Startups often capture the world’s imagination. They raise billions of dollars, attract top talent, and promise to change industries. They shine brightly like stars, but many of them burn out just as quickly. Investors call them unicorns when their valuations cross a billion dollars. Yet, not every unicorn grows into a lasting company. Some collapse spectacularly.
When we look back, we see a clear truth. For every success like Google, Amazon, or Tesla, there are dozens of startups that fail. These failures are not small stumbles. They include companies worth billions of dollars that went bankrupt, shut down, or lost the trust of the public.
Learning about these failures is as important as studying success stories. Failure shows us the dangers of poor leadership, overconfidence, weak business models, and blind trust in hype. In this article, we will look at some of the most massive startup failures and bankruptcies in history. We will see why they failed, what patterns repeat across industries, and what lessons founders and investors must learn.
Case Studies: The Biggest Startup Collapses
1. Theranos – The Fall of a Health Tech Giant
Elizabeth Holmes founded Theranos in 2003. She promised to change blood testing forever. The company claimed that it could run hundreds of medical tests using just a few drops of blood from a finger prick. The dream looked revolutionary. If it worked, it could have saved time, money, and even lives.
Theranos grew fast. At its peak, the company reached a valuation of 9 billion dollars. Holmes appeared on magazine covers. Politicians, military leaders, and billionaires praised her as the next Steve Jobs. Theranos signed deals with Walgreens and Safeway to open blood testing centers inside their stores. Investors poured in money, dazzled by the vision.
The truth soon came out. The technology never worked. Investigations showed that the company faked test results. Employees revealed a culture of secrecy and fear. Regulators discovered violations in lab practices. Theranos even voided two years of test results because they were unreliable. Walgreens ended the partnership. The company had no way forward.
By 2018, Theranos shut down completely. Elizabeth Holmes and Sunny Balwani, the company’s president, faced charges of fraud. Both were later convicted.
Why Theranos failed:
- The company lied about its technology.
- It ignored scientific validation and strict healthcare regulations.
- It silenced employees instead of listening to concerns.
- It relied too much on hype and investor trust.
Theranos remains one of the most shocking startup failures in history because it mixed ambition with deception.
2. Katerra – Trying to Fix Construction All at Once
Katerra entered the construction world with a bold plan. It wanted to control every part of the process: design, materials, manufacturing, assembly, and even technology systems. The idea was simple but ambitious. The company wanted to treat buildings like products made in a factory.
SoftBank’s Vision Fund backed Katerra with hundreds of millions of dollars. The company expanded quickly. It opened offices in multiple countries and took on dozens of projects at the same time.
The reality proved harder. Construction is messy. It involves permits, regulations, supply chains, labor, and materials. Katerra struggled to deliver projects on time. Costs exploded. The pandemic made things worse with delays and shortages. The company could not keep up with its commitments.
In June 2021, Katerra filed for bankruptcy. A rival builder described the failure as “spectacular.”
Why Katerra failed:
- It tried to solve too many problems at once.
- It burned through cash at an unsustainable rate.
- It underestimated the complexity of the construction industry.
- It scaled too fast without proving success in one place first.
Katerra’s story shows the danger of overreach. Ambition can inspire, but execution determines survival.
3. Quibi – The Billion Dollar Streaming Flop
Quibi launched in April 2020 with great excitement. The name stood for “quick bites.” The company offered short video episodes, 7 to 10 minutes long, designed for mobile viewing. It raised 1.75 billion dollars before launch. Big Hollywood names supported the project.
The timing could not have been worse. Quibi counted on commuters watching videos on the go. But the COVID-19 pandemic hit. People stayed home. They wanted long-form content on big screens, not short clips on phones.
Quibi also lacked breakout shows. Viewers had no reason to pay for it when YouTube, TikTok, and Netflix offered better options. The service charged a subscription fee, which made it harder to win customers.
After just six months, Quibi shut down in October 2020. It returned around 350 million dollars of unused funds to investors.
Why Quibi failed:
- It misunderstood consumer behavior.
- It relied on hype and ignored market testing.
- It launched at the worst possible time.
- It failed to create must-watch content.
Quibi remains a classic example of a product that nobody truly needed.
4. Northvolt – The EV Battery Dream That Collapsed
Northvolt wanted to become Europe’s leader in battery production for electric vehicles. The company raised billions and promised to challenge Asian battery giants. Governments supported it because they wanted energy independence.
But by 2024, Northvolt ran into major problems. Costs soared. Projects faced delays. Contracts fell apart. The company struggled to raise new funding.
In March 2025, Northvolt filed for bankruptcy in Sweden. The collapse shocked the clean energy industry because the company once symbolized Europe’s green tech ambitions.
Why Northvolt failed:
- Costs and delays spiraled out of control.
- The company relied heavily on government support and hype.
- It could not compete with established global battery players.
Northvolt showed that even industries with huge potential, like green energy, can produce painful failures.
5. Bird Global – The Scooter Boom and Bust
Bird became famous as one of the first big scooter-sharing startups. Cities across the world saw Bird’s electric scooters on sidewalks. Investors valued the company at billions of dollars.
