10 Famous Failed Startups and Businesses in Canda
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Starting a business can be challenging and risky, and it is common for even the most promising startups to fail.
From high-profile collapses to quiet shutters, these failed businesses offer valuable lessons for aspiring entrepreneurs.
Economic Insights states that around 39,000 businesses have shut down each month in Canada’s business sector since January 2015. However, in April 2020, the number of closures was much higher, with 88,187 businesses shutting down. (Source: Statistics Canada)
Many famous failed startups and businesses in Canada have made headlines.
In this blog, we will explore some of the well-known failed startups and businesses in Canada that closed shop in the last few years, highlighting the reasons behind their failure and the lessons that can be learned from their experiences.
This article is in follow-up to our failed business articles from other countries:
Famous Failed Businesses and Startups in the UK
Famous Failed Businesses and Startups in Australia
Famous Failed Businesses and Startups in India
And before you jump to the article, note that whether you are just starting in the business world or an experienced entrepreneur, understanding the challenges and pitfalls these failed businesses face can help you avoid making similar mistakes and increase your chances of success.
Let’s get started!
The Disney Store
Founder(s): Walt and Roy O. Disney
Industry: Retail
Founded: 1987
Shutdown year: 2021
Funding Amount: No Data
Reason for failure: Shift towards E-Commerce business
In 2021, Disney lovers in Canada were heartbroken to discover that all Disney Stores in the country would be closing by the end of the year.
Throughout the year, Disney closed down its Canadian locations one by one, with the final stores in the Toronto Eaton Centre and Scarborough Town Centre shutting down permanently in September. (Source: Narcity.com)
This decision was part of a larger strategy to shift the company’s focus towards e-commerce and reduce its physical presence in countries such as Canada, the US, and the UK, among others.
The decision was also an inconvenience for Canadian shoppers as there is no shopDisney website for Canada, so the only option for getting Mickey merch is to order from the United States and pay for shipping.
Verelo
Founder(s): McGrath, Michael Curry
Industry: Analytics
Founded: 2012
Shutdown year: 2012
Funding Amount: No Data
Reason for failure: Lack of Funds
Verelo was a startup based in Canada that provided website monitoring services, including notification of downtime, malware, or database connection issues to customers.
These services could be accessed through SMS, email, or phone and were not an additional feature but a core part of the product offering.
The monitoring was set up on the client’s website and would alert the customer if any problems were detected.
One of the main challenges that Verelo faced was a need for more funding and traction, which hindered its ability to achieve its goal of improving the internet. (Source: Failory.com)
Despite operating for only six months, the company could not secure the financial support it needed to continue its operations.
As a result, Verelo announced its closure and was acquired by Dyn, a cloud-based infrastructure company, in January 2013.
Dyn, later acquired by Oracle in 2016, was a pioneer in providing users with access to digital content and great experiences across the internet.
By integrating Verelo into its operations, Dyn could offer more innovative services to its customers.
Wattage
Founders: Brett Hagman, Jeremy Bell, Peter Nitsch
Industry: Software & Hardware
Founded: 2014
Shutdown year: 2015
Reason for failure: No Market Need
Wattage was an online platform to lower the barriers to entry for hardware design. Its vision was to create a world where anyone could customise their electronics using its software regardless of their knowledge or expertise.
With an internet connection, anyone could use the platform to design and customise hardware that would then be 3D printed, packed, and shipped to the customer once the specifications were finalised.
The founder of Wattage, Jeremy Bell, shared reasons he believed the startup failed. One of the main reasons he mentioned was the need for more traction and validation of market interest in the product.
During the early development phase, the team focused on demonstrating that the idea was technically feasible but did not adequately confirm that people would see it as a needed solution. (Source: Failory.com)
With this proof, persuading investors to fund the project was easier.
As a result, doubts about the viability and scalability of the service arose, and the team needed to provide clear and convincing responses.
Chowdy
Founder: Steven Long
Industry: Food & Beverage
Founded: 2014
Shutdown year: 2016
Reason for failure: Legal Challenges
Steve and his housemate were consistently unhappy with the high cost of food in Toronto, so they decided to devise a solution to their problem.
They hired a chef to cook for themselves and a group of 20 friends, and this simple idea quickly turned into a successful business.
Within a few months, their business was bringing in over $110,000 per month. However, despite the rapid success of their venture, the company was eventually forced to shut down due to legal issues.
Steve’s experience serves as a cautionary tale and a reminder to be mindful of potential problems when starting and running a business.
Despite the initial success of the business, it ultimately failed due to unforeseen legal issues.
It serves as a reminder to be mindful of potential problems when starting and running a business. (Source: Failory.com)
Overall, Steve’s failure story is a valuable opportunity to learn from his mistakes and avoid similar pitfalls in the future.
Gymlisted
Founder: Tom Zaragoza
Industry: Software & Hardware
Founded: 2017
Shutdown year: 2018
Reason for failure: No Market Need
Gymlisted was a website to help people find the right private gym for their needs.
Tom, the founder, was passionate about the project and dedicated significant time and effort to building and improving the website.
Every day after his regular job, he would come home and work on coding new features for Gymlisted until late at night.
