A Long, Strange Trip for the ‘Uber for Nurses’Read more

Bradley Tusk of Tusk Ventures in October. Photo by Bloomberg

Virus Begins Separating Strong Startups From Weak

Photo: Bradley Tusk of Tusk Ventures in October. Photo by Bloomberg

While it will take months to understand the full impact of the coronavirus on the startup economy, evidence of its grim toll is already beginning to mount.    

Take Service Technologies, a Los Angeles–based online travel startup that went out of business abruptly on Monday. That followed the failure of a recent effort to raise a new round of capital, amid new restrictions companies have imposed on employee travel. In an interview, Michael Schneider, Service’s CEO, said he immediately began negotiating a deal with Enterprise Holdings for the car rental firm to acquire Service’s staff and perhaps some of its assets. But last Friday, Enterprise called him to say the deal was off because of the disruption to business travel. 

On Monday, Schneider sent a note to customers, including Microsoft and Facebook, saying that Service—which helps companies get refunds from airlines for delayed and canceled flights—would shut down. “It’s a very odd feeling,” Schneider said. “You’re about to lose your investors’ money, which is not great. And customers have paid for yearly subscriptions. But overwhelmingly we have gotten very supportive [responses] from customers thanking us for the money we got them [from airlines].” 

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