According to a regulatory filing social video sharing service (and Vine competitor) Viddy has raised $2.9M in an equity round from New Enterprise Associates and Battery Ventures. The filing indicates that Pete Sonsini of NEA and Brian O’Malley of Battery are now on the Board of Directors.

Viddy received a ton of buzz about a year ago for reportedly raising a $30M Series B at a $370M valuation, which NEA was part of according to TechCrunch. A regulatory filing from April 2012 shows that deal did happen, so this investment is in addition to that round.

I’ve got to wonder how much of the $30M raised a year ago has been burned through already. With ~30 employees (on LinkedIn) they would have to burn ~$2.5M per month to be out of money right now (and that’s assuming they were at 0 when they closed that round).

Maybe they’ll use it to make more incredible videos like this:

Graphicly, a tools and distribution platform for visual stories like digital comics and children’s books, raised $300,000 on the MicroVentures according to an SEC filing today.

This funding comes in addition to It is unclear whether this investment rounds out the $1M announced earlier this year, or additional funding, but often with crowd funding platforms a seperate entity is formed for each of the smaller investors to commit capital, and that entity in turn invests in the startup. This also keeps the cap table much simpler. I’m digging in further to find out how MicroVentures works.

In 2010 Graphicly participated in Bizspark and made this video (below), which discusses the original vision for digital comic books. Since then they have expanded their focus to include all kinds of content and offer distribution to platform Kindle, iOS, and NOOK.

MicroVentures is an Austin, Texas based P2P startup funding platform similar to AngelList and Funders Club where accredited investors gain access to pre-screened investment opportunities. Their site indicates the Graphicly offering took place 01/07/2013.

Usually I skip over S-1 filings unless they are by companies whose names I recognize. It’s unlikley a tech company will suddenly go public without getting on the radar of the tech press in the years leading up to IPO.

That’s why this S-1 filing from Barking Applications caught my eye today, and upon closer examination I’m quite confused as to why they’d want to raise $100k by listing on the OTCBB (Over-the-Counter Bulletin Board). Even more baffling is why any retail investor would consider this company a good investment after reading the prospectus.

Solo founder (who only works 30 hours a week!):

We currently have no employees other than Raymond Kitzul, our sole officer and director, who devotes approximately 30 hours per week to our business and who will not be compensated for his time until and if we become profitable.

No revenue:

We have a short history of operating losses and negative cash flow and have not generated any revenues to date. Our only asset as of the date of this prospectus is our cash in the bank of approximately $3,244, the balance of cash generated from the issuance of shares to our founders. At May 23, 2012, we had an accumulated deficit of $624. As a result, we expect to continue to incur significant losses as we execute our strategies and may never achieve or maintain profitability. If we fail to execute our business strategy or if there is a change in the demand for mobile applications or market conditions, or any other assumptions we used in formulating our business strategy, our long-term strategy may not be successful and we may not be able to achieve and/or maintain profitability. These and other factors raise substantial doubt by our auditors about our ability to continue as a going concern. Our fiscal year end is December 31.

No code:

As a development stage company, our current operations have been limited to planning and administrative activities.

What am I missing? Have you listed your tech company on the OTCBB to raise capital in the past, or invested in one of these companies in the past? I’d love to hear from you.

Photo credit: mtsofan on Flickr

According to an SEC filing today, enterprise software company Good Technology has raised $50,000,005 from undisclosed investors in a equity round of financing.

Crunchbase data appears to be out of date, showing its most recent funding event in 2005. However, according to the EDGAR database prior funding events not listed on Crunchbase include $51.3M raised in October 2006. The company was founded in 1996 and is estimated to have raised a total of $223.3M to date.

I will update this post as I learn more.

According to a banner across the top of the company’s website, interest-based people discovery service LikeIt will shut down tomorrow. Originally called TheComplete.me, the company relaunched as LikeIt.com in late January of this year. Its Facebook app and shows ~1,000 monthly active users, and the website doesn’t appear to have ever had enough traffic to produce a traffic graph on Alexa.

According to Crunchbase, the company raised $1.22M from Intel Capital, CrunchFund, and Plentyofish 1 year ago and received an additional $500,000 in January from Western Technology Investment.

From my own experience it’s pretty difficult to burn through nearly $2M in a year with such a small team, so it wouldn’t surprise me if the company was changing course to fight another day with a new project. The company is lead by CEO and Cofounder Brian Bowman and I have reached out to him for comment.

