TL;DR:
- SimpleClosure, founded by Dori Yona, aims to streamline and automate the complex process of shutting down businesses.
- The traditional closure process can cost up to $75,000 and take nearly a year, while SimpleClosure offers a faster and more cost-effective solution.
- The company raised $1.5 million in pre-seed funding in just 24 hours, even without a pitch deck, underscoring the market demand for their service.
- Investors in the funding round included Vera Equity and Cambrian Ventures, among others.
- SimpleClosure leverages fintech, legal tech, and AI to automate the shutdown process in three stages: onboarding, dissolution & wind-up, and actual shutdown.
- The startup plans to expand its services to various business segments as it continues to grow.
Main AI News:
In the world of startups, it’s often said that starting a company is the easy part, while shutting one down is the real challenge. With approximately 90% of startups meeting their demise, it’s clear that this issue is widespread. Yet, the process of winding down a company remains largely manual and bureaucratic.
Dori Yona, a three-time founder, encountered this problem firsthand when tasked by a board member to create a “shutdown analysis” for his last company. He embarked on a journey from one lawyer to another, accountant to accountant, and even scoured the internet for information. Despite the fact that a staggering 93% of startups that secure funding will eventually shut down, discussing this topic seemed almost taboo.
In April, after leaving his role as GM of Growth at Navan, Yona joined forces with Nimrod Ram (CTO) to launch SimpleClosure, a seven-person company dedicated to building a platform that streamlines and automates the shutdown process. Traditional providers currently charge upwards of $75,000 and take nearly a year to complete the closure process. In contrast, SimpleClosure aims to accomplish this in a matter of weeks and at a fraction of the cost. Their pricing model is flexible, taking into account factors like company size and the stage of wind-down.
Rapid Funding without a Pitch Deck
Remarkably, Yona and his team managed to secure $1.5 million in pre-seed funding within 24 hours, and they did so without a pitch deck. Yona, who previously sold his startup Earny in a private transaction after raising $14 million in funding, wasn’t actively seeking investment. However, after presenting the SimpleClosure platform at a Fintech Meetup on a free ticket, the enthusiasm from investors was palpable. Yona commented, “The fact that we were able to raise so quickly really underscored the market need for a solution like this.”
Leading the funding round were Vera Equity and Cambrian Ventures, with participation from executives representing startups such as Brex, Plaid, Gusto, and Nvidia. The majority of the funds raised will be allocated to product development and engineering.
An Eye on Profitability and Efficiency
SimpleClosure has a unique approach to business closure, leveraging fintech, legal tech, and artificial intelligence in a three-stage process: onboarding, dissolution & wind-up, and actual shutdown. The company starts by collecting essential information to understand the specific challenges of each business. It then proceeds with executing the dissolution and closure plan, including fulfilling any remaining obligations to customers, vendors, state agencies, and employees. During this stage, SimpleClosure handles the necessary legal paperwork and obtains the required consent from stakeholders. In the final phase, the company manages intellectual property, settles any remaining financial obligations, and facilitates fund distributions to investors. Additionally, they provide guidance on post-closure activities, such as the retention and safeguarding of crucial company records.
Yona emphasized that the startup is harnessing AI technology to automate labor-intensive processes like data extraction and legal document summarization related to company dissolution.
Expanding Horizons
Currently, SimpleClosure works with startups and various corporate entities, including LLCs, with plans to broaden their reach as they continue to grow. Since June, the company has experienced exponential growth in paying customers, largely driven by word-of-mouth referrals and organic interest from founders.
Elie Toubiana, founder of Carbon Payments, praised SimpleClosure for making the shutdown process manageable and for handling complexities with professionalism and transparency. Rex Salisbury, founder and general partner of Cambrian Ventures, invested in SimpleClosure because he recognized the pressing need for a solution to this challenging problem. He stated, “It’s also a big business opportunity.” Salisbury highlighted the complexity and risks involved in shutting down businesses, particularly for larger or highly regulated companies. SimpleClosure’s tech-first approach is poised to transform a previously manual and error-prone process into a seamless operation.
Conclusion:
SimpleClosure’s rapid funding success and innovative approach to simplifying business closures highlight the pressing need for such solutions in the market. Their ability to attract significant investment in a short time indicates a substantial market demand for streamlining the often complex and costly process of shutting down businesses. This development could potentially disrupt the business services market, offering more efficient and cost-effective solutions to entrepreneurs and companies facing shutdowns.
