Key Takeaways
The psychological weight of closing a company often surpasses the operational work required to complete it.
Investors do not judge founders for shutting down. They judge how the shutdown is executed.
Communication is not a formality. It is the bridge that preserves trust on both sides.
A clean exit is not about closing the door. It is about opening the next one without baggage.
The right decision is the one that protects your time, your money, and your relationships. You owe clarity to yourself just as much as to your investors.
At SimpleClosure, we speak with thousands of founders who are making one of the hardest decisions of their careers: whether to keep going or shut down. Recently, SimpleClosure CEO and co-founder Dori Yona sat with Drew Glover, co-founder of Fiat Growth and Fiat Ventures, to break down what actually happens during shutdown conversations, why timing and communication matter, and how founders can protect their future opportunities.
Their conversation peeled back the curtain on a side of startup life that rarely gets talked about publicly. These are the patterns they see up close and the lessons founders wish they had known sooner.
1) What Founders Face Behind the Scenes
Most founders do not shut down because the numbers suddenly stop working. The emotional shift happens first.
Dori shared that hundreds of founders describe the same moment: the realization that the hardest part of shutting down is not paperwork, but accepting that their company has reached its natural end.
If you think about it, one of the hardest things to do is pull the plug on something you have built. It becomes very real the moment you have to communicate it to your investors and your team.
Some founders delay because they believe the process will be heavy or overly complex. Others hesitate because sending the investor message feels like admitting defeat, even though responsible shutdown is often the smarter, more strategic decision.
2) How Investors View Shutdown Decisions
Founders frequently assume investors will be disappointed when a company winds down. Drew’s perspective revealed a different truth.
Investors expect a portion of their portfolio to shut down. What matters most is how founders handle the process, how they communicate, and whether they follow through during the most difficult moments.
It takes years for you to gain our trust, and it literally takes one second for you to lose it. When founders delay without communication, we start wondering where the money is and whether it is being spent responsibly.
This is not about punishment. It is about clarity and trust. Many of the founders Fiat reinvests in are the ones who handled previous shutdowns professionally, communicated consistently, and closed without loose ends.
3) The Communication Gap
Communication is the most fragile part of the shutdown experience.
Drew shared that long gaps in communication create unnecessary concern for investors because they have audits, valuations, tax deadlines, and LP reporting. When a founder goes silent, a simple dissolution can ripple into operational chaos for the fund.
Dori sees this from the founder’s side as well. Many believe communication is the final emotional hurdle they must cross.
Usually the average company has twenty or thirty investors. That single communication to all of them is the nail in the coffin moment for a founder. It is the one step that feels like admitting the journey is officially over.
To support that moment, SimpleClosure drafts investor communication, sends notices on behalf of founders, and helps manage the emotional and operational load.
4) Why Clean Closures Matter
Shutting down cleanly is not just about closing a chapter. It is about protecting what comes next.
Dori shared that a significant portion of founders on the SimpleClosure platform are already working on their next company. For them, how they close their current company directly affects whether their previous investors will support their next idea.
Investors also care about timing. Even remaining open for a single day in January triggers a full year of state fees, franchise taxes, and new tax filings. For founders with limited cash, this cost can meaningfully reduce what is left to return.
Clean closures matter because:
They protect relationships with investors
They reduce unnecessary financial burden
They remove risk of compliance issues or tax problems
They create a straightforward record for future fundraising
They ensure no one is left chasing documents or signatures months later
This is why SimpleClosure now gives VCs visibility into the dissolution process, allowing them to download documents and approve resolutions without friction.
5) What Founders Can Do Today
Not every company needs to shut down. Some can pivot. Some can sell assets. Some can pursue acquihires. But founders need clarity before committing more time or money to the journey.
Drew advises founders to explore every viable path, but to be honest about where the business stands. If the energy is gone, if the numbers no longer add up, or if the opportunity is no longer there, continuing may not serve the founder, the team, or the investors.
Dori encourages founders to look at the practical side. Waiting too long often leads to unnecessary costs that could have been avoided with earlier action.
For Founders Navigating the Middle
If you are weighing whether to keep going, pivot, or wind down, you do not have to navigate it alone. Every founder eventually reaches a moment where clarity matters more than momentum.
A shutdown is not an ending. It is a structured transition that protects your future as a founder.
If you need guidance or support in evaluating your options or closing cleanly, SimpleClosure is here to support you.