After launching the website, Tom and his team began focusing on marketing efforts to promote it.
However, they quickly realised there needed to be more demand for their product. Despite Tom’s hard work and dedication, Gymlisted was required to gain traction and attract users.
Apparently, there needed to be more interest in the website’s offerings to sustain the business.
Despite the initial enthusiasm and dedication of the team, Gymlisted ultimately failed due to a lack of demand for the product.
This serves as a reminder that it is essential to thoroughly research the market and ensure that there is a need for a product or service before investing significant time and resources into it. (Source: Failory.com)
Community Coders
Founder: Kaito Cunningham
Industry: Education
Founded: 2018
Shutdown year: 2020
Reason for failure: Bad Management
While attending university, Kaito founded a business called Community Coders.Â
The company aimed to connect companies needing web development and digital marketing services with talented high school students who could provide these services.
Initially, Kaito and his team were able to close deals and secure clients for Community Coders.Â
However, it became increasingly difficult to close deals and secure new business as time passed.
Despite their efforts, the startup lost momentum and struggled to stay afloat.Â
Eventually, Kaito and his team were forced to shut down the business due to their inability to sustain it financially.
This failure serves as a reminder of the challenges and struggles that can arise when starting and running a business.
It is important to constantly reassess the viability of a business and be willing to pivot or make changes to stay afloat. (Source: Failory.com)
In Community Coders’ case, the founders could not adapt to changing market conditions and ultimately had to shut down the business.
Victoria's Secret
Founder: Roy Raymond
Industry: Clothing
Founded: 1977
Shutdown year: 2020
Reason for failure: Pandemic
Victoria’s Secret, the iconic lingerie company, closed stores in Canada and North America.Â
In May 2020, the company confirmed that it would be closing an additional 250 locations, citing plummeting sales as the main reason for the closures.
The pandemic had a significant impact on the company’s sales.Â
With many of its physical stores closed, consumers could not purchase products in person, which led to a decline in revenue.
The company’s financial struggles were further exacerbated by increased competition from e-commerce retailers and changes in consumer preferences, which favoured more inclusive and body-positive brands.
This problematic scenario led Victoria’s Secret to close many stores in Canada and USA and focus more on online sales. (Source: Narcity.com)
Team Voice
Founder: Kirill Vechtomov
Industry: Software & Hardware
Founded: 2015
Shutdown year: 2017
Reason for failure: No Market Need
Team Voice was a software-as-a-service (SaaS) platform designed to help HR professionals manage employee communication and feedback.
The founders of Team Voice believed that their platform would be a valuable tool for HR professionals and were confident it would be successful.
However, as they began to test and use their platform, they realised that the problem they were trying to solve was human rather than technological.
Despite their platform’s innovative features and functionality, Team Voice needed help to gain traction and attract users.
This failure serves as a reminder that sometimes, the most pressing problems faced by businesses are not technical but rather relate to human behavior and communication. (Source: Failory.com)
In the case of Team Voice, the founders needed help to effectively address the human problems they had identified, leading to the failure of their business.
Overall, Team Voice’s experience highlights the importance of thoroughly researching and understanding the needs and challenges faced by potential customers to create a successful product or service.
Godiva
Founder: Pierre Draps
Industry: Chocolate
Founded: 1926
Shutdown year: 2021
Reason for failure: Global Pandemic
The disappointment was widespread among chocolate enthusiasts when the chocolate-making company decided to scrap its grand expansion plans for 2021.
Instead, the company announced that it would close all its stores across North America in the same year.
The company explained that the decline in demand for in-person shopping experiences that Godiva’s brick-and-mortar stores offered was due to the effects of the pandemic and the acceleration of changes in consumer shopping behavior. (Source: Narcity.com)
Flixel Photos
Founder: Mark Homza and Marcelo Sommer
Industry: Technology and Media
Founded: 2011
Shutdown year: 2017
Reason for failure: Inability to monetize its product
Flixel Photos was a startup based in Canada that developed a popular app for creating cinema graphs, which are still photos with small movement elements.
The company was founded in 2011 and gained significant traction and attention, with its app featured by Apple and its cinemagraphs used in advertising campaigns by major brands. However, despite its early success,
Flixel struggled to monetize its product and eventually shut down.
The company needed help finding a viable business model and needed more revenue to sustain itself.
In 2017, Flixel co-founder Mark Homza announced that the company would shut down and that the Flixel app would no longer be available for download.
Despite the initial success and popularity of Flixel’s product, the company was ultimately still looking to turn its success into a viable and sustainable business.
A seed round of funding of $2.2 million was raised by Flixel Photos, led by Extreme Venture Partners. (Source: Betakit.com)
Conclusion
Canada’s entrepreneurial ecosystem has seen its fair share of failed startups and businesses. These failures serve as a reminder that starting a business in Canada, like any other place, is not without risk.
These failures can be attributed to various factors, including poor marketing, competition from larger, more established companies, and difficulty monetizing products or services.
These failures remind entrepreneurs of the challenges and risks that entrepreneurs face when starting and running a business and highlight the importance of thoroughly researching and understanding the needs and challenges of the market before launching a product or service.
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