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Nothing can be more upsetting than promising startups collapsing into bankruptcy. Often a lack of farsightedness from the founders leads to such fateful consequences. Exorbitant marketing campaigns, hasty expansions and sloppy fiscal structures are some of the main reasons behind startups getting bankrupt. As stated by a veteran Scottsdale Bankruptcy Attorney, failure to comply with set business and operational standards (ending in expensive lawsuits) is another big reason for company bankruptcy. Below is a list of 4 promising tech startups that collapsed into bankruptcy in recent times.
Powa’s failure last year was a huge blow to the UK tech commerce scene. It’s tragic how a promising unicorn that was destined to become a tech giants ended up succumbing to bankruptcy. Powa developed mobile payment apps & POS terminals. It boasted a valuation of $2.7 million just two months before going bankrupt. Unfortunately, the startup was unable to impress customers and failed to raise the capital needed to keep the firm running. There was possibly no other way out and Powa declared bankruptcy in February 2016.
Another major tech startup to file for bankruptcy in 2016 was PopExpert. The company was a EduTech startup that worked to connect people with music teachers, career guides and other educational pros. It was fast gaining traction in the market, raising a whopping $2 million+ in seed funding. However, according to PopExpert officials, it was the controversial regime of their CEO Ingrid Sanders that spelt doom for the company. After 11 months of struggle, PopExpert finally filed for bankruptcy in April 2016. Ironically, Sanders was acknowledged as one of the 13 most influential women in modern tech world that same year.
Delaware-based Jumio was yet another prospective startup to file for bankruptcy in 2016. The company developed ID verification technology and had backing from Facebook Co-founder Eduardo Saverin. According to sources, Jumio had financial issues since 2013 due to poor management decisions that finally led to its voluntary declaration of bankruptcy. The company is now owned by its high-profile backer Saverin and the new entity is now known as “Jumio Acquisitions LLC.
Dart Music Inc.
Another tech startup to file for bankruptcy this year is Dart Music Inc. It was a Nashville-based music-tech endeavor that aimed to foster digital distribution of classical music. The concept took the music scene by storm, which helped the company raise $1.5 million seed funding in 2015. However, Dart Music suffered a serious decline in revenue and eventually filed bankruptcy in February 2017. The company’s lack of negotiating capacities with stake holders was another major reason behind its failure. The good news is that Dart Music still has many assets to liquidate.