Hey — It’s Nico.

I’m writing you from SF! After a 26-hours trip, I made it to the city. This is how this week has been so far:

Let’s get into the issue. It takes 5 minutes to read, but if you only have one, here’s what you must know:

• Buildspace, a 6-week program for builders, is shutting down — find out why below.

• Nikata Bier went to Lenny's Podcast and shared how he makes consumer apps go viral.

• Gong’s CPO shared their journey validating their idea and reaching PMF.

• Data Infrastructure startup Cribl raises $319M at a 3.5B valuation.

• Startup failure rates are rising rapidly — get all the details below.

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This Week In Startups

🔗 Resources

Gong’s path to product-market fit.

Nikata Bier on how to make consumer apps go viral.

A deep dive into PostHog's genius marketing strategy. 

Why speed matters most to startups. 

Why niching down is crucial for startups in 2024.

📰 News

Y Combinator backs its first weapons startup Ares Industries 

G Squared raises $1B to invest in discounted startups.

Andrew Ng steps back from Landing AI and announces new AI fund.

Dropbox acquires AI scheduling tool Reclaim.ai

Transportation startup Swiggy targets $15B valuation in India IPO.

💸 Fundraising

Data Infrastructure startup Cribl raises $319M at a $3.5B valuation.

Tilt raises $18M to expand capabilities on its real-time shopping app.

Viggle raises $19M to create AI characters for memes. 

YC-backed Openmart raises $2.75M seed to help enterprises sell to local businesses.

Fail(St)ory

Builder’s Heaven

This week, Buildspace, the YC-backed 6-week program to “build cool shit,” announced that it is shutting down. This news surprised everyone since Buildspace seemed to be doing well.

Founder Farza Majeed explained in a letter that the company was “the strongest it had ever been” in terms of community and progress. However, the decision to close wasn’t about business performance—it was rooted in something much more personal.

What Was It: Buildspace wasn’t your typical startup accelerator. It was a six-week program where people from all walks of life came together to, as they put it, “build cool shit.” 

The premise was simple: take any idea, whether it’s designing a board game, creating a podcast series, or launching a small online store, and give it a shot.

Buildspace offered a unique space where creators, founders, and even hobbyists could take their ideas from concept to reality, all during nights and weekends.

At its core, Buildspace was about action. Participants were given challenges that pushed them to create, gather feedback, and market their ideas. The program wasn’t about teaching specific subject matter but about fostering a community of doers, where you could build anything from a manga series to an airplane engine design.

Backed by Y-Combinator and a16z, Buildspace quickly gained traction, attracting over 30,000 participants who were eager to work on their ideas.

The platform wasn’t just virtual; they hosted physical events where like-minded creators could meet and collaborate. Their impact was significant, with millions of views across social media and thousands of people flying in for their events.

The Numbers:

• 📅 Founded in 2019.

• 💰 Raised $10M from a16z to fuel their vision.

• 👥 30,000+ participants joined their nights & weekends program.

• 🧑‍🤝‍🧑 1,000 people attended their physical events.

• 🌐 12M+ people engaged with their content on Instagram and Twitter.

Reasons For Failure: Despite the impressive numbers and backing from top investors, Buildspace’s journey has come to an end.

However, this isn’t a story of a startup that crumbled under financial strain or investor pressure. The reasons for Buildspace’s closure, as its founder Farza explained in a letter, are rooted in something much more personal: his struggle with his mental health.

In 2023, as Buildspace was gaining momentum, Farza began experiencing depression. Even as the program flourished and participants thrived, the personal toll became heavier.

He pushed through the challenges, trying to maintain the passion and drive that had initially fueled Buildspace, but it became increasingly difficult. The internal struggle grew despite external successes and encouragement from those around him.

Ultimately, Farza made the difficult decision to step back, recognizing that he could no longer find the same spark that had once driven the program. In his own words, “Buildspace has always been driven by passion to do something new and groundbreaking. And sadly, I just haven’t been able to craft an updated direction that feels worth pursuing.”

Why It Matters: Buildspace’s story is a powerful reminder that the pressures of startup life aren’t just about hitting KPIs or securing funding.

The emotional and mental health of founders plays a crucial role in the success or failure of a venture.

It’s a reminder that behind every startup, no matter how successful, there are real people with real challenges.

Trend

Startup Failure is Rising

Last week, Carta released a report with some concerning news: the failure rate of startups is rising fast.

Let’s break down what’s happening.

Why It Matters:

• Raising funds is getting tougher. Startups are finding it harder to secure the money they need.

• VCs are becoming more selective. Investors are being cautious about where they put their money.

• Failures are happening across all stages. Even established startups are struggling to stay afloat.

• The shutdown rate is skyrocketing. It’s way higher now than it was just a few years ago.

• Survival is no longer guaranteed. Even well-funded startups aren’t safe in this environment.

What’s Happening: Carta’s recent report shows a sharp increase in startup failures, particularly in the U.S. The numbers show a rather grim picture: startups' closure rate has more than doubled over the past couple of years.

In fact, between the first quarters of 2023 and 2024, the number of startups shutting down jumped by 58%, which comes after an even bigger jump of 124% from the previous year.

One of the main reasons behind this trend is the tightening of venture capital. It’s becoming increasingly difficult for startups to raise money, especially compared to the boom years of 2021-22. 

Back then, VCs were more willing to take risks on young companies. But now, with the market shifting, they’re under pressure from their own investors to be more selective. This cautious approach means fewer startups get the funding they need to survive and grow.

The impact is being felt across all stages of startup development. Carta’s data shows that shutdowns are increasing at every level, whether seed-stage companies just starting out or Series B companies that are further along in their journey. For instance, the number of seed-stage shutdowns increased by 102%, while Series A and Series B saw increases of 61% and 133%, respectively.

While some of this increase can be attributed to the larger number of startups now using Carta’s platform, this doesn’t fully explain the surge in failures. The reality is that many startups, particularly those that raised their first rounds of funding during the recent tech boom, are struggling to navigate the current market conditions.

In the past, a strong pitch and a bit of momentum might have been enough to secure a round of funding. But today, startups must demonstrate a clear path to profitability and a solid strategy for sustainable growth. The “growth at all costs” mentality is fading, and startups that can’t adapt to this new reality are finding themselves at risk.

Whether this trend of rising failures continues will largely depend on the availability of venture capital. While there are signs that VC funding is beginning to recover slightly this year, it's still far from the highs of 2021. The future of many startups will hinge on whether this recovery gains momentum.

So, what do you think?

Help Me Improve Failory

That's all of this edition.

Cheers,

Nico