The tech sector can’t seem to catch a break. After a decade of climbing valuations and billion-dollar funding rounds, companies came crashing down post-pandemic. Venture funding dried up, thousands of startups shut down between 2022 and 2024, and mass layoffs hit large, trillion-dollar tech behemoths.
Now amid tariffs originated by the Trump Administration, companies are bracing for the ripple effects that may impact their bottom line.
So perhaps Los Angeles is home to an emerging startup category that shines in a recession environment: SimpleClosure Inc., a startup dedicated to helping other startups shut down their businesses.
Covina-based SimpleClosure announced in May it raised $15 million in series A funding led by TTV Capital and included eShares Inc., also known as Carta, a startup-focused financial management platform that created, and then sunsetted, its own startup dissolution service.
SimpleClosure bills itself as the TurboTax of shutting down a startup. Its software platform guides users through all the moving parts of dissolving a company, from notifying shareholders and regulatory agencies to the step-by-step sequence of shutting down a bank account.
“You can’t close the company bank account if you’re still paying payroll, and you can’t close payroll until at least a quarter after the last person you paid,” said chief executive Dori Yona.
Another tech recession
The funding slaughter that plagued the tech ecosystem in 2022 continues, albeit quietly. Large tech companies are still slashing workers in droves – Microsoft Corp. announced in mid-May it would lay off another 6,000 employees, or 3% of its workforce. According to Carta, 966 startups shut down in 2024 – a 25.6% surge from the year before. According to SimpleClosure, the company saw a 25% uptick in volume on its platform between February – when Trump signed an executive order to impose tariffs on China, Mexico and Canada –and May.
“Investors now see an elevated recession risk as the higher-than-expected tariffs could increase inflation and reduce economic growth,” Paul Condra, the global head of private markets research for PitchBook said in an analyst note. “Additionally, investors are waiting for the next shoe to drop as countries respond with retaliatory measures. The tariff plan brings little relief for the private market ecosystem, which has already been struggling under the pressures of low exit activity.”
The TurboTax of shutting down
Yona co-founded SimpleClosure after running his own startups – one of which was in danger of shutting down. Earny Inc., a fintech platform based in Santa Monica, raised around $11 million before the board told Yona that there was no longer enough runway to support operations, and it would need to shut down.
“The process I went through for preparing a company to shut down was one of the biggest shit shows of my career, sorry for the language,” Yona said. “It was painful. It was manual. It was bureaucratic. And I just had the worst experience ever.”
Suddenly, Yona was tasked with shuttering all the moving parts – 95 on average –of running a company. Announcing layoffs, creating severance packages, negotiating office leases, liquidating assets and notifying vendors needed to be completed in line with the web of municipal and legal regulations that were required. The internet wasn’t much help to Yona – it turns out very few founders were interested in relaying the painful process of sunsetting a startup on LinkedIn. Nor were board members.
“Investors’ job is to invest and spend time with the successful companies. The reality is when companies aren’t doing so well, they kind of write it off and move on,” Yona said. “It becomes this painful process where a founder is left alone a lot of times in this ecosystem when their investors have moved on, their lawyers have moved on, their team has moved on.”
