Zirtual

  • Founded: 2011
  • Ceased Operations: 2015

Zirtual, launched in 2011 by Maren Kate Donovan, Collin Vine, and Erik Jensen, was a virtual assistant (VA) service designed to match busy professionals and entrepreneurs with efficient, US-based virtual assistants. This innovative approach quickly positioned Zirtual as a promising startup in the burgeoning gig economy.

In its early days, Zirtual experienced rapid growth, scaling at a breakneck pace. This period saw the company reaching nearly $1 million in monthly revenue, fueled by venture capital and the allure of a burgeoning market. Zirtual’s success was underpinned by its unique value proposition: providing a wide range of administrative tasks, from scheduling and email management to research and social media engagement.

However, the company’s trajectory took a dramatic turn in 2015. The decision to transition from using contractors to employing full-time staff drastically increased Zirtual’s operational costs. This shift, coupled with inadequate financial management and an over-reliance on outsourced financial firms, led to a significant cash burn rate. The firm reportedly started burning $300k-400k per month, an unsustainable rate given their revenue at the time.

The situation was further exacerbated by a critical error in financial projections. The outsourced financial firm failed to account for two full payroll cycles, leading to a severe underestimation of the company’s expenses. This error went unnoticed until it was too late, and by the time the leadership realized the magnitude of the financial mismanagement, Zirtual was already on the brink of bankruptcy.

The final blow came when a round of funding, which the company was relying on to stay afloat, fell through. Investors who initially showed interest backed out, leaving Zirtual in a dire financial state. With no other options and unable to meet its financial obligations, CEO Maren Kate Donovan made the difficult decision to lay off the entire workforce of 400 employees overnight, effectively ceasing operations.

The abrupt shutdown of Zirtual left many employees and clients in shock, leading to significant backlash and negative press. However, this was not the end of Zirtual’s story. Shortly after its closure, the company found a lifeline in Startups.co, a platform for launching new businesses. Startups.co acquired Zirtual in an all-stock transaction, and the company resumed operations under new ownership, albeit in a different form.

Zirtual’s story is a cautionary tale of rapid growth and the pitfalls of scaling too quickly without adequate financial oversight. It highlights the importance of robust financial management, particularly for startups navigating the challenges of rapid expansion and fluctuating market dynamics. Despite its initial promise and success, Zirtual’s journey underscores the complex balance between growth, operational scalability, and financial sustainability in the startup world.

Who started Zirtual?

Maren Kate Donovan, who served as CEO, and Erik Jensen

Why did Zirtual go out of business?

Zirtual’s rapid expansion and aggressive growth strategy ultimately strained the company’s financial resources. As a result, it struggled to meet payroll obligations, leading to severe disruptions in service and ultimately the closure.

Zirtual’s sudden closure left many of its investors, as well as its clients and virtual assistants, in a state of uncertainty and frustration. Following the shutdown, Zirtual’s assets were acquired by Startups.co, a company that provides resources and support for entrepreneurs and small businesses.


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