When do startups know that they have made it
There are many reasons a start-up can fail. According to a study by CBInsights, the most common cause is the product itself: Almost half of the failing start-ups had an offer for which there was simply no need in the market. This basic problem applied, for example, to the German start-up Doo, whose online document management system simply did not find enough customers. However, it is not always the founders' lack of market assessment; a successful start-up can quickly get into an existential crisis. The popular picture service Twitpic had to give up when Twitter requested a name change and the popular video blogging service Viddy had become too tightly bound to a specific social network. There can be many more reasons, as our selection of bankruptcies in recent years shows.
Viddy's demise came swiftly. The app had just had a huge number of users and prominent donors. But it did not come up against Facebook.
The Sonar social media tool had a large number of users, but it failed to generate enough income in the long term.
Social TV was in vogue for some time, but unlike the USA there was a German TV market that was too small and too many competitors.
- Photo media
Sophisticated photo presentations could easily be created with Fotopedia. However, the income fell short of expectations.
Twitpic dominated the publication of pictures on Twitter for a long time. The name Twitter was too similar to its own, which meant the end for the provider.
Receiving all mail only in digital form sounded like a good idea. However, the company simply had too few customers and failed mainly because of the resistance of the American post office.
Aereao made live television over the Internet possible. But the business concept was legally vulnerable. The US Supreme Court then pulled the plug in mid-June.
A development environment for NFC sounded like a good idea, but the software company apparently hardly found any customers.
A delivery service for children's books shouldn't be too expensive. Obviously a subscription fee of $ 25 was just too much.
The Dealomio app should show cheap offers nearby. The service apparently had little chance against Groupon.
A solid technical solution and good apps couldn't make Doo a success. Document management had too few customers.
In our list of failed start-ups, US companies are mainly represented, which has several reasons: In Germany, only a few IT and web start-ups manage to grow to a significant size, exceptions such as Teamviewer and Sociomantic tend to confirm the rule. However, if only one or two founders are affected, their disappearance is often barely noticed; this could also be referred to as the lack of "height of fall".
In Germany, many donors also seem reluctant to admit that one of their projects has failed. The "Gründerszene" website, for example, maintains a large archive of failed Internet projects, which often sit idle for years as an inactive website and face-to-face appearance until they are finally taken offline. These include so-called "Groupon clones" such as CoupoMania, Deal Ticket, Heimatpreis, Reduti or UnserDeal.
In contrast, there are significantly more investors in the USA. These are quickly ready to invest eight-digit sums, but especially when it comes to financing through venture capital, US entrepreneurs are then under significantly more pressure and may have to explain their failure in more detail.
Video blogging: Viddy
The photo blog service Instagram was a great success, the Viddy service hoped to top this with a video blog service. The beginnings were promising: The number of users rose in 2012 from one to ten million users and in a second round of financing Viddy was able to raise 30 million dollars in capital. The start-up then estimated its own value to the investors at 370 million dollars. Investors and users included many US celebrities such as Shakira and Jay-Z's Roc Nation label, and users included Justin Bieber. The basis of the app, however, was a close connection to Facebook. When Facebook cut this tight integration, the number of users dropped rapidly. Facebook had taken over Instagram and soon added a video recording function. Soon after, the parent company was taken over by Fullsceen and the service was finally officially closed.
Founder: JJ Aguhob, Brett O'Brien
Financing: $ 20.2 million, New Enterprise Associates, Khosla Ventures, Goldman Sachs, Battery Ventures
Mobile Social: Sonar
Sonar, an app from Sonar Media Inc., was once one of the most popular apps on Android and iOS smartphones and claims to have millions of users. Friends and like-minded people nearby were automatically recognized by the tool, displayed on a map and you could chat with them. Sonar supported Facebook, LinkedIn, Twitter and Foursquare. However, the large number of users did not generate the corresponding income. After three years, the end came at the end of 2013. According to founder Brett Martin, many wrong management decisions had also contributed to the end. For example, a failed purchase by a company cost a lot of money and resources.
Founder: Daniel Klaus, Brett Martin
Financing: $ 200,000 from Social Starts and Shawn V. Gruver
Social TV: TunedIn
Social TV was the topic of the Berlin start-up TunedIn. During a TV film, users of the app could get additional information or chat with other viewers. The idea of the company, which was founded in New York and later relocated to Berlin, was to combine television, internet and social media. In the USA, for example, the model tvtag (formerly GetGlue) is quite successful with this concept.
Axel Springer took over 75 percent of the shares in February 2013, but at the beginning of July 2014 the second-screen company filed for bankruptcy. According to a report at "Gründerszene", the second screen market had not developed as planned. With providers like Zapitano, Couchfunk, Tweek and Wywy, there were probably too many competitors in a small market. In the end, the company employed ten people.
Founder: Justin Scull, Sebastian Bartz
Financing: Axel Springer, height not known
Photo encyclopedia: Fotopedia
Fotopedia wanted to be a different kind of online photo service - a collaborative photo encyclopedia. Professional and amateur photographers were the target group. The start-up founded by former Apple members enabled users to create elaborate photo presentations; Wikipedia and Google Maps could be integrated. Some communication features were also offered and the easy-to-use photo pages met even higher visual requirements. The service was particularly popular on iPad and iPhone. The end of July 2014 had financial reasons, the company hardly made any money. In parting, the operators wrote: "We truly believe in the concept of storytelling but don't think there is a suitable business in it yet."
Founder: Jean-Marie Hullo, Bertrand Guiheneuf, Manuel Colom, Sébastien Maury and Olivier Gutknech
Financing: Banexi Ventures Partners, David Rosenblatt, DG Incubation Inc, Ignition Partners, Joi Ito, Local Globe (& Saul Klein), Mats Carduner, Reid Hoffman, Ron Conway IRA, Soft Tech (Jeff Clavier)
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