SunRocket

Founded: 2004

Status: July 2007

Cause of Death: Multiple causes, beat down by cable VoIP, tried to grow too fast

What did it do: Low-cost Vonage clone 

Founded by a pair of former MCI employees, the VoIP services company raised $80 million in venture capital and had 206,000 customers at its peak. SunRocket's hook was aggressive pricing, as low as $299 per year for unlimited calling to major cities in 41 countries and a domestic U.S. unlimited plan of $199 per year; an initial promo promised two years of service for $199, plus phones (no jelly jars or Ginzu knives, though). 

SunRocket ran into severe growing pains early on. The company suffered from extended outages and poor customer service as it continued to grow.  

And then it just ran out of cash. One source attributed SunRocket's money crunch to trying to raise a third round of investment funding at the same time as Vonage was trying to get its IPO out the door.

Even if SunRocket had managed to raise another round, it would have only been putting off the inevitable. Cable and POTS players were easily winning the argument of better and more reliable service trumping low-ball cost. And big brother Vonage is still trying to make its business model work.