivering the low-cost and high-quality care that it had originally promised. According to MobiHealthNews, the company has sold the tech to Digital Health Business & Technology. The rest of the company has terminated all operations. 

5. Freshly

The meal delivery service company, Freshly, announced its closure in late December 2022. The company reportedly closed for a variety of reasons. Some of the causes were changing consumer behavior and its inability to retain customers. The pandemic also saw many people just go back to traditional ways and many started cutting back on these retail subscriptions. After the pandemic eased, people simply returned to dining out and the demand for this platform slowly declined. It's safe to say that the company did not stand the test of time. 

6. Argo AI

Argo AI, which was once valued at over $12 billion, shut down in 2022. One of the major shareholders Ford Motor Company (apart from Volkswagen Group) said that the company was failing to attract new investors and that there was no scope for making profits. "In coordination with our shareholders, the decision has been made that Argo AI will not continue on its mission as a company," the company says in a statement. The company had also reportedly missed a commercial deadline in 2021 after which there was no going back. 

7. CommonBond

CommonBond struggled through the COVID-19 pandemic and shut down its operations in September 2020. In the same year, the company stopped offering student loans and later ended the refinance program in May 2022. The company also decided to delve into residential solar financing but even that attempt failed. Many people had questions regarding the legitimacy but it turned out that the company was going out of business and was not a scam. 

8. Reali

Reali catered to homebuyers who were finding it difficult to pay for their mortgages. According to the co-founder, the company failed because of market challenges and an unfavorable capital-raising environment. He also talked about the problem he faced in raising capital. The start-up initially raised close to 100 million, making many people feel that the company was going to take off. However, the company could not sustain the business and shut down in 2022. 

9. Airlift

Airlift, the Pakistani start-up, failed after the global recession. The startup used a mobile app and a website to deliver groceries in 30 minutes. While the idea is working for many companies today, the business model was actually why the business failed. The business opted for a hyper-growth model which requires large funding and therefore, it failed when it did not get any funding. Some other issues that added to it were the funding crunch, inflation, and petrol prices. 

10. Katerra

Katerra beleived it could save resources by bringing every step of the construction process in-house—from manufacturing windows to factory-built walls to making its own lightbulbs. In 2020, the company reportedly invested more than $2 billion. The company wiped out nearly $3  billion of investor money and failed to get more investors. In an interview, the co-founder expressed regrets. Katerra filed for bankruptcy in 2021 after the company could not cope following the pandemic.