Closing Time: Lessons from a Series of Startup Shutdowns

Founder Collective
2 min readFeb 8, 2024

By Micah Rosenbloom

I’ve worked with more companies winding down in the past 12 months than I have the previous 10 years of my career. Here are some things I’m learning:

1) The process is emotional. The process is lonely, sad, humbling and anxiety inducing. Burying a venture that you put your hopes, dreams, blood, sweat and tears into is one of the hardest things to do. Its best to lean on your community — you are definitely not alone!

2) Couple this with the fact that besides all of this there are legal issues, cash outlays, potential layoffs, A/R, A/P and a whole bunch of things founders aren’t trained for or prepared to deal with.

3) Misalignment between founders & VCs can be very pronounced during these moments. Investors may wonder why the founder doesn’t keep going on a leaner budget? Why not find a buyer? Why sell for so low? So many questions that unless there’s good communication in the process, a solid relationship can turn bad very quickly in these moments.

4) Messaging is important. How you frame what happened in the end is a real opportunity to build a lot of goodwill with investors/employees/customers. People are more understanding than you think, especially when there’s an honest and thoughtful post mortem.

The US, and particularly the tech ecosystem, is unique in that we’re built for do-overs. Many successful founders have one or more failures behind them. My father is a bankruptcy attorney so I’ve seen the hardship of failure from a young age, but also the ability for founders and companies to bounce back.

At the end of the day, 1 for 3 in the start-up world is an all-star batting average :)

--

--

Founder Collective

Our mission is to be the most aligned VC for founders at seed. #ProudInvestor in @Uber @TheTradeDeskinc @Buzzfeed @Cruise @Diaandco @PillPack @SeatGeek & more.