How does a start-up with $34 million in orders go out of business?

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(This post originally appeared on The Washington Post)

Lily Drone certainly had some buzz not such a long time ago. Founded in 2013, the venture capital-backed start-up created a really cool, first-of-its-kind “throw and shoot” camera drone. What the heck is that, you ask?

It’s a cute little drone about the size of your hand. It’s lightweight, has a high-resolution HD camera and is launched just by throwing it in the air. The really cool thing (in my view) is that it uses sensors to follow you around–so it can take video selfies while you ride your bike or ski down a black diamond trail, all on its own. And best of all…it worked!

It worked so well that 60,000 people bought it before it was ready to ship. The $34 million they paid in pre-orders at a special price of $899 allowed the company to move the product through its research and development without the owners needing additional equity capital. Things were going well for the company. It won a Consumer Electronic Show Innovation Award in 2016 and received much media attention. But then the start-up apparently ran out of money.

Technical delays and launch push-backs took its toll. The product is ready…but too late. There’s no cash left to make or sell it.  “Over the past few months, we have tried to secure financing to unlock our manufacturing line and ship our first units — but have been unable to do this,” the company said in a blog postthat confirmed its closing. The good news is that those who placed pre-orders will get refunds (hats off to the founders for meeting this obligation).

Digital Trends’ Hillary Grigonis points out that “The drone market is vastly different now than when the company first formed — and while 2016 was the best year for drone sales yet, Lily isn’t the only one struggling. Without a product on the market after several years, the company’s closure is unsurprising as even the well-known Parrot announces layoffs and 3DR shifted focus to industrial applications last year.”

Tech start-ups have raised billions during the past decade and a few unicorns have emerged from the group. But many have found themselves in similar straits as the entrepreneurs at Lily Drone.

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