Starting a Startup is Simple, Shutting One Down is Not
Launching a startup may seem straightforward, but closing one is a different story. With around 90% of startups ultimately failing, the challenges of winding down a company are considerable and often mired in manual, bureaucratic processes.
Dori Yona, a three-time founder, recognized this issue while building his latest venture. Tasked by a board member to develop a “shutdown analysis,” he discovered that finding information about the closure process was not only difficult but often considered taboo. “I spoke with lawyers and accountants, searched online—despite 93% of funded startups eventually shutting down, it’s a conversation few are having,” Yona shared.
In April, after departing from his role as GM of Growth at Navan, Yona partnered with Nimrod Ram (CTO) to establish SimpleClosure, a seven-person team focused on automating the business dissolution process. Currently, using traditional providers to close a company can cost $75,000 and take nearly a year—SimpleClosure aims to cut that timeline to just weeks at a significantly lower cost. Their pricing model varies based on company size and the stage of the wind-down process.
Raising Funds Without a Pitch Deck
Remarkably, Yona and Ram secured $1.5 million in pre-seed funding in just 24 hours without a formal pitch deck. “I hadn't intended to raise funds, but after sharing our vision at the Fintech Meetup, the enthusiasm from investors was immediate,” said Yona, who had previously sold the startup Earny in 2021 after raising $14 million. “The speed of our funding highlighted the pressing market need for a solution like SimpleClosure.”
The investment round was co-led by Vera Equity and Cambrian Ventures, with support from executives from notable companies such as Brex, Plaid, Gusto, and Nvidia. Most of the funding will be directed toward enhancing product and engineering capabilities. “From day one, SimpleClosure was designed for profitability, allowing us to scale quickly without relying entirely on venture capital,” Yona explained. “To put the market opportunity into perspective, between 700,000 and 1 million companies close their doors in the U.S. each year.”
SimpleClosure integrates fintech, legal tech, and artificial intelligence to streamline the shutdown process through three key phases: onboarding, dissolution & wind-up, and actual shutdown. Initially, the platform gathers necessary information to identify unique challenges faced by each company. Following this, it activates dissolution procedures, tackling obligations and concluding matters with customers, vendors, state agencies, and employees. This phase includes preparing legal documents and obtaining necessary stakeholder approvals. Finally, SimpleClosure manages intellectual property, settles financial obligations, and orchestrates fund distributions to investors while providing guidance on retaining essential company records post-closure.
Yona highlighted the startup's commitment to leveraging and developing AI technology to automate labor-intensive tasks like data extraction and summarizing legal documents necessary for company dissolution.
Identifying a Major Business Opportunity
Currently, SimpleClosure services startups, corporations, and LLCs, with plans to extend its offerings as the company grows. “Since June, we've witnessed remarkable growth in paying customers and interest from founders, all driven by word-of-mouth referrals,” said Yona.
Among its clients is Elie Toubiana, founder of Carbon Payments, which shut down earlier this year. He praised SimpleClosure for simplifying the shutdown process and addressing complexities with “professionalism and transparency.”
Rex Salisbury, founder and general partner of Cambrian Ventures, expressed his investment rationale by stating, “It’s a problem that desperately needs a solution.” He further noted the significant business potential inherent in this sector.
Salisbury shared insights from his own experiences, revealing that shutting down a business, even a straightforward one, can be surprisingly challenging. “For larger or more regulated companies with licenses and multi-state operations, the complexities—and the risks to founders—escalate quickly,” he explained. "Closing a business isn’t just a one-time task; there are ongoing risks that require proper insurance and management of IP and assets. SimpleClosure has pioneered a tech-driven solution to a traditionally manual and error-prone process.”
Ranking
