Speaking to Windpower Monthly, Nenuphar co-founder Charles Smadja said the company had been unable to find a buyer, following the exit of industrial partner Areva (now called Orano).
The firm's 29 employees lose their jobs, while its 1MW Vertiwind prototype will be dismantled.
Smadja said it had been difficult to convince potential backers outside France to invest in the firm when there ha been no interest from within the country.
There had been long-running talks with unnamed Chinese backers, Smadja added, but these broke down.
Following Areva's financial troubles in 2016 and its exit from offshore wind, which also saw the French nuclear firm sell its stake in the Adwen joint venture with Gamesa, Nenuphar's other partner, EDF, didn't want to continue without an industrial partner Smadja explained.
Smadja hopes there is still a place for vertical axis wind turbines, but conceded price pressure from solar would make it difficult to scale the technology to make it economical.
The Vertiwind turbine had been earmarked for a number of test sites around France. The turbine design had been up-rated to 2.6MW in December 2014.