Investing in...SimpleClosure

Portfolio Update

It’s a hard, but inarguable, truth of venture capital: most startups fail (in the US, 90% remains the going estimate). And this isn’t just a tech startup problem — 20% of all small businesses fail within their first year, 50% by their fifth. 

For SMBs and startups denied a successful exit, there awaits a veritable gauntlet of bureaucratic complexities to manage — a maze of confounding, error-prone, mostly manual processes and procedures that, frankly, no one wants to deal with. 

As an investor, I can tell you: THIS SUCKS. The entire thing, from the upsetting death spiral through the stages of grief. Mix a failing company with delusional behavior, bad board, enormous pref stack, or legal disputes and you get a real recipe for ulcers.

Even thinking about failure freaks everyone out. But it shouldn’t. Planning for potential collapse is an important aspect of a director’s fiduciary responsibility. Knowledge of the wind-down process can inform important decisions, decisions that might even lead to creative problem-solving and expanded optionality. Having an insolvency plan is not the same thing as going insolvent. As an industry, we need to de-dramatize talking openly about our companies’ prospects and get real.

Enter SimpleClosure. SimpleClosure was born from a deep understanding of the world of stress and chaos involved in winding down a company’s operations. From our own experience, we saw an incredible opportunity: a ubiquitous problem, a ton of market whitespace, and a potentially category-defining company that had already figured out an end-to-end solution to streamline and automate the thankless process of business shutdown. (You might have read about them in Techcrunch, Fortune, BusinessInsider, NYTimes, Inc Magazine, WSJ, 44 startups to bet your career on in 2024.)

In stark contrast to the myriad solutions dedicated to helping startups get off the ground, there are few comprehensive resources to guide a company through dissolution and closure. This process typically involves numerous filings, notifications and other obligatory procedures. It’s time-consuming, fussy work, often deprioritized by lawyers and accountants who know there’s limited future upside to working with a closed business.

SimpleClosure automates the shutdown process across three key stages: onboarding, dissolution/wind-up and actual shutdown. To do so, the platform leverages a combination of artificial intelligence, fintech and legal tech to guide a client through the shutdown process from start to finish while limiting associated risk exposure. In addition to creating significant cost-efficiencies for the client, the SimpleClosure shutdown process typically wraps in days or weeks, compared to the many months more typical of conventional methods.

How do they do it? As part of onboarding, the SimpleClosure platform prompts users for information to understand the unique variables a company needs to deal with (e.g. cap table, operating agreement, states the company is registered in, and so on). It then augments this data with searches across public state databases to validate and ensure all relevant information is covered. From there, a specific dissolution and closure plan is developed with a navigable checklist of all shutdown-related tasks for the founder or business owner to follow, for example, filing franchise taxes or EIN cancellation. Finally, the platform focuses on any contractual obligations, helping to settle debts and distribute assets. The platform additionally offers users vital guidance throughout the process and even post-closure.

Beyond SimpleClosure’s deeply needed product offering with broad market potential, we also saw in co-founders Dori Yona (CEO) and Nimrod Ram (CTO), a passionate, mission-driven leadership team who understood the importance of speed of execution. Dori brings a wealth of experience as a third-time founder with a successful exit under his belt with the consumer fintech platform, Earny. Dori also served as the GM of Growth at Navan (previously TripActions), leading the company’s PLG and SMB go-to-market strategies. Before SimpleClosure, Nimrod spent a decade at Riskified, where he served as Head of Innovation and was instrumental in growing the company from seed, to unicorn status, to listing on the NYSE.

I firmly believe that shareholders stand to benefit from normalizing insolvency planning as an exercise that can inform key decisions. Equally, I think there is an enormous opportunity here to expose the IP and assets of companies that didn’t quite make it to companies that will. Watch this space…Dori and Nimrod have a very cool roadmap.