There has long been talk and rumors that the tech bubble will burst but, so far, no bubble has burst. However, that is not to say that there haