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Saturday, Feb 04, 2023

Fast shuts doors after slow growth, high burn precluded fundraising options

Fast shuts doors after slow growth, high burn precluded fundraising options

Fast, a startup that provided online checkout products, announced this afternoon that it will shut down. The company’s future has been in doubt for days now, after reporting indicated that its 2021 revenue growth was modest, its cash burn high and its fundraising options limited.
The Information first reported the company’s conclusion. In a statement, the company said that in the wake of “making great strides on our mission of making buying and selling frictionless for everyone, we have made the difficult decision to close our doors.”

The company, founded by Domm Holland and Allison Barr Allen, went on to describe itself as a “trailblazer,” saying that not all such parties make it to “the mountain top,” claiming that while it failed, the startup managed to “forever” change the world online commerce. How much credit the short-lived company can actually claim for work in the one-click checkout market is far from clear, but at least Fast is going out as it lived: giving itself more props than perhaps its business results warranted.

Fast posted a paltry six-figure revenue total in 2021, despite raising a $102 million Series B led by Stripe. The company’s burn rate was said to be as high as $10 million per month, or a simply massive multiple of its revenue, let alone gross profit.

A company imploding a year after raising nine figures won’t be a common story this year, but startup failures come in degrees; this is a more high-profile crash. Others will be slower-motion and less violent in their halt.

PitchBook data indicates that Fast was last valued at around $580 million, measured on a post-money basis. For the employees holding options that are now worth nothing, the company’s shuttering is a shock. Whether the company’s founders were able to sell some shares in the company’s huge Series B is not clear, but if they did, let’s hope they distribute the cash to their former staff.

The company has raised $124.5 million since its 2019 inception, according to Crunchbase. Besides Stripe, other investors include Index Ventures, Susa Ventures and Global Founders Capital.

As recently as March 28, 2022, Fast was inking deals such as one with The Honest Company to implement one-click checkout for its customers. Earlier this year, NPR reported on how CEO Holland had his share of controversy in Australia prior to starting Fast. Holland’s former startup, Tow.com.au, which aimed to be “the Uber of towing,” failed in what at least one person described as a “disaster.” NPR’s article noted that Holland’s previous venture was embroiled “in a multimillion-dollar billing dispute with the Australian state government over towing and impounding fees that led to the startup’s liquidation in 2018.”

Meanwhile, in the wake of Fast’s demise, community resources are already cropping up — including a list of former workers that is circulating. A quick scan of social media indicates that a number of companies are looking to snap up Fast staff. The talent market for startup workers is still hot, so perhaps the impact on those laid off today will prove short-lived.

Fast’s conclusion comes after some other richly valued startups have begun to pull back. Layoffs are ticking back up more broadly in startup land, and one very well-known unicorn cut its valuation to better incentivize its workers. Earlier today, TechCrunch reported that Workrise — which was valued at $2.9 billion last year after a $300 million raise — laid off what is believed to be “hundreds” of employees. This year is shaping up to look a lot different than 2021.
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