From Northvolt’s staggering $14bn failure to crypto crashes and biotech struggles, 2024 has been a brutal year for corporate-backed startups facing financial, operational, and market pressures.
Failure rates of investments in venture portfolios vary widely, largely influenced by differing definitions of “failure” and the industry’s persistent shroud of secrecy. University of Pennsylvania professor Elizabeth Pollman cites estimates that around 75% of venture-backed startups fail to provide returns to all equity holders. Some more optimistic and forgiving estimates suggest a comparatively modest failure rate of 25-30%.
Our research on corporate-backed startups aligns more closely with the lower estimates. Broadly defining failed portfolio companies as those that fail to return the capital invested, eight out of 10 corporates report that 30% or less of their portfolios fall into this category, according to data from our most recent annual survey.
The rationale is that specialisation and expertise in VC tend to reduce failures. For instance, a study by Dimov and De Clercq found that VC firms with specialised expertise in certain development stages experienced lower portfolio failure rates. Corporates arguably possess domain expertise that could lower failure rates, although there is always the possibility that failures are simply underreported.
However, failure in VC is undeniably commonplace, so what have been the major missteps that have left corporate investors nursing their losses in 2024? We’ve compiled a list of 10 of the most interesting ones. The causes for failures were diverse, spanning from operational and external challenges through market-related issues to financial and financing troubles and downright fraud.
Northvolt
By far the most memorable business failure in 2024 was that of Northvolt, the Swedish battery manufacturer founded in 2016 by a former Tesla executive. It filed for Chapter 11 bankruptcy protection and secured $100m in debtor-in-possession financing from Scania to maintain operations during the restructuring process. The company, which aimed to position Europe as a leader in battery production faced significant financial challenges, including reportedly $5.8bn in debt and only $30m in cash available. By the time this crisis hit, Northvolt had raised over $14bn in funding and was even planning to file for an IPO.
Northvolt’s financial difficulties were compounded by operational setbacks, such as production delays that led to the loss of significant contracts, including a $2bn order from BMW. Additionally, the company also faced safety concerns, with reports of multiple workplace accidents and fatalities at its Skellefteå factory.
Northvolt had attracted substantial investments from major corporations like BMW, Ikea, Scania and most notably Volkswagen Group, which held a 21% stake and is itself beleaguered by problems. Northvolt’s bankruptcy underscores the difficulties European companies face in competing with established Asian battery manufacturers, highlighting the complexities of scaling up production in the electric vehicle sector.
Terraform
A list like this one couldn’t go without a crypto startup failure. While the Terraform Labs failure was publicised a couple years ago, it wasn’t until well into 2024 when it formally concluded. And there’s a fraud-related element sprinkled on it.
Terraform Labs, co-founded in 2018 by Do Kwon and Daniel Shin, was a Singapore-based blockchain company renowned for developing the Terra blockchain and its cryptocurrencies TerraUSD (UST) and Luna. The firm attracted $207m in funding and its corporate backers included Coinbase, Binance and OKX, according to PitchBook.
In May 2022, Terraform Labs faced the catastrophic collapse of its UST and Luna tokens, leading to an estimated $40bn loss for investors. Subsequently, the US Securities and Exchange Commission (SEC) charged the company and its CEO, Do Kwon, with defrauding investors by misleading them about the stability of UST and the adoption of its blockchain technology. In June 2024, Terraform Labs agreed to a $4.47bn civil settlement with the SEC. Founder Do Kwon personally faced an $80m fine and was banned from engaging in crypto transactions.
Qredo
Terraform’s formal winding down was not the only crypto failure recorded in 2024, though. Qredo, a London-based crypto custody platform founded in 2018, entered administration following a partial acquisition by 10T Holdings and 1RoundTable Partners (1RT). The acquisition, executed through a new UK-based entity dubbed Fusion Laboratories, reportedly involved “substantial” assets of Qredo.
Despite raising $80 million in a series A round in 2022—led by 10T Holdings and including strategic investment from Coinbase Ventures, Qredo faced significant financial setbacks. The company underwent multiple rounds of layoffs, including a reduction of approximately 50 jobs in September 2023.
In December 2023, Qredo’s CEO and COO were removed as part of a restructuring effort to secure debt financing and maintain operations. Subsequently, in February 2024, Qredo entered administration. The newly formed Fusion Labs plans to relaunch the acquired assets under the name Fusionchain, an upgraded version of the Qredo Network built on the Cosmos blockchain.
Kevin
Crypto startups were not the only examples of fintech bedevilled by bankruptcies and controversies. Lithuanian payments infrastructure provider Kevin was declared insolvent in September 2024. The company, once a contender to become “the next Lithuanian unicorn” and raising nearly $100m in funding (as per PitchBook), was seeking to replace costly card transactions with its account-to-account (A2A) payment infrastructure. It counted Uniqa Ventures, the corporate venturing arm of Austrian insurance company Uniqa, among its backers.