But Bird had a weak business model. Scooters broke down quickly. Replacing them cost a lot of money. Cities introduced new rules and fines. The company spent more on operations than it made in revenue.
By late 2023, Bird filed for bankruptcy protection under Chapter 11. It hoped to restructure but had already lost investor confidence.
Why Bird failed:
- Its unit economics did not work.
- Maintenance costs exceeded earnings.
- Regulations cut into operations.
- Growth depended on subsidies and investor money.
Bird’s fall highlighted the risks of chasing growth in a business that never reaches profitability.
6. Canoo – The EV Startup That Ran Out of Road
Canoo, an electric vehicle startup in the United States, promised futuristic vans and lifestyle vehicles. It attracted attention for its designs and raised millions from investors.
However, the company never reached mass production. Costs overwhelmed it. The EV industry grew more competitive, with Tesla, Rivian, and legacy automakers dominating the market.
In January 2025, Canoo filed for Chapter 7 bankruptcy, which meant liquidation and the end of its operations.
Why Canoo failed:
- It could not bring products to market on time.
- Competition crushed its chances.
- It ran out of cash and options.
7. Uniti – Sweden’s EV Startup That Died Early
Uniti in Sweden wanted to build small, affordable electric city cars. The idea excited eco-friendly drivers. The company raised money and built prototypes.
But manufacturing cars is expensive and complicated. Uniti never scaled to real production. By 2022, it filed for bankruptcy.
Why Uniti failed:
- High production costs.
- Lack of funding.
- Difficulty competing with larger EV companies.
8. Olive AI – Healthcare Automation with Empty Promises
Olive AI reached a valuation of over 4 billion dollars. The company promised to automate healthcare processes with artificial intelligence. Hospitals and clinics signed up, believing it could cut costs.
But the technology did not deliver the promised savings. Customers became frustrated. Investors lost trust. By 2023, Olive shut down and began selling its assets.
Why Olive AI failed:
- Overstated claims about AI capabilities.
- Weak product performance.
- Loss of trust from customers and investors.
9. Convoy – Logistics Startup with Big Names Behind It
Convoy entered the trucking and freight market with support from Jeff Bezos and other big investors. It promised to use technology to match shippers with truckers more efficiently.
For a time, Convoy looked unstoppable. But the freight market slowed in 2023. Prices dropped, and demand weakened. Convoy could not adjust quickly.
The company shut down in late 2023.
Why Convoy failed:
- Heavy dependence on market conditions.
- Lack of flexibility in operations.
- Inability to sustain when the freight market turned down.
10. WeWork – From Global Sensation to Cautionary Tale
WeWork once looked like the future of office space. It raised billions and expanded worldwide. At its peak, it was valued at 47 billion dollars.
But the business model was fragile. WeWork signed long-term leases on buildings and then rented short-term office space to customers. When demand dropped, it still owed landlords.
The company’s culture and leadership also drew criticism. The founder, Adam Neumann, made questionable decisions. Investors lost trust.
WeWork faced heavy debt and multiple restructurings. By 2023 and 2024, the company was close to bankruptcy. It serves as a warning of how hype and valuation can hide deep problems.
Common Patterns in Startup Failures
When we look across these failures, patterns emerge.
- Running out of cash: Many startups burned money faster than they earned it. They relied too much on future funding. When investors pulled back, they collapsed.
- Weak product-market fit: Some companies built products nobody truly wanted, like Quibi.
- Scaling too quickly: Katerra and WeWork expanded worldwide before proving their models locally.
- Operational complexity: Startups like Katerra and Bird faced logistical nightmares.
- Ignoring regulation: Theranos lied about lab tests, while Bird fought city rules.
- Overconfidence in leadership: Charismatic leaders sometimes blinded teams and investors to problems.
- Macroeconomic shocks: COVID-19, rising interest rates, and supply chain disruptions exposed fragile models.
Lessons for Founders and Investors
For founders:
- Test ideas with real customers before scaling.
- Manage cash carefully.
- Build slowly and prove success before expanding.
- Be honest about challenges.
- Create a culture that values transparency and feedback.
For investors:
- Look beyond hype and buzz.
- Demand real data and milestones.
- Spread investments carefully.
- Avoid chasing trends without proof of value.
For ecosystems:
- Normalize failure as a learning step.
- Create policies that allow smoother restructuring.
- Encourage realistic reporting and education for founders.
Conclusion: Why Studying Failures Matters
Startup culture often celebrates success stories. Yet, the biggest lessons come from failure. Theranos teaches us about honesty. Katerra warns us about overreach. Quibi reminds us that timing and consumer behavior matter more than hype. Northvolt and Canoo show the risks of capital-intensive industries. Bird proves that weak unit economics will always catch up.
Failure is painful. Investors lose money, employees lose jobs, and founders lose reputations. But failure also shapes the next generation of entrepreneurs. Many who fail once go on to succeed later, wiser and stronger.
In the end, massive startup failures remind us of a simple truth: bold ideas need strong execution, honest leadership, and real value for customers. Without those, even the biggest unicorns can vanish overnight.
Also Read – Good Glamm Group: A Startup Story Filled with Lessons