The tech hardware market is competitive. Startups compete against established companies as well as other startups. They fight for funding and struggle to pitch their idea as original and revolutionary. When Lily first introduced its plan for an AI assisted camera drone, the outlook was good. They received $14 million dollars in Series A funding from sources like Spark Capital and SV Angel. They received $34 million dollars in orders. Then, they faced production issues.
The final product’s delivery was moved back to the summer of 2016, to November of 2016, to December of 2016, until early 2017. However, they finally made the hard decision to dissolve their company, and the suprising decision to refund their customers.
According to a report in TechCrunch, Lily sent out an email that explained to their customers the reasons behind numerous delays. It stated in part, “Over the past few months, we have tried to secure financing in order to unlock our manufacturing line and ship our first units – but have been unable to do this…”
Considering the competitive nature of tech start-up culture and the tooth-and-nail fights over funding and status, it is refreshing to see a startup that truly values their backers. It seems easy, think of Theranos or Zenefits, to continue making promises, cutting corners and hiding details from investors and consumers. It may even seem that the very nature of Silicon Valley investment encourages this kind of desperate behavior. To their credit, Lily was transparent with consumers and investors.
Companies like Hover, DJI and Phantom were able to bring similar products to market more rapidly than Lily, making the niche drone market hard to break into. It’s a sad story with a moral. If your startup is floundering Lily provides an excellent example of how to go out with dignity.