Financial hardship had surfaced earlier in 2024 for Kevin, when reports indicated that the company had failed to pay its staff for two months, according to Sifted, a claim which it disputed. In July 2024, the Bank of Lithuania revoked the company’s payment institution license due to failure to submit accounting statements on time. Following the insolvency declaration, Kevin announced in a LinkedIn post, reported by Sifted, that it plans to appeal the court’s decision. The post has since been removed.
Universal Hydrogen
The industrial space was not immune to notable business failures, either. Universal Hydrogen, an aviation startup founded in 2020 by former Airbus CTO Paul Eremenko, was developing hydrogen fuel cell propulsion systems and modular storage solutions for aircrafts. The company had attracted significant investment, securing around $90m, according to PitchBook, from backers including corporates Airbus Ventures, American Airlines Ventures, JetBlue Ventures and Toyota Ventures.
By 2023, Universal Hydrogen had reached a notable milestone by conducting a successful test flight of a hydrogen fuel cell-modified Dash 8 aircraft. Despite this achievement, the company faced financial challenges and was unable to secure additional funding or complete a proposed merger with US regional carrier Silver Airways. It ceased operations in June 2024, having run out of cash.
MaaS Global
Services proved no less prone to failure. MaaS Global, a Finland-based public mobility startup, was offering Mobility-as-a-Service (MaaS) with its Whim app since 2015. Its platform allowed users to plan and pay for various transportation modes like public transit, taxis, bikes and rental cars in a single app. It had attracted considerable interest among investors, including corporate backers such as BP Ventures, Toyota and Mitsubishi.
Despite the appeal of its services, MaaS Global ran into significant financial challenges, as it recorded a €9.3m loss in 2022 against revenues of just €3.8m, even though it counted 10,000 active users in Helsinki. Its subscription model, which bundled various transportation services into a single package, was cited as a key factor in its financial hurdles, as users preferred the flexibility to choose and pay for individual modes of transport as needed, rather than being tied to a comprehensive subscription. In March 2024, MaaS Global filed for bankruptcy and then Dutch mobility platform Umob acquired the company’s technology and assets.
Blickfeld
Another closure in the mobility-related sector came for Blickfeld, a German startup developing high-performance, cost-efficient LiDAR (Light Detection and Ranging) sensors for applications in autonomous vehicles. Backed by prominent investors such as automotive parts maker Continental, lightning maker Osram’s Fluxunit and Tengelmann Ventures, the venturing arm of conglomerate Tengelmann. Blickfeld had secured $68m in funding, according to PitchBook, including a €15m in financing from the European Investment Bank (EIB) in 2022.
Despite its strong technical foundation and investor confidence, Blickfeld succumbed to financial difficulties that culminated in insolvency proceedings in June 2024. The company’s struggles can be chalked up mostly to market forces – fierce competition in the LiDAR market coupled with slower-than-expected adoption of autonomous vehicle technologies globally has left many companies in the sector grappling with delayed revenue streams.
Embodied
Robotics has seen a surge of interest from investors in 2024 but that hasn’t led to success for all. Embodied, a startup developing robots for emotional support for kids aged 5 through 10, is planning to cease operations. Its previous backers include corporates Intel Capital, Toyota Ventures, the Amazon Alexa Fund as well as the Sony Innovation Fund. Embodied’s robot, dubbed Moxie, which bore a price tag of $800, will soon be rendered useless, as it can’t operate without connection to the cloud. The company reportedly cited failure to secure a “critical funding round” as the reason for its shutdown, without revealing further details. The company had raised $75m across various venture rounds, according to PitchBook.
Datagen
This year also saw the downfall of Datagen, an Israeli startup specialising in generating synthetic data to train computer vision models for applications such as virtual reality, augmented reality and AI. The company attracted significant investment, raising nearly $70m in funding (as per PitchBook) from investors, including Samsung NEXT Ventures. In March 2022, it secured $50m in a series B round led by Scale Venture Partners, to enhance its position in the rapidly growing computer vision industry. However, by August 2023, Datagen faced substantial challenges, leading to the layoff of nearly all its employees, retaining only a core team of 10. The downsizing was attributed to the emergence of generative AI technologies like ChatGPT and Bard, which diminished the relevance of Datagen’s solutions.
Bonac
Even less cyclical areas such as biotechnology saw their share of failures, including the demise of Japanese biotechnology startup Bonac, which was focused on developing nucleic acid medicines. In 2020, Bonac partnered with Fukuoka Prefecture to develop a covid-19 treatment. The Japan Agency for Medical Research and Development also supported it. Bonac had piqued the interest of various local corporates like Chikuho Bank, Daiwa, Fujifilm Holdings, Sumitomo Chemical and Toray Industries, among others. It had also raised $65m in funding since its inception in 2010, according to PitchBook.
The covid-19 drug project failed to deliver effective results. Bonac’s broader research efforts also struggled to produce marketable pharmaceutical products, leading to mounting financial pressures. By 2023, the company had reportedly exhausted its research funds and accrued approximately ¥1.5bn ($9.86m) in debt and ended up filing for bankruptcy in February 2024. This failure appears to stem from both debt-related issues and significant R&D efforts with unpredictable outcomes typical for the biotech space.
