Andreessen Horowitz (A16Z) bad investment:

Below I listed 8 start-up companies A16Z invested which didn’t perform well.

1. Company: Flow

Institution type: Adam Neumann’s new company Flow wants to transform the
residential rental real estate market.

Funding: Andreessen Horowitz is investing about $350 million in Flow, with a valuation
of more than $1 billion.

Why bad decision?

Founder’s Reputation: Many noted Neumann’s less-than-ideal track record at

WeWork, which under his tenure tanked in value from ~$47 billion to ~$8 billion and
gained a reputation for mismanagement and poor treatment of employees.

2. Company: LendUp

Industry: Consumer Finance

Institution type: LendUp is a financing company that caters to people with bad or poor
credit. This company was co-founded by Sasha Orloff and Jake Rosenberg in 2012 to
act as an alternative to traditional payday loans.

Funding: LendUp received $325 million in equity and debt financing from PayPal,
Kleiner Perkins Caufield & Byers, Google Ventures, Andreessen Horowitz, Alexis
Ohanian, Y Combinator and QED Investors, among others

Why this company failed?

Lawsuit/Misleading/Cheating: In December 2021, the CFPB ordered LendUp, a fintech

primarily known for its earned wage access product, to cease lending operations after
allegedly misleading and deceiving customers.

The CFPB also alleges that LendUp illegally failed to provide timely and accurate
notices to consumers whose loan applications were denied. LendUp lures consumers
with false promises that repeat borrowing would allow them to 'climb the LendUp
Ladder' and unlock lower interest rates.

3. Company: Anki
 Institution type: Anki was an American robotics and artificial intelligence start-up that
put robotics technology in products for children. Anki programmed physical objects to
be intelligent and adaptable in the physical world and aimed to solve the problems
of positioning, reasoning, and execution in artificial intelligence and robotics.

Funding: Andreessen Horowitz, Index Ventures, and Two Sigma see the potential, as
they’ve invested a total of $50 million Series A and Series B funding to help Anki launch
in the fall. Oveall, Anki raised nearly $200 million from high-profile investors like
Andreessen Horowitz.

Why this company failed?

Sale/ lack of money: Anki was shut down because the company ran out of money. The
company was allegedly in talks to raise another funding round, which ultimately fell
through. With a staff of 200 people, all while producing and storing physical products,
its operations could not be financed anymore. Anki ran out of money and could no
longer “support a hardware and software business.

4. Company: Airware

Institution type: Airware (incorporated as Unmanned Innovation, Inc.) was an

American venture-funded start-up that provided commercial unmanned aerial vehicles
for enterprises. The company ceased operations on September 14, 2018.

Funding: In 2013, when started Airware raised $10.7 M series A investment led by
Andreessen Horowitz, and backed by Google Benture

Why this company failed?

Lack of Fund/Fund mismanagement/Competitor: It appears [Airware] wasn’t able to

raise necessary funding to save the company or secure an acquisition from one of its
strategic partners like Catepillar. The startup ran out of money after trying to
manufacture its own hardware that couldn't compete with drone giants like China's DJI

Airware will serve as cautionary tale of startup overspending in hopes of finding

product-market fit. Had it been more frugal, saved cash to extend its runway, and
given corporate clients more time to figure out how to use drones, Airware might have
stayed afloat. Sometimes, even having the most prestigious investors can’t save a
startup from mismanagement.

5. Company: Quirky
 Institution type: Quirky is an invention platform that connects inventors with
companies that specialized in a specific product category.

Funding: It was founded in 2009 by Ben Kaufman. In 2012 it received a $68 million
Series C investment led by Andreessen Horowitz and Kleiner Perkins Caufield & Byers.
Then, in November 2013, Quirky raised $79 million in Series D funding from General
Electric (GE) as well as its venture investors Andreessen Horowitz, Norwest Venture
Partners, RRE, and Kleiner Perkins Caufield & Byers

Why this company failed?

