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Startup closure company SimpleClosure raises $1.5 million seed

Illustration of an office chair with a "closed" sign hanging from it.

Illustration: Maura Losch/Axios

SimpleClosure, a company that helps venture-backed businesses automate the shutdown process, has raised $1.5 million in seed funding.

Why it matters: Guidance to shut down a company is a rarity in an industry that tends to sweep failures under the rug.

Context: This comes as a rising number of startups throw in the towel while venture funding dries up. Data from Carta show a 107% increase in dissolutions in the second quarter of 2023 (81) from a year ago (56).

Details: Vera Equity and Cambrian Ventures led the round.

How it works: SimpleClosure blends automation with human consulting, aiming to automate and simplify the shutdown process by ingesting the company's documents. Having processed that information, it creates a shutdown plan, building a checklist and auto-populating paperwork (including tax filings and vendor termination agreements).

  • A process that typically takes months can then be accelerated to weeks or even days, says CEO Dori Yona.
  • Documents might include IRS papers and investor documents. SimpleClosure aims to find loose ends, having helped Elie Toubiana, a founder that shuttered ZenBill this year, to close an entity that he had forgotten he'd opened in Florida.
  • It also helped Toubiana identify in his credit card statements which vendors the company was still paying.

Of note: Toubiana also figured out, with help from a representative, how much to return to his investors.

Flashback: Yona was asked by investors to create an analysis of what could happen if he shut down his previous fintech business, Earny.

  • The startup eventually pivoted and found a buyer, but the complex and highly manual process left a mark in Yona's mind.
  • "It didn't make sense to me that shutting down a company was that complicated and that ambiguous," he said. "I felt like I was the first business in America shutting down a company."

The intrigue: Venture investors tend to seek companies with recurring revenue, but shuttering a business is a one-time event. Yona sees the possibility of dominating the market rather than focusing on recurring revenue, citing research that most venture-backed startups fail.

  • He also foresees serving a broader set of customers (such as vendors or creditors) and adding products — including managing leftover assets.
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