Australian start-up 99dresses has temporarily closed its doors after 20-year-old founder Nikki Durkin ran into financial troubles, although the business’ former incubator is confident that Durkin will bounce back.
99dresses allows users to sell unwanted clothes online in return for a virtual currency, known as “buttons”, to be spent on other users’ unwanted items.
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Durkin was 18 when she founded the business – her third – enlisting the help of tech seed fund Pollenizer, with co-founder Mick Liubinskas as her mentor.
Durkin was recently selected to participate in the prestigious Y Combinator program in the United States, a three-month program culminating in a demo day attended by investors.
As part of the program, Y Combinator invests a small amount of money – around $18,000 – into each start-up. In exchange, it takes a small stake in each one, usually 6-7%.
The start-ups move to the US to participate in the program, during which time Y Combinator helps them to hone their offering and refine their pitch.
It’s believed Durkin beat thousands of start-ups that applied for a spot in the bi-annual program.
However, 99dresses has closed its doors after Durkin experienced financial and technical difficulties in 2011, including a lack of operating capital and a botched redesign.
“2011 wasn’t a very good year for 99dresses,” Durkin said in an email to the site’s members.
“I had a lot of trouble with the technology, made a lot of mistakes and could not fix these very expensive problems.”
“I really screwed up… I gave it my best shot and, being only 20 years old, I have learnt a lot and realised that I would have been very fortunate for it to run to plan.”
Durkin said she is working on a new version of 99dresses, which will re-launch as soon as possible, insisting she will not give up.
“This is not goodbye… I’ve teamed up with a friend of mine… to keep working on 99dresses but from a different angle,” she said.
“The main problem with 99dresses in its current form was that whilst ‘buttons’ are super fun to trade with, they don’t generate enough cash to maintain the website and admin support.”
“So really, if we want 99dresses to continue, the buttons have to go.”
Pollenizer co-founder Phil Morle says while he was aware of the news, he’s not overly concerned about the fate of 99dresses.
“I think it’s just the natural stage of things to happen in start-up land… We all know it’s the rule rather than the exception for start-ups [to change course],” Morle says.
“As far as I understand, Nikki hasn’t given up. She’s a resilient and intelligent entrepreneur, and will come back with whatever 99dresses comes back to be.”
“I think it will make her stronger. I’m sure there’s a new business model right around the corner.”
“I don’t know what 99dresses will become but I have confidence she will turn it into something positive.”
Durkin is offering refunds to users to upload and digitise their wardrobe to generate “the perfect outfit” and find clothes, shoes and accessories from other users to complete the outfit.