1. Failing to connect with consumers: Quirky was unable to pick out winning
inventions from thousands of crowd sourced ideas, leading to weak sales that
could not cover the high development cost. Although the winning ideas were
picked by a voting system used by the inventor community, the company failed to
realize that the voters are NOT the customers. After all, it’s very different to click
on an invention you like than to pay real money for it. Quirky lost its value
proposition to since each product has its own target customers. Quirky also didn’t
measure whether each product addressed a real consumer need, and if the
consumer is willing to pay a certain amount for it.
2. Unable to attain scale in manufacturing: Due to distribution limit, demand
uncertainty, and manufacturing capacity, Quirky was unable to reach scale and
save costs in manufacturing. Many of the innovative products were unprofitable
due to these high fixed costs.
3. Quality control: Quirky could pull off simple consumer gadgets like cross-over
iPhone case or cord keepers, but it couldn’t live up to the quality expectations for
more complicated products such as household appliances or smart connected
products. Reviews on Quirky’s site suggested customers were frustrated that
products broke quickly or never worked

6. Company: Atrium

Institution type: It is B2B company providing legal services for start-ups through tech-
based platform. It provides legal services for start-ups through a tech-based platform.
It was founded in 2017 by Justin Kan, Augie Rakow, Bebe Chueh, and Chris Smoak. The
company aims to solve three common problems that the founders encounter when
accessing legal services: unpredictable pricing, unpredictable response times, and a
lack of transparency from the service provider to the client

Funding: $75 million from investors like Andreessen Horowitz

Why this company failed?

 Product/Unmature market/Regulations: Justin Kan’s hybrid legal software and law
firm startup Atrium is shutting down today after failing to figure out how to deliver
better efficiency than a traditional law firm, the CEO tells TechCrunch exclusively. The
startup has now laid off all its employees, which totalled just over 100. It will return
some of its $75.5 million in funding to investors, including Series B lead Andreessen
Horowitz. The separate Atrium law firm will continue to operate.

A lesson any company combining lawyers and technology should take from Atrium is
that they need to be aware of and push (whilst remaining in) regulatory boundaries.
When I asked Scott Kupour about why Atrium hadn’t been more successful back in
October, his view was that legal tech is still an immature market and heavily regulated.

7. Company: Quantopian

Institution type: Quantopian aimed to create a crowd-sourced hedge fund by letting

freelance quantitative analysts develop, test, and use trading algorithms to buy and
sell securities. In November 2020, Quantopian announced it will shut down after
having operated for 9 years.

Funding: John Fawcett and Jean Bredeche founded Quantopian in 2011. Over its
history, Quantopian raised $48.8M from investors such as Spark Capital, Khosla
Ventures, Bessemer Venture Partners, Point72 Ventures, and Andreessen Horowitz

Why this company failed?

Product/Unrealistic goals: To some pros, the end of Quantopian was inevitable. Could
amateurs really figure out anything they couldn’t? Even high-priced hedge fund
managers are struggling to outwit the market these days. […]

Quantopian’s bet was that this kind of elitism might give it a competitive edge. By
offering everyone on the internet free access to data, tutorials, and tools, it sought to
beat the army of Ivy League Ph.D.s by picking the best quant strategies from the
world’s untapped geniuses. It was the wisdom of the crowds, applied to the nerdiest
corner of Wall Street — radical, sure, but a logical extension of a burgeoning gig
economy and a tech revolution that was opening up access to ever-deeper market
data.
1. Unrealistic goals and expectations coupled with restrictions
Quantopian figured out the above late in the game. Due to their process for testing
market neutrality of strategies and strict requirements, Type-II error (false rejections)
was high and they ignored many strategies that although not market neutral could
have generated good returns.

8. Company: Automatic
Institution type: Automatic is a Smart Driving Assistant that can save you money on gas,
remember where you parked, and even call for help in a crash.

Funding: Total disclosed funding $24 million

Why this company failed?

Pandemic affecting sales: Just like many other companies in the United States, the
COVID-19 pandemic has adversely impacted our business,” the company said in a
statement. “With fewer consumers purchasing and leasing vehicles and drivers on the
road, we unfortunately do not see a path forward for our business. These are
unprecedented times, and with so much uncertainty ahead, we have made the difficult
decision to discontinue the Automatic connected car product, service and platform.”