Start-Up Company Quirky Files for Bankruptcy

by San Antonio Attorney

Quirky, a crowdsourced innovation start-up company, filed for bankruptcy on Tuesday.  It gathered $185 million funding from numerous investors.

The breakdown of the invention startup business will definitely raise doubts about how far the crowd-based business models and Internet-based product creations can go. Many businesses are utilizing crowdsourcing to make actual products, like Local Motor and Threadless.

None, however, did it as extensively and as wide an array of items as Quirky.

The company said it is seeking bankruptcy protection from its creditors to be able to organize a sale of almost all of its assets.

The New York-based company has already received a first bid of $15 million to acquire its Wink subsidiary, which was launched in 2014.  Wink makes connected devices accessible.  Flextronics International USA made the bid for the software.  The auction is expected to be completed in about 60 days, and Quirky hopes to draw in more bidders for its assets before that schedule.

In its bankruptcy filing announcement, Quirky said it is also seeking for a buyer for its operations in gathering, winnowing and manufacturing product concepts from a remote community of inventors.  That business has been suspended, but the company is hoping that the new owner will reboot those operations.

Quirky had a million online users and had manufactured at least 400 products that have been sold in Home Depot, Amazon and other major retailers.

Its backers included G.E., which poured $30 million in the company.

Quirky had been profitable, with earnings rising significantly this past year to around $100 million.  However, the degree of its goals, such as managing a vast community of inventors, converting raw ideas into actual products, and handling manufacturing and distribution, proved to be overwhelming and very costly.

This year, it had become apparent that the undertakings were mounting gradually, while the company was using up money rapidly.  When backers demonstrated hesitance to invest more money, employees lost their jobs.

Leave a Comment

Previous post:

Next post: