The top 10 startup failure case studies

Starting a company can be a thrilling rollercoaster ride. There’s the excitement of creating something new, the passion of a founding team, the buzz around launching your product...But for many startups, it all ends too soon. Failure in startups is more common than success, and while it can feel disheartening, each failure holds valuable lessons.

In this post, we dive into the stories of 10 startups that didn’t make it. We’ll explore what went wrong, share insights from the founders, and offer suggestions from our team at Codelevate to help you avoid similar pitfalls. Let's dive into it!

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Top 10 startup failure case studies

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1. Ansaro

Founded by: Sam Stone

Ansaro was an AI-powered hiring platform aiming to remove bias from recruitment. It used data to help companies make better hiring decisions by analyzing candidate interviews and resumes.

What went wrong: Despite a promising idea, Ansaro struggled to gain enough traction. The startup couldn’t convince enough companies to change their hiring practices or integrate the platform into existing workflows. It also faced fierce competition from larger HR tech companies.

“We tried to make the case for ROI based on backtesting, but that never resonated with HR buyers. I now believe that problems that require years to measure results are fundamentally better suited to large companies’’, said Sam Stone in an interview with Failory.

Codelevate’s insight: A great product must fit into users’ habits. Before building, test how your target users will actually use your product. Behavioral change is hard—don’t underestimate that.

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2. MapR Technologies

Founded by: John Schroeder and M.C. Srivas

MapR was a big data company that provided a platform for managing large-scale data workloads. It was once valued at over $1 billion and competed directly with companies like Cloudera and Hortonworks.

What went wrong: Despite raising over $280 million, MapR couldn’t keep up with the fast pace of cloud innovation. It focused heavily on enterprise clients but failed to adapt as customers moved to cloud-native solutions. In 2019, it was sold for a fraction of its valuation.

“While the reasons for the results are not entirely understood, they were at least in part to the sudden, last-minute and unexpected postponement of several customers’ timelines to make a purchasing decision,” said Chief Executive John Schroeder, according to Silicon Angle.

Codelevate’s insight: Tech is always evolving. Don’t get stuck in your original vision—be ready to pivot when the market shifts. Listen closely to your users’ future needs.

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3. Wesabe

Founded by: Jason Knight and Marc Hedlund

Wesabe was one of the first personal finance platforms, launching before Mint. It helped users track spending and offered budgeting tools.

What went wrong: Although it had a head start, Wesabe lost the race to Mint due to its less user-friendly design. Users had to manually upload bank data, while Mint offered automatic syncing. Mint also focused on simplicity, while Wesabe tried to be more comprehensive but ended up too complex.

“Everything I’ve mentioned - not being dependent on a single source provider, preserving users’ privacy, helping users actually make positive change in their financial lives - all of those things are great, rational reasons to pursue what we pursued. But none of them matter if the product is harder to use.” – Marc Hedlund, as cited in Failory.

Codelevate’s insight: Simplicity wins. No matter how powerful your product is, if it’s not easy to use, users will leave. Prioritize user experience from day one.

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4. Aria Insights (formerly CyPhy Works)

Founded by: Helen Greiner

Aria Insights built tethered drones for industrial and military use. It aimed to provide real-time data and persistent aerial views.

What went wrong: Despite founder Helen Greiner’s experience as a co-founder of iRobot (makers of Roomba), Aria couldn’t find a stable commercial market. The hardware was costly, and the company struggled with product-market fit.

“It’s an example where a company offers a solution to a problem that really doesn’t exist yet on such a large scale that it’s possible to monetize from it.” – Helen Greiner, as cited in Failory.

Codelevate’s insight: Don’t fall in love with your tech. Fall in love with your customer’s problem. Your solution should be laser-focused on solving that pain point.

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5. Shyp

Founded by: Kevin Gibbon

Ship was a mobile app that made it easy to find and schedule moving services. It partnered with moving companies and aimed to streamline the moving experience.

What went wrong: The startup faced logistical challenges and struggled with scalability. Coordinating moves across different cities, driver availability, and timing proved to be a nightmare. Operational costs soared, and revenue couldn’t keep up.

“Rather than change direction, I tasked the team with expanding geographically and dreaming up innovative features and growth tactics to further penetrate the consumer market. To this day, I’m in awe of the vigor the team possessed in tackling a 200-year-old industry. But, growth at all costs is a dangerous trap that many startups fall into”, shares Kevin Gibbon on LinkedIn.

Codelevate’s insight: If your startup is operationally heavy, build a rock-solid logistics model first. Scale slowly, and don’t sacrifice quality for growth.

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6. HubHaus

Founded by: Shruti Merchant

HubHaus helped young professionals find co-living spaces by connecting them with potential roommates. It aimed to simplify shared living with flexible leases and community matching.

