Remembering the startups we lost in 2018

There are few things in this world more difficult than launching a successful startup. It takes talent, know-how, money and a hell of a lot of good timing and luck. And even with all of those magical components in place, the odds may still be against you.

At TechCrunch, we take pride in covering the best and brightest of the startup world. But while covering the startup world is one of the most exciting and fulfilling parts of our job, death is a part of any life cycle. Sadly, not all startups that burn bright ultimately make it. In fact, most don’t.

As we wrap up this year and look forward to the next, let’s take a moment to remember some of those startups we lost in 2018.

Airware (2011-2018)

Total Raised: $118 million

Airware created a cloud software system to help construction companies, mining operations and other enterprise customers use drones to inspect equipment for damage. It also tried to build its own drones, but found that it couldn’t compete with giants like China’s DJI.

The shutdown appears to have been very sudden, coming just four days after Airware opened a Tokyo office, with an investment and partnership from Mitsubishi. In a statement, the company said, “Unfortunately, the market took longer to mature than we expected. As we worked through the various required pivots to position ourselves for long-term success, we ran out of financial runway.”

Blippar (2011-2018)

Total Raised: $131.7 million

Blippar was one of the early pioneers in augmented reality, but unfortunately the AR market has yet to live up to the hopes for mainstream adoption. And despite raising a funding round earlier this year, the startup was apparently losing money quickly as it sought new customers.

Not helping matters was some shareholder drama, where an emergency influx of $5 million was blocked by Khazanah, a strategic investment fund from the Malaysian government. In a blog post, the company said this was “an incredibly sad, disappointing, and unfortunate outcome.”

Bluesmart (2013-2018)

Total Raised: $25.6 million

One of the major casualties of the FAA’s ban on smart luggage, this New York-based startup was forced to close its doors in May. CEO Tomi Pierucci was extremely outspoken when airlines started to enforce the new rules early this year, calling the news “an absolute travesty.”

From the standpoint of Bluesmart, he was right. The startup went all-in on connected luggage, and ultimately found it impossible to adapt when battery packs were no longer allowed on flights. The startup ended all sales and manufacturing, selling what was left of its tech, designs and IP to luggage giant TravelPro.

Doughbies (2014-2018)

Total Raised: $760,000

Things came crumbling down for San Francisco-based Doughbies in July, when the 500 Startups-backed, same-day cookie delivery service announced it was shutting down immediately. But it wasn’t because the startup ran out of money. Doughbies was actually profitable. Rather, its founders, Daniel Conway and Mariam Khan, just wanted to move onto something new.

TechCrunch’s Josh Constine argued at the time that Doughbies really didn’t need venture backing and that pressure to deliver adequate returns may have weighed more heavily on Doughbies than it was willing to admit. RIP Doughbies.

Lantern (2012-2018)

Total Raised: $21.5 million

Like many failed startups before it, San Francisco-based Lantern was forced to shutter operations after an acquisition deal fell through. The mental health startup, founded by Nicholas Bui LeTourneau and Alejandro Foung, had raised millions in venture capital funding from the University of Pittsburgh Medical Center’s venture arm, Mayfield and SoftTechVC, but failed to follow through on its promise.

What was that promise? To offer personalized tools to deal with stress, anxiety and body image based on cognitive behavioral therapy techniques via a mobile application. Despite being an early mover in a now overly crowded field of mental wellness apps, Lantern wasn’t able to find enough customers to survive.

Lighthouse AI (2014-2018)

Total Raised: $17 million

Smart security camera maker Lighthouse AI had a promising product with a natural language processing system that allowed users to navigate their footage. But it also faced a crowded market, and it seems consumers didn’t embrace the product. The company announced this month that it’s winding down.

“I am incredibly proud of the groundbreaking work the Lighthouse team accomplished – delivering useful and accessible intelligence for our homes via advanced AI and 3D sensing,” wrote CEO Alex Teichman. “Unfortunately, we did not achieve the commercial success we were looking for and will be shutting down operations in the near future.”

Mayfield Robotics (2015-2018)

Total Raised: N/A

Mayfield, which was originally part of Bosch, created the adorable home robot Kuri. However, it announced in July that it would stop manufacturing Kuri, and followed with an announcement that it would cease operations altogether.

“Our team is beyond disappointed,” the company said in a blog post. “Together we’ve spent the past four years designing and building not just Kuri, but also an equally incredible company culture and spirit.”

Rethink Robotics (2008-2018)

Total Raised: $149.5 million

A major player in industrial robotics, Rethink was founded by iRobot co-founder Rod Brooks and former MIT CSAIL staff researcher Ann Whittaker. The Boston area startup grew into one of the most important players in both the collaborative and educational robotics space, courtesy of creations like Baxter and Sawyer.

Ultimately, however, the company served as yet another testament to just how difficult it is to launch a robotics startup. Even with brilliant minds and nearly $150 million in funding, the company couldn’t turn enough profit to stay afloat. A last-minute planned acquisition fell through, and Rethink was forced to close up shop in October.

Theranos (2003-2018)

Total Raised: $1.4 billion

Startup stories don’t come more film-ready than this. Even before it officially closed its doors, Theranos was set to be the subject of a book, documentary and an Adam McKay-directed feature film starring Jennifer Lawrence as founder Elizabeth Holmes. Holmes founded the company in 2003, promising a breakthrough in blood testing. By age 31, she became the world’s youngest self-made billionaire.

Theranos would go on to raise $1.4 billion, with a $10 billion valuation at its peak. In 2015, medical professionals began to mount criticism against the company’s methods. The following year, the SEC began investigating Theranos, ultimately charging it with “massive fraud.” In September, the company finally called it quits, with Holmes agreeing to pay a $500,000 penalty, while being barred from serving as an officer or director of a public company for 10 years.

Shyp (2013-2018)

Total Raised: $62 million

NEW YORK, NY – MAY 06: Co-founder and CEO of Shyp, Kevin Gibbons speaks onstage during TechCrunch Disrupt NY 2015 – Day 3 at The Manhattan Center on May 6, 2015 in New York City. (Photo by Noam Galai/Getty Images for TechCrunch)

A $250 million valuation and capital from some of the best investors (Kleiner Perkins, Slow Ventures) failed to keep on-demand shipping startup Shyp from dissolving. The San Francisco-based startup raised multiple rounds of venture capital amid a major hype cycle for on-demand shipping companies, but wasn’t able to scale successfully beyond the Bay Area.

“To this day, I’m in awe of the vigor the team possessed in tackling a 200-year-old industry,” CEO Kevin Gibbon wrote at the time. “But, growth at all costs is a dangerous trap that many startups fall into, mine included.”

Telltale Games (2005-2018)

Total Raised: $54.4 million

Over the past few years, Telltale Games seemed to reinvent adventure gaming, adapting big franchises like The Walking Dead, Game of Thrones and Batman into episodic stories where players’ choices seemed to have real weight. It even partnered with Netflix to bring a version of “Minecraft: Story Mode” to the streaming service.

But it seems the company has had longstanding business issues, with 90 employees laid off in November 2017, then another 250 let go in September of this year. Although a skeleton crew remained employed to finish the work for Netflix, it looks like Telltale is dead. And the fact that those employees were let go without severance seems to reinforce an earlier report of toxic management.

Drone startup Airware crashes, shut downs after burning $118M

Drone operating system startup Airware today suddenly informed employees it will cease operations immediately despite having raised $118 million from top investors like Andreessen Horowitz, Google’s GV, and Kleiner Perkins. The startup ran out of money after trying to manufacture its own hardware that couldn’t compete with drone giants like China’s DJI. The company at one point had as many as 140 employees, all of which are now out of a job.

A source sent TechCrunch screenshots from the Airware alumni Slack channel detailing how the staff was told this morning that Airware would shut down.

Airware makes a cloud sofware system that helps enterprise customers like construction companies, mining operations, and insurance companies reviewing equipment for damages to use drones to collect and analyze aerial data. That allowed companies to avoid using expensive helicopters or dangerous rigs with humans on harnesses to make inspections and gauge work progress.

One ex-employee asked “How do I get my options sent to me on paper so I can burn them all in a fire?😅

Founded in 2011 by Jonathan Downey, the son of two pilots, Airware first built an autopilot system for programming drones to follow certain routes to collect data. It could help businesses check rooftops for damage, see how much of a raw material was coming out of a mine, or build constantly-updated maps of construction sites. Later it tried to build its own drones before pivoting to consult clients on how to most efficiently apply unmanned aerial vehicles.

While flying high, Airware launched its own Commercial Drone Fund for investing in the market in 2015, and acquired 38-person drone analytics startup Redbird in 2016. In this pre-crypto, pre-AI boom, Airware scored a ton of hype from us and others as tried to prove drones could be more than war machines. But over time, the software that shipped with commercial drone hardware from other manufacturers was good enough to make Airware irrelevant, and a downward spiral of layoffs began over the past two years, culminating in today’s shutdown. Demonstating how sudden the shut down is, Airware opened a Tokyo headquarters alongside an investment and partnership from Mitsubishi just four days ago.

“Airware was ahead of the game trying to build their software. So far ahead that the drone hardware on the market wasn’t sophisticated enough to actually produce the granularity of data they needed to test out their software/train their algorithms” an ex-employee told TechCrunch (emphasis ours). “So they spent shitloads of money designing bespoke hardware, including two drones in-house, one multi-rotor called an AT-28, and one fixed-wing called Cygnet. Both projects were scuttled as hardware from DJI and Ebee caught up to needs, after sinking tons of engineering time and manufacturing into them.”

Following TechCrunch’s inquiry about the unnannounced news, Airware confirmed the shut down to us with this statement:

“History has taught us how hard it can be to call the timing of a market transition. We have seen this play out first hand in the commercial drone marketplace. We were the pioneers in this market and one of the first to see the power drones could have in the commercial sector. Unfortunately, the market took longer to mature than we expected. As we worked through the various required pivots to position ourselves for long term success, we ran out of financial runway. As a result, it is with a heavy heart that we notified our team, customers, and partners that we will wind down the business.

This is not the business outcome we had worked so hard for over the years and yet we are deeply proud of our company’s accomplishments and our leadership in driving the adoption of drone powered analytics to improve productivity, mitigate risks, and take workers out of harm’s way.

As we close the book of Airware; we want to thank the partners and customers who believed in us and helped us along the way. And, while it is difficult to say goodbye to our team, we want to thank them for all they have contributed to Airware and the industry. We look forward to seeing how they will take their learnings from Airware to fuel continued innovations in the world around us.”

[Update: Since we broke the news, Airware has put up a “thank you” note about the shutdown informing clients that “A representative from the Airware team will be in touch.”]

An Airware-hardware equipped drone

Employees will get one week’s severance, COBRA insurance until November, and payouts for unused paid time off. It appears the startup wasn’t able to raise necessary funding to save the company or secure an acquisition from one of its strategic partners like Catepillar.

Airware will serve as cautionary tale of startup overspending in hopes of finding product-market fit. Had it been more frugal, saved cash to extend its runway, and given corporate clients more time to figure out how to use drones, Airware might have stayed afloat. Sometimes, even having the most prestigious investors can’t save a startup from mismanagement.

Our ex-employee source concludes that “I think having $118M in the bank led Airware to charge ahead and sink tons of money into force-it-to-work methods rather than exercise a bit of patience and wait for the inevitable advance of hardware to catch up. They had a knack for hiring extremely talented and expensive people from places like Google, Autodesk, there was even SpaceX and NASA alumni there.

They spared no expense ever.”