The company, which launched in 2015, says it faced a fundraising round that collapsed two weeks ago and was in the middle of an acquisition that collapsed on Friday. It cites the current economic downturn and COVID-19 as the reason for both of these events.
Service will shut down later this week, on Friday, March 20. It’ll try to refund subscribers (pending its cash position), route all pending claims directly to existing users and delete all personal information from its customers within the next 30 days.
It’s worth noting that Service founder and CEO Michael Schneider also notes that since it was founded, the company never turned a profit, even though it recovered more than $4,000,000 for its customers.
“Despite partnerships with major brands such as KAYAK and Microsoft, we have never turned a profit, despite a focus on revenue growth and cost cutting through software automation,” Schneider writes. “We were in the middle of a fundraise when it collapsed two weeks ago, and then we were in the middle of an acquisition that collapsed last Friday due to everything going on with COVID-19 and the economy.”
With the current downturn in travel, we’ll likely see more travel startups collapse. Margins are notoriously low in this business and a lot of companies depend on what is essentially affiliate marketing revenue. As the travel industry is currently in a tailspin, that source of revenue is quickly dwindling for this class of startups.
Service had raised a total of $5.1 million since it was founded. Investors include Founders Fund, which led its seed round, as well as Menlo Ventures, Maveron, Xfund, Flight Ventures and others. The company last raised a convertible note last September.
“I remain proud of what we accomplished over the last nearly five years, and I’m grateful to our investors, employees, and customers for all their support. While I regret not succeeding in building a sustainable long term business, I am proud that we tried, and that we made people’s lives a bit easier around customer service,” writes Schneider.
Source: Tech Crunch Startups | Travel savings tool Service shuts down, citing COVID-19 downturn