Startups Lost in 2021: A Remembrance

Reflecting on Startup Losses in 2021

As we began drafting this article last year, it was difficult to foresee that many of the challenges facing startups would persist well into 2021. With another holiday season impacted by a new variant of concern, it’s clear that change is constant. However, the landscape has shifted in some ways.

Interestingly, despite the ongoing global pandemic, 2021 witnessed fewer prominent failures within the startup ecosystem compared to the previous year. Perhaps the initial phase of the pandemic proved insurmountable for companies already facing difficulties, or maybe increased capital availability provided a crucial lifeline.

Several companies successfully adapted their strategies, while others emerged directly in response to the altered world shaped by COVID-19. The year also lacked the large-scale collapses seen in 2020, such as those of Quibi and Essential. Nevertheless, maintaining a startup remains a formidable undertaking, and not all businesses navigated the year without setbacks.

Abundant Robotics (2016-2021)

Total raised: $12 million

This represents a notable setback in a year that otherwise saw considerable progress in the robotics startup sector. Abundant Robotics was, in some respects, pioneering agtech robotics, a field that often presents more challenges than benefits. Just two years after initiating commercial deployments, the apple-picking robotics company ceased operations.

Throughout its existence, the company secured $12 million in funding, including a $10 million Series A round led by GV (Google Ventures) in 2017. Farmers are increasingly exploring robotics and automation to address ongoing labor shortages. Major players like John Deere are heavily investing in both internal development and acquisitions.

It is plausible that we will see more widespread adoption of picking robots in the near future, but the key question remains: who will lead this advancement? In October, Waverly Labs acquired Abundant’s intellectual property, suggesting that the technology may continue to evolve in some capacity.

Chanje (2015-2021)

In November 2018, TechCrunch reported that FedEx was collaborating with Chanje Energy, a relatively new startup, to electrify its delivery fleet. The company announced plans to add 1,000 electric delivery vehicles from Chanje, a California-based company with backing from China, founded in 2015.

Over time, Chanje became known for importing electric delivery vans from China and selling them to companies such as FedEx, Ryder, and Amazon. However, the company reportedly “quietly folded” sometime this year, leaving customers like FedEx and Ryder in a difficult position, as reported by The Verge on December 15.

CEO Bryan Hansel, described by some employees as both “charismatic” and “narcissistic,” had partnered with a Chinese company that declared bankruptcy. Hansel reportedly attempted to persuade investors to acquire portions of that company to sustain Chanje’s operations, but his efforts were unsuccessful. According to The Verge, he terminated the employment of all remaining Chanje employees the Friday before Memorial Day weekend.

Chanje allegedly still owes “many” former employees months of unpaid wages and promised bonuses, with at least four having filed lawsuits against the startup. Ryder also sued the company for over $3 million after Chanje failed to deliver the majority of the vans it had promised. Furthermore, FedEx did not receive the 1,000 electric vans it had expected from the 2018 agreement, forcing the delivery giant to abandon a project to build charging infrastructure at its California depots.

Dark Sky (2012-2021)

In March 2020, Apple acquired the Dark Sky weather app, renowned for its hyperlocal accuracy. The tech giant integrated many of its features into the iPhone’s native weather application. Apple immediately announced the discontinuation of the Android app in July.

The fate of the iOS app and API service, however, remained uncertain. (The API service allowed other developers to access Dark Sky’s database of weather forecasts and historical data.) By June 2021, both the iOS app and API service were given official expiration dates, with co-founder Adam Grossman stating: “Support for the Dark Sky API service for existing customers will continue until the end of 2022. The iOS app and Dark Sky website will also be available until the end of 2022.”

While not an explicit shutdown announcement, the implication was clear.

Katerra (2015-2021)

Total raised: $2 billion

Katerra was once hailed as a leader in construction technology, popularizing prefab construction. The company aimed to control the entire technology stack for construction projects, from office buildings to apartments. However, by late 2020, serious problems surfaced.

The startup was reportedly on the brink of Chapter 11 bankruptcy when SoftBank intervened with a $200 million bailout. This proved insufficient, as Katerra’s vertically integrated approach struggled with rising labor and construction costs, project delays, and cost overruns. Accounting irregularities, as reported by The Wall Street Journal, further complicated matters.

On June 1, 2021, Katerra officially shut down after exhausting over $2 billion in funding. Founded in 2015, the company was once valued at $4 billion and employed over 8,000 people. At the time of its closure, it had approximately 2,400 employees. This failure marked the second high-profile setback for a SoftBank-backed proptech company (WeWork being the first). Despite Katerra’s implosion, the construction tech industry continued to attract significant investment throughout the year.

Loon (2015-2021)

Alphabet’s Loon project, which aimed to provide internet connectivity to underserved areas via high-altitude balloons, concluded its nine-year run earlier this year. Two years after spinning out of Alphabet’s X innovation lab, Loon CEO Alastair Westgarth announced the project’s termination, citing an inability to achieve profitability.

“While we’ve found a number of willing partners along the way, we haven’t found a way to get the costs low enough to build a long-term, sustainable business,” he explained. “Developing radical new technology is inherently risky, but that doesn’t make breaking this news any easier.”

Loon’s technologies will continue to be utilized, having been adopted by projects like Project Taara, another Alphabet X initiative focused on delivering high-speed internet through light transmission. In September, Alphabet transferred over 200 patents to SoftBank, which intends to leverage them within its High Altitude Platform Stations (HAPS) business. Meanwhile, another Alphabet moonshot, Wing, continues to make progress.

