Startup Failures 2025: The Complete Report
2025 brought the AI reckoning, with Builder.ai, Lilium, and Rain AI among the casualties. Funding dried up for unproven business models.
67
Notable Failures
$103B
Total Funding Lost
26
Industries Affected
Failures by Industry
Failure Reasons
Key Highlights
Builder.ai collapsed after governance and financial irregularities surfaced
Lilium's electric air taxi dream ended in insolvency despite $1.5B raised
Rain AI shut down as enterprise AI wrappers proved unsustainable
Plenty's vertical farming couldn't overcome unit economics challenges
Biggest Failures of 2025
Byju's
Aggressive acquisition-driven growth funded by debt is fragile. Transparency with investors is non-negotiable.
Juul Labs
A $38B e-cigarette company that hooked teenagers on nicotine faced total regulatory destruction.
Northvolt
Manufacturing battery cells at scale is extraordinarily hard. Even $13.8B couldn't bridge the gap between lab results and factory output.
Rivian (Value Destruction)
Rivian IPO'd at $150B — briefly worth more than Ford and GM. The stock fell 90% as production couldn't match hype.
GoPuff
$3.4B in funding for instant convenience delivery still hasn't produced profitability. Another quick commerce cautionary tale.
OYO Rooms
SoftBank poured $2B+ into a budget hotel chain that expanded to 80 countries before ensuring quality in one.
Nuro (Autonomous Delivery)
Autonomous delivery robots raised $2.1B but commercial deployment remained limited to tiny pilot areas.
Opendoor
iBuying houses with algorithms works in rising markets but creates massive losses when prices drop even 5%.
Predictions for 2026
2026 will see the first major AI foundation model company failure
Crypto/Web3 zombie companies will formally dissolve
Healthcare AI faces regulatory crackdowns
Learn from Startup Failures
93% of startups fail. Study these cases to avoid the same mistakes.
Terra/Luna
Algorithmic stablecoins are inherently fragile. When confidence breaks, the death spiral is unstoppable.
WeWork
Valuation hype cannot mask fundamentally broken unit economics. Corporate governance failures amplify founder risk.
FTX
Due diligence on founder character is as important as business metrics. Lack of corporate governance enabled massive fraud.
Byju's
Aggressive acquisition-driven growth funded by debt is fragile. Transparency with investors is non-negotiable.