Why Electric Failed: Unit Economics | Startup Autopsy
$254M
Raised
7y
Time to collapse
$800M
Peak valuation
// startup autopsy
Electric
The Bessemer-backed IT management platform for SMBs raised $254M and shut down in November 2023 after 7 years of building without achieving the margins that would justify the investment.
Evaluating only Electric’s profile at its peak — without knowing the outcome — the model ranked Unit economics as the #1 likely cause. That’s exactly how it died.
Key Events Timeline
FOUNDING
Electric founded
DOWN ROUND
Down round or bridge financing
SHUTDOWN
Silent Shutdown: Electric ceases operations
Full Analysis
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Documented cause
Electric built an IT-as-a-service platform for small and medium businesses, combining software for IT management with on-demand human technicians who could resolve issues remotely or in person. The company raised $254M from Bessemer Venture Partners, Primary Venture Partners, and GGV Capital. The human-in-the-loop model created a product that worked well for SMBs who previously managed IT ad hoc, but the blended cost of software platform plus human technician labor could not scale to SaaS margins. After 7 years and $254M, Electric could not achieve profitability or find an acquirer. The company shut down in November 2023.
Lesson
“Managed IT services for SMBs is a fragmented, low-margin business that the best-capitalized incumbents (CDW, CompuCom) can barely make profitable. Electric raised $254M trying to out-software the problem, but the human labor cost of IT support does not go away through software alone.”