The effects of economic decline in 2022 hit businesses hard, especially startups. Particularly, it hit startups in the tech industry, though most startups felt the squeeze as interest hikes and decreased funding continued throughout the year. Even on a good year, most startups fail, and a lack of funding is one of the top reasons they do, so it should come as no surprise that last year saw many promising startups crash and burn.
Airlift: At one time, Airlift stood as Pakistan’s high-valued startup, and it had the funding to propel it forward. However, cash flow problems ended up being its downfall, with the high-profile startup crashing and burning in July due to a lack of capital and difficulty securing further funds.
Airlift started as a mass transit startup, and at its peak, it was giving around 35,000 rides daily. Then, when the pandemic hit and affected transportation companies, it successfully shifted to a grocery delivery startup.
Prior to its downfall, Airlift managed to secure $85 million in Series B funding at a $275 million valuation. It was a massive amount of funding for Pakistan, making the failure even more painful for those involved and the country as a whole.
Bolt Mobility: The micromobility startup gained a lot of attention due to its co-founder Usain Bolt, and it made its grand ambitions known. Bolt Mobility wanted to revolutionize transportation in a safe and green way, but an abrupt closure left abandoned scooters scattered across cities in multiple states. City representatives spoke about not being able to reach anyone at the company about the abandoned scooters.
Part of why Bolt Mobility failed was rapid expansion without secured funding to back it up. Therefore, when a major deal fell through, the company collapsed, and chaos was left in its wake. Companies stretching themselves thin and relying on funding that never came was seen many times in 2022.
FTX: FTX’s collapse and Sam Bankman-Fried’s extradition and upcoming trial have been all over the news, practically defining crypto in 2022. At a time when crypto was already hurting, the fall of FTX caused a chain reaction that saw multiple companies buckle. FTX filed for bankruptcy in November after struggling to secure a bailout deal.
The crash and burn of FTX is unique in the sense that it pulled others down with it, managing to hurt an entire industry. Moreover, the effects of its failure are still being seen, and they likely will be well into 2023.
Future: The Andreessen Horowitz tech publication looked to bring tech news and information directly to readers, circumventing traditional media. It hit the scene with high-profile editors and a lot of hope, shining a positive light on tech and the future. But a mere year and a half later, Future decided to close its doors.
In part, the downfall occurred because companies have started building their own editorial arms, going direct by themselves. The startup saw traffic decline from 1.3 million visits in early 2022 to 420,000 in October 2022.
Protocol: Protocol was another up-and-coming publication focused on tech that stopped operations in 2022. Founded by the owner of Politico in 2020, the company was meant to replicate Politico’s success with a focus on the tech industry. However, timing and challenging economic conditions saw it close its doors.
The company’s ad-driven model failed, and it did not hit revenue goals. In fact, it came in well under its 2022 goals, and the 2023 outlook did not seem bright, which ultimately sealed the startup’s fate.
Reali: The real estate industry felt the pinch in 2022, and Reali was no different. The promising startup raised $100 million in funding in 2021, only to be forced to lay off employees and eventually call for a full shutdown of operations that saw it letting go of its remaining staff by September 2022.
The co-founder and chairman spoke out, citing challenges in real estate and the financial market for the failure. However, ultimately, it was about funding and money, a problem faced by many startups in 2022.
