Startup City Is Littered With Lost Billions In Investments: Here Are 6 Obits From 2017

The first half of 2017 was a boulevard of broken dreams for a variety of startups that raised billions in capital, but only have ghostly, untended websites to show for it.

The reasons are varied, including this one: If the long-feared fintech bubble hasn’t quite burst, it kind of sprung a leak.

"[The market] will weed out things that aren't gaining traction," said Nathan Richardson, co-founder of Trading Ticket Inc (aka Tradeit.com) and a well-known entrepreneur who helped build Yahoo Finance.

“Capital is more scarce, which is natural in this stage of a cycle,” said Richardson, who told Benzinga back in April that financial technology had cooled by $2 billion per year in each of the past two years.

The Cemetery.com Of Startups

Consumers play the key role in adoptability, of course, and Richardson said new apps are decelerating. WeChat, for example, requires a whole operating system. “Desktop is dead,” says Richardson.

And the so-called FANG group - Facebook Inc FB, Amazon.com, Inc. AMZN, Netflix, Inc. NFLX and Alphabet Inc GOOGL - have driven ad revenues so low that startups that rely on ad sales can’t compete.

As for fintech, pioneer Seth Merrin told Benzinga in May that it was a bubble. According to Richardson, “Fintech got overfunded without any big unicorns to dream of; on the asset side: audience is small; on (the) liability side, things scale but are less glamorous.”

Related link: Can Uber Make A Profit?

Startups: The Obituary Column

Here’s a list of high-profile failures of things that tried to be the next Amazon or Uber Technologies, with a shout out to CB Insights, which publishes post-mortems on startups trapped in a world they never made.

Sprig

A meals-on-wheels for the relatively well-heeled, the daily dinner source couldn’t raise enough money to get big enough to turn a profit.

“We apologize to those of you who relied on Sprig for daily meals, and to our extended Sprig team for how this will impact them,” founder Gagan Biyani writes on the site’s online tombstone.

Sprig raised $56.7 million to cook and deliver its own gourmet meals in the San Francisco area, but it was reportedly losing six figures monthly and couldn't expand the service into other cities.

Jawbone

The black hole of venture capital, this electronics firm went under when its wearable fitness tracker failed to get the blood pumping of consumers, though investors were stoked enough to pump an eye-popping $900 million into the endeavor.

Sindeo

San Francisco-based Sindeo, a mortgage technology firm, announced its shutdown last month. CEO Nick Stamos had co-founded the business on more than $15 million in funding to enhance and simplify the mortgage-shopping experience.

“But, startups are hard and simplifying the highly regulated, complex business of mortgages is even harder,” he wrote in a public announcement on the company website. “I believed we had overcome the biggest hurdles, but unfortunately, we didn't.”

Editor's note, July 27: It looks like Sindeo is getting another chance.

Beepi

The used-car marketplace was on its deathbed by the end 2016, but only when it began selling off its stock, like a freshly dead patient giving up organs, it was RIP for a startup that had raised $150 million in investment capital.

Luxe

Parking is scarce in the big city, and this company had the mother of necessity-demanded inventions: A mobile valet service where people would pick up your car after you arrived at your congested destination, and deliver you to the same location when you were done. Investors pumped $75 million into the endeavor, which shut down in April.

Word on the street was that Uber was thinking about folding Luxe’s engineers and tech into its ride-sharing mix. Sometimes, there is a guardian angel with a bailout. Sometimes, that bailout is short-lived.

Which brings us to:

Quidsi

The e-commerce parent of Diapers.com, Soap.com and BeautyBar.com was rescued by Amazon in 2010, then purged from Amazon’s virtual store shelves and the app store in March. The reason given was that the app and the products were sluggish sellers.

Hey, even Jeff Bezos isn’t perfect when it comes to startups.