The CEO of the startup that dissolved overnight explains what happened: Burn

Earlier this week, a virtual assistant startup that had raised about $5 million dissolved, suddenly laying off about 400 employees via email and changing its website to say it was "pausing operations."

Employees told Business Insider's Biz Carson that they felt blindsided by the news. Clients felt left in the lurch too.

Today, CEO Maren Kate Donovan explains about what happened in a Medium post, writing that she "cannot express my deep sorrow at letting down our employees, our clients, and our investors."

What went wrong? Her short answer: "Burn."

A company's burn rate is how much money the company spends above what it makes.

"At the end of the day we grew faster than we could handle," Donovan writes. "Our burn spiraled out of control even with our high revenues, and that led to the pausing of Zirtual's services."

That pause didn't last long though.

Donovan also announced that Startups.co, led by Zirtual investor Wil Schroter, will be buying the company's assets and restarting the service, "to offer our clients support and give us the opportunity to hire some of our Zeople back."

Here's the key part of her essay about Zirtual's burn:

Here's Donovan's full post.

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