Big funding rounds often create excitement around startups. People believe millions of dollars will guarantee success. But history shows the opposite. Many startups raised huge sums, grabbed headlines, and still ended in bankruptcy. Their stories teach us about the dangers of hype, poor planning, and bad execution. Let’s explore some of the most famous cases from recent years.
Builder.ai – An AI Dream That Fell Apart
Builder.ai claimed it could build apps faster and cheaper with artificial intelligence. Investors loved the story. Big names like Microsoft and Qatar’s sovereign wealth fund poured in money. In 2023, the company raised $230 million.
The truth turned out different. The so-called “AI” depended on hundreds of human engineers, not just technology. Costs rose, results slowed, and customers complained. By 2025, the company could not pay back creditors. It laid off almost 1,000 workers and entered insolvency proceedings. A group of shareholders offered emergency cash to rescue it, but the damage was too great.
Builder.ai’s collapse shows how easy it is to sell a dream of AI, but without real breakthroughs, even hundreds of millions cannot prevent bankruptcy.
Solid – The Fintech That Could Not Scale
Solid wanted to be the “AWS of fintech.” It promised to help other companies launch financial products quickly. Investors liked the idea and invested $81 million.
The startup grew fast but struggled with complex systems and regulatory hurdles. Managing financial infrastructure proved far harder than expected. By early 2025, Solid ran out of runway and filed for bankruptcy. The case highlights how fintech companies face heavy costs and strict oversight. Even strong funding cannot solve deep structural problems.
Marin Software – From IPO Glory to Shutdown
Marin Software once stood tall in the digital advertising world. It went public in 2013 with a value of more than $400 million. Investors believed Marin could compete with giants like Google and Facebook.
But those tech giants kept improving their own ad tools. Marin could not keep up. Losses piled up year after year. By 2025, the company faced heavy debt and a shrinking client base. Executives tried to cut costs by firing 30% of the staff, but that could not save it. Nasdaq threatened to delist its shares. In July 2025, Marin filed for Chapter 11 bankruptcy.
This story proves that raising millions or even going public does not guarantee long-term success when powerful competitors dominate the market.
Fisker – The EV Startup That Overpromised
Fisker, an electric vehicle startup, became a star during the SPAC boom in 2020. It promised futuristic cars and projected revenue of more than $10 billion by 2024. That forecast convinced investors to pour in huge sums.
But the company never came close to those numbers. In 2023, Fisker only earned $273 million and lost almost $1 billion. Customers complained about quality issues, and the company struggled with production delays. By 2024, Fisker owed around $180 million, laid off workers, and finally filed for bankruptcy.
Fisker shows how startups can raise money by making bold promises. But when reality falls short, the fall becomes sharp and unforgiving.
Munchery – Food Delivery That Burned Out
Munchery wanted to deliver chef-cooked meals in big cities like San Francisco, Seattle, and New York. Investors loved the idea and poured in $125 million. In 2015 alone, it raised $87 million.
But food delivery is an expensive business. Logistics, labor, and supply chain costs ate up cash. Competition grew fierce as other companies entered the space. In January 2019, Munchery shut down suddenly. Bankruptcy filings revealed more than $34 million in debt.
The Munchery story highlights how food delivery, even with lots of funding, becomes unsustainable without a clear path to profit.
PledgeMusic – Crowdfunding That Betrayed Artists
PledgeMusic launched in 2009 as a crowdfunding platform for musicians. Artists used it to sell pre-orders and fund albums. The platform grew fast and raised millions in campaigns.
By 2018, problems surfaced. Artists said they did not receive their money. Fans complained that orders never arrived. Leadership failed to manage cash responsibly. By 2019, PledgeMusic shut down and entered liquidation. Many artists never received the funds they earned.
This case shows how trust plays a central role in crowdfunding. Once artists and fans lost faith, the company had no chance of recovery.
Webvan – A Warning from the Dot-Com Era
Webvan became famous during the late 1990s. It promised to deliver groceries online before anyone else thought it possible. Venture capitalists loved the idea and invested more than $700 million. In 1999, Webvan raised another $375 million through an IPO.
The company expanded too quickly. It built expensive warehouses and bought competitors. Cash burned faster than revenue grew. By 2001, Webvan had spent $800 million while earning only $178 million. The company filed for bankruptcy, and 2,000 employees lost their jobs.
Webvan became a symbol of the dot-com bubble and remains a cautionary tale about chasing growth without discipline.
LightSail Energy – A Green Tech That Could Not Deliver
LightSail Energy began in 2008 with a bold vision: compressed-air storage that could rival lithium batteries. The idea attracted around $70 million from investors like Bill Gates, Peter Thiel, and Vinod Khosla.
But technology moved faster in lithium-ion batteries, leaving LightSail behind. The company could not bring its storage system to market. By 2017, it had burned through most of its funds. In 2018, it shut down completely.
LightSail’s failure highlights how clean-tech startups face brutal competition from faster-moving alternatives. Great ideas do not always become practical solutions.
The Bigger Picture – Why Startups Fail Despite Millions
Across these cases, some clear themes appear:
- Money cannot replace execution. Millions in funding give breathing room, but poor planning, weak leadership, or over-expansion can still lead to collapse.
- Hype creates pressure. Companies that raise money on bold promises often feel forced to over-deliver. When results fall short, investors lose patience.
- Competition is ruthless. Giants like Google, Meta, and Tesla can crush smaller rivals with stronger resources and market power.
- Trust is priceless. Once customers or partners lose trust, no amount of money can bring it back.
- Scaling too fast kills. Expanding without stable revenue burns cash faster than investors can provide it.
Final Thoughts
The stories of Builder.ai, Solid, Marin Software, Fisker, Munchery, PledgeMusic, Webvan, and LightSail show that raising millions—or even billions—does not secure survival. Startups need discipline, innovation, and honesty to stay alive. Money buys time, but it cannot buy execution.
For entrepreneurs, the lesson is clear: raise capital wisely, spend carefully, and never let hype run ahead of reality. For investors, these bankruptcies remind us that due diligence matters more than glossy presentations. And for employees, they highlight the risk of tying careers to companies that grow too fast without solid foundations.
In the end, the biggest bankruptcies teach us the same truth: success comes from strong fundamentals, not from the size of the funding round.
Also Read – 10 Reasons Why Datafication is Crucial for Startups