I worked for a startup that went out of business. There is a whole of detail, but basically the last client canceled the project and they ran out of money. So I was laid off.
That is what I tell people. They understand that as companies run out of money all the time. The important thing is that in my experience people take it at face value.
What I don’t do is air the dirty laundry about how the company got into that position in the first place.
Maybe a few years down the line I’ll tell people about it over beers as we are exchanging war stories. However it is not some that you need to mention while looking for another job.
This is really the most important advice in the entire feed here. "Don't air the dirty laundry".
The founder might have gone "full retard and psycho", but that is something you can keep between you and your friends/family, not your future employer.
Employers hire people all the time who are on the job market because their previous employer went out of business or had layoffs. It doesn't make the employee bad. Companies go out of business all the time, it is life.
The interviewer will want to know that you were not fired, and were in fact laid off (which is basically what happened to you, when a company goes belly up, all of its' employees are essentially laid off).
The interviewer might ask why the company went bankrupt if you are applying for a position where you were in a responsibility to generate revenue (CEO, COO, Salesman, etc). But will probably not dig any deeper if you are any other type of employee (like a software developer for example).
If they do dig deeper about the company, just be honest to a point. Tell them that your burn rate was too high for sales and the company couldn't land contracts needed before the money dried up. There is no value in adding that the founder was a dumbass, even if they were.
One valuable point you can throw in that will make you look good is that you were kept until the very end. I would mention that. You were so essential, important, good at your job, that your previous employer held onto you until the very end. Even as the burn rate was too high and the company could have fired you to save money, they didn't. They needed you until the company was literally gone. That shows lots of value to future employers in how indispensable you were at your previous job.
In fact for anyone who is interviewing, one important piece of advice is to never be critical about past employers during an interview. I have interviewed people who say their reason for leaving their last 5 jobs was all for "personal differences with their manager". Well if you haven't gotten along with your last 5 managers, what faith can I have that you can work with me or your new manager? Don't blame other people, it really makes you look bad.
That is what I tell people. They understand that as companies run out of money all the time. The important thing is that in my experience people take it at face value.
What I don’t do is air the dirty laundry about how the company got into that position in the first place.
Maybe a few years down the line I’ll tell people about it over beers as we are exchanging war stories. However it is not some that you need to mention while looking for another job.