What went wrong: COVID-19 drastically reduced demand for co-living. People moved away from shared spaces, and remote work changed how people viewed housing. With high burn rates and a shrinking market, HubHaus shut down in 2020.

“Prior to WeWork’s failed IPO, we were close to getting a Series B. Investors’ feedback was that our metrics were best in class (for this model of co-living), and we quickly got our first offer for a piece of the round. As WeWork crashed from grace, the real estate tech market crashed with it. Our deal was pulled off the table and other formerly interested investors went cold’’ – Shruti Merchant, as cited in Medium.

Codelevate’s insight: External forces can disrupt even the most innovative models. Always have a contingency plan and watch for macro trends that could impact your niche.

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7. Blendle (Netherlands)

Founded by: Alexander Klöpping and Marten Blankesteijn

Blendle was a Dutch journalism startup that allowed users to pay per article from various newspapers and magazines. It wanted to make quality journalism accessible and ad-free.

What went wrong: Though initially popular, the pay-per-article model proved hard to sustain. Most users didn’t want to pay for individual articles, and publishers pulled back. Eventually, Blendle pivoted to subscriptions and was later sold. Blendle shifted to digital subscriptions in 2019 and was acquired a year later by Cafeyn, a European digital media bundle provider.

“German and US micropayment user bases were "very limited compared to the size of the overall Cafeyn / Blendle base, hence our decision to close down the micropayment service.” – Statement by Cafeyn CEO Ari Assuied, as cited in Journalism.co.uk.

Codelevate’s insight: Disrupting user habits, especially around money, is a tall order. Try hybrid models and test thoroughly before scaling.

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8. Gidsy (Netherlands)

Founded by: Edial and Floris Dekker

Gidsy was a marketplace for local experiences, where people could host and book activities like cooking classes or walking tours. It gained attention quickly and was even backed by Ashton Kutcher.

What went wrong: The model didn’t scale well. Trust and safety were hard to manage, and finding consistent hosts with quality experiences became a bottleneck. It was acquired by GetYourGuide in 2013.

“By combining Gidsy’s proven excellence in design and expertise in building engaging mobile and social experiences with GetYourGuide’s fast-growing web platform and strong distribution network, we are positioned to completely transform the way travel activities are discovered, bought and sold.” – Johannes Reck, CEO of GetYourGuide

Codelevate’s insight: Marketplaces are tough. Focus on quality control early, and build strong systems for host onboarding and review moderation.

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9. SnappCar (Netherlands)

Founded by: Victor van Tol and Pascal Ontijd

SnappCar was a peer-to-peer car sharing service. It allowed people to rent cars from others in their neighborhood, promoting sustainability and reducing car ownership.

What went wrong: While still technically operating, SnappCar never fully scaled as expected. It struggled with trust issues, insurance complications, and inconsistent user engagement. The market was smaller than projected, and profitability was elusive.

“As a sharing platform, we are aware of the importance of trust in our platform and the privacy of our users. We are sorry that we were not able to guarantee this privacy to the standard that our users expect.” - Official statement by Snappcar, as cited in Silicon Canals.

Codelevate’s insight: Peer-to-peer models need deep trust infrastructure. Solve for reliability and safety before thinking about growth.

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10. DigiNotar (Netherlands)

Founded by: Not publicly disclosed (it was part of Vasco Data Security)

Diginotar was a Dutch digital certificate authority. It played a crucial role in internet security by issuing SSL certificates.

What went wrong: In 2011, Diginotar was hacked, and hundreds of fake certificates were issued. Trust in the company collapsed, and browsers revoked its certificates, effectively ending its business.

“All CA servers were members of one Windows domain, which made it possible to access them all using one obtained user/password combination. The password was not very strong and could easily be brute-forced.” – Fox-IT post-mortem report on the DigiNotar breach, as cited in PKI Solutions.

Codelevate’s insight: If trust is the core of your business, invest in it relentlessly. One security breach can end everything. Hire experts, audit regularly, and don’t take shortcuts.

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Want to dive deeper into the main reasons why startups fail and how are they relevant for your business? Download our latest e-book for free!

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Conclusion

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Building a startup is no small feat. These 10 case studies show us that even great ideas with talented teams can fail. Whether it’s product-market fit, operational challenges, timing, or external shifts, the road is never easy.

At Codelevate, we work with startups every day and see common patterns that lead to trouble. Here are a few final takeaways:

• Talk to your users constantly: Don’t assume you know what they want, but ask.
• Simplify: Complexity kills adoption.
• Be flexible: Pivot when the market tells you to.
• Invest in trust and security: Especially in marketplaces or fintech.
• Test before you scale: Early feedback can save years of effort.

Failure isn’t the end, it’s a powerful teacher. Learn from these stories, build wisely, and when in doubt, reach out. We’re here to help you build the right thing, the right way.

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Want help validating your startup idea or avoiding costly mistakes? Book a free strategy call with us and let's discuss how we can build smarter, together.