Houseparty (2015-2021)

Houseparty experienced a surge in popularity during the early stages of the pandemic, reportedly gaining 50 million new users per month as people sought virtual connection. However, this momentum did not translate into long-term sustainability.

In September, Epic Games announced the shutdown of Houseparty in October, a little over two years after acquiring the company for a reported $35 million. Potential reasons for the shutdown include the rise of Clubhouse and general fatigue with video conferencing platforms.

In a statement announcing the shutdown, Houseparty CEO and co-founder Sima Sistani suggested a strategic shift: “The metaverse vision and products we’re working on at [EpicGames] are also about shared experiences, but in a more rich form than 2D video — one that’s better positioned to shape the next generation of the internet.”

Houseparty will live on as the core of Fortnite’s voice chat and within larger projects in the Epic Games metaverse.

Pearl Automation (2014-2021)

Pearl Automation, a startup specializing in automotive accessories, closed its doors just a year after its official launch. Founded by former Apple engineers, Pearl debuted with a wireless rear-view camera priced at $499.99.

“Once connected, the RearVision app in landscape will show you a full-screen view of what the cameras in the license plate holder is seeing, with a 175-degree viewing angle,” reporter Darrell Etherington wrote in a 2016 review of the product. “You can toggle between the full fish-eye experience, or a warp-corrected view that fills the display corner-to-corner with the space behind your car. You can also pivot the view up or down to get a better look at more of the sky, or more of the ground as needed.”

While Etherington praised the product’s industrial design and minimal software, he noted its premium price point and the need for upgrades: “It’s still for a specific subset of users — those who value quality and craftsmanship and are willing to pay for it, but who also don’t have a modern vehicle with its own backup camera, and don’t plan on getting one anytime soon.” This year, it appears that this niche market was insufficient to sustain the company.

According to Axios, the shutdown resulted from disappointing sales and a high burn rate, despite the company having raised $50 million in venture capital funding. Investors included Accel, Venrock, Shasta Ventures, and Wellcome Trust, as per Crunchbase.

Notable Companies No Longer With Us

Fry’s Electronics

An apology is due; this entity wasn’t a startup, yet its absence would be keenly felt in any such compilation. The February closure of this Bay Area electronics retailer created a significant void, reminiscent of a vast Egyptian pyramid, for those who fondly recall exploring its expansive aisles. The Fremont location, with its 1893 World’s Fair aesthetic, may not have been visually striking from the outside, but its internal Tesla coil proved captivating.

In a marketplace largely governed by Amazon, and with the decline of retailers like Circuit City and RadioShack, the longevity of this unique establishment was remarkable. At its height, Fry’s operated 34 large stores across nine states. Ultimately, the challenges posed by COVID-19 proved insurmountable for the brick-and-mortar business. The substantial size of these former retail spaces has even led to zoning complications following their closure.

LG Phones

The end of LG’s mobile phone division, unlike other losses accelerated by the pandemic, was a gradual process. The South Korean electronics manufacturer found itself unable to compete effectively against dominant players like Samsung, Apple, and the growing number of Chinese manufacturers. In April, LG announced its withdrawal from the phone market to concentrate resources on televisions and smart home technologies.

Visionrare (2021-2021?)

Its vision was indeed exceptionally unique. Founders Jacob Claerhout and Boris Gordts launched Visionrare, merging the principles of gamified investing with the rising popularity of NFTs. The resulting platform allowed users to bid on NFT shares of various startups, constructing a simulated portfolio for competitive comparison. Several Y Combinator startups participated in the venture.

Beyond the crypto aspect, Visionrare’s concept was intriguing. The simulated stock market offered non-accredited investors a means to build an investment track record, potentially “serving as a signal for VCs seeking new talent.”

However, some entrepreneurs and investors raised concerns about the platform’s legality, questioning whether it constituted an investment security. This pushback ultimately led the co-founders to discontinue the paid marketplace, citing an underestimation of “the legal complexities” associated with selling novelty NFT shares in actual startups.

While crypto marketplaces are not uncommon, Visionrare’s specific approach sparked regulatory scrutiny. The founders have indicated plans to relaunch the company in the near future, and their LinkedIn profiles confirm their continued collaboration as they “build something new.”

Nuzzel (2012-2021)

Launched nearly a decade ago by Friendster’s Jonathan Abrams, Nuzzel was a social news reader that highlighted headlines being read and shared within a user’s network. This straightforward yet effective startup quickly gained a dedicated following, particularly among Twitter users seeking a more personalized news experience. Crunchbase reports that Nuzzel secured $5.1 million in funding from investors, including Salesforce CEO Marc Benioff.

In 2019, Nuzzel was acquired by Scroll, with the intention of integrating its aggregation and curation capabilities into Scroll’s subscription service. Although no original Nuzzel team members joined Scroll full-time, the app continued to operate until this year. Twitter acquired Scroll in May and simultaneously discontinued Nuzzel. A blog post detailing the decision, now removed, explained that the product required a complete rebuild to scale effectively within Twitter.

“To those who valued Nuzzel and are disappointed that we cannot maintain it in its current form in the interim, I share your disappointment,” stated Scroll CEO Tony Haile in the deleted post. “We explored numerous options to prevent this outcome but were ultimately unable to succeed. Looking ahead, Nuzzel’s functionality has always seemed like a natural fit for Twitter, and I am excited to contribute to its implementation.”

Fortunately, months later, positive developments emerged: Twitter reintroduced one of Nuzzel’s most popular features, Top Stories, as part of its premium subscription service, Twitter Blue.