We benefit from a startup culture where it’s okay to fail, but that doesn’t mean we should avoid examining the mistakes that lead to the loss of capital, jobs, and the opportunity cost when increasingly limited venture capital dollars go to the wrong companies.

Ecomom controller Philip Prentiss wrote a post-mortem of the company’s financial and managerial situation, chronicling how things fell apart in the months leading up to shutting down. His analysis ultimately points to Ecomom CEO Jody Sherman’s lack of business acumen:

“He was not a numbers guy. I would bring the financial statements to Jody who would glance at them so cursorily and wave me away with “no one can understand this without extensive analysis.” Critically, he did not understand margin. At the end of December when things were getting truly desperate, he said to me “Phil, just bring me a forecast that shows how much we need to sell to break even.” He did not understand, after three years of negative margin, that increased sales resulted in increased losses.” – Prentiss

Accountability Starts with Transparency

It really is remarkable just how easy it is to digitally disassociate yourself from having held an important role at a failed company. The senior management team of Ecomom, who go unnamed in Prentiss’ post mortem, should be held accountable for the company failing as well. It is too convenient to hide behind the tragic ending of Jody’s life, or to simply remove any relationship with the company from your LinkedIn profile as several employees have done.

Ecomom’s VP of Marketing Leslie Langford ran a marketing program with aggressive discounting that played a substantial role in driving the company into the ground.

“You don’t need the company’s financials to get a glimpse of what was going on. If you Google “Ecomom” and “coupon” you find 73,000 results. Many were run through daily deals sites. This one on PlumDistrict is one of the more egregious. It offers $100 of product for just $40, with free shipping, and when you consider the healthy 50 percent that most deal sites take, the economics are even worse. As one investor characterized it to me, it’s like selling a dollar for $0.20 — venture capital dollars at that, which aren’t limitless in today’s era and can come with a steep cost.” — Sarah Lacy, PandoDaily

Ecomom’s VP of Sales, who I believe is the same person as Alex Sayyah – VP of eCommerce, was paid on revenue before discounts – leading to a mis-aligned and expensive compensation package.

“the VP of Sales was compensated according to sales before discounts, not according to margin or profit. Our discount strategy resulted in enormous losses, but for the VP of sales the strategy optimized his bonus” – Prentiss

He appears to have removed all record of himself working at the company from his LinkedIn profile, although his past tweets indicate he worked there at some point and Zoominfo captured his old profile. I have reached out to him to confirm whether he is the VP of Sales who received this misguided compensation package:

Also critical to the team was Ecomom cofounder and “Chief Mom Officer” Emily Blakeny, who now lists herself simply as VP of Merchandising for the past 5 years.

Reality Distortion Field Gone Wrong

Investors don’t get the luxury of hoping the Internet will forget, as Ecomom has one of the most surprising Crunchbase pages I’ve ever seen with ~$10M in total raised from a huge slew of investors, many of them quite high profile angels, in a series of party rounds.

At first I thought it seemed unlikely that Ecomom’s CEO could trick these people into investing in broken company, however popular Los Angeles VC Mark Suster clearly felt Jody’s grasp on the numbers was strong:

“Ok. I have to admit something to you. With your persona I always expected to ask you tough financial questions about your business and expect you to say, “let me check with my CFO.” You didn’t. You always had the most precise mastery of your numbers. The way no CEO from Harvard does.“ – Mark Suster, Goodbye Jody (emphasis added)

This doesn’t add up with the controller’s account of Jody not being “a numbers guy”.

The startup ecosystem can’t afford to turn a blind eye to this blatant example of mis-management and lack of understanding of fundamental business concepts and math. Startups need to stop trying to re-invent good business practices, evidenced by the litany of self-helpish posts rising to the top of Hacker News, and focus on building real businesses that leverage the skills, knowledge and experience of skilled operators.

Investors who say their value-add is operational experience you are on warning – the expectation is that you break through the reality distortion field to help founders see around these corners. For hired senior management this should go without saying but I’ll say it anyway: operating the business in a way that will ensure its survival is your #1 priority. Sexy top line numbers might get you a pat on the head or line the pockets of the sales guy, but strategic long term thinking by professional managements wins every time (even when it fails).

Image credit: Tripletsisters on Flickr

Ecomom Post Mortem by ashontell