Only 1 startup in 5 million reaches the unicorn status – a company worth at least $ 1 billion. Then why do other projects not “go off“? There are many factors, in particular, experts at eu-startups.com. name the following: the absence of a business model, unskilled employees, poor marketing and a bad idea. Also, young projects are often faced with the lack of a market where the product could be sold. We have found three stories of Ukrainian startups that, despite their original ideas and investment, have been closed.
The Ukrainian startup Ecoisme was founded in 2014 by Ivan Pasichnyk from Kyiv and his two friends. The concept of a startup is a gadget with a built-in smart system which, with its sensors, monitors energy consumption in the house in real time. With the help of a special service, users can see what appliances are turned on at home, how much energy they are consuming, and get cost-cutting tips. The founders of the startup also promised up to 15% savings on electricity in case their gadget was used.
The Ecoisme project was well-liked by IoT (The Internet of Things) fans, as it provided the opportunity to turn their home into a smart one. The startup had tremendous media support, in addition to being constantly mentioned in the Ukrainian media, it was also written about in Forbes, Voice of America, TechCrunch and the BBC.
From the very beginning, Ecoisme was set up in Kyiv, and later, when they managed to attract serious investments, the team moved to Krakow. Here they have registered their company and started to establish contacts with European investors. However, in the end, they returned to Ukraine. Instead of launching mass production of gadgets in China (like most Ukrainian startups), they chose Poland.
To develop the startup, the team launched fundrising on Indigogo ($ 63,000 were raised), received investments from Hubraum, a Polish incubator (€ 80,000 for Deutsche Telekom project), InnoEnergy (€ 200,000), and sold shares in the Syndicate Room (£ 10 per share). There have been numerous victories on various projects and participation in accelerator programs and hackathons, such as the Dubai Future Accellerator or Tesla Camp.
However, large-scale investments and support from business angels have not helped the startup stay afloat. Due to lack of gadget sales, investors have refused to invest in product development. Subsequently, as Ivan Pasichny wrote on his Facebook page, there were several attempts to sell the company, but they were also unsuccessful.
Have you ever dreamt of learning to manage your sleep in your childhood? Fly as long as you want, turn into animals, or save Earth from aliens? For 5 years, Mykyta Antonov has been charishing the idea of creating a dream managing device and later made it a reality. In 2014 he and his team developed a LucidCatcher sleep mask that can be used to program dreams without special skills. The device works according to the scheme similar to the apparatus for electroencephalograms, examines the activity of the brain and determines when the user’s phase of fast sleep begins. Then the gadget switches on and sends an electrical signal to the brain, which helps the user to understand that he is sleeping.
The advent of LucidCatcher has caused a boom among Internet users, it has been written about by Ukrainian and international media. In 2014, they received $ 15,000 from the WannaBiz incubator, later at Tech Crunch Disrupt 2015 in the US, the startup team got acquainted with former Google employee Jack Levin, who invested $ 20,000 in the project. Later on, they received more $ 65,000 from Sikorsky Challenge investors and $ 20,000 from the iQSpace accelerator. The money was needed to refine the project and launch it into mass production.
In 2017, the startup launched the campaign on Kickstarter and raised $ 87,000 from the planned $ 75,000 in 33 days. On the project page on the Medium platform there were only favourable reviews from the buyers, but on Kickstrarter, they were completely different – from threats of being sued to fraud charges. Many users said they had not received the device yet, though Luciding representatives have promised to ship them back in 2018.
The project site is currently unavailable, and social network pages have not been updated since 2017. In his comment for Mind, one of the startup founders, Mykhailo Skrychevsky, said that the project had already been closed in 2017. And his business partners at Luciding have cheated not only investors and Kickstarter bakers, but the project team as well.
In 2014, Olexandr Savsunenko moved from Donetsk to New York. Here, he got a job as a research chemist with a $ 100,000 contract a year. Later on, with his colleague, he decided to create their own startup, but started with a blog about transhumanism. Later, when Olexandr visited Ukraine, he met a team of scientists here who were also fascinated with transhumanism and learned about telomeres. These are sections of chromosomes that serve to protect DNA. By measuring them, you can roughly calculate a person’s health. Then, having assembled a team, he became a co-founder of the Titanovo project.
Startup work was built by outsourcing – customers bought a DNA sampling kit, sent it back, and then the project team sent it to the lab. Then, users could find out the results of their analyzes and data about their body work on the special site in real time. Subsequently, the company has launched the DNA Lifestyle Coach project, a genetic test that helps to find the right diet, exercise and dental and skin care products.
In total, the Titanovo startup initially raised $ 10,000 (out of $ 20,000 planned) on Indiegogo and over $ 30,000 on Kickstarter. Over time, the company’s activity went up – the number of customers was growing, and sales reached $ 1 million. The money they got from their profits was immediately invested in their business. The project founders also held negotiations with investors several times, but they were unsuccessful.
However, one day this “success story” was cut short by a lawsuit from competitors in court – for infringement of a patent on telomere measurement technologies bought by an influential competitor. Although, in fact, Titanovo had nothing to do with it, as it purchased services from partner laboratories. But this had to be proved in court. The company hired lawyers and spent all their money on their consultations. Later, they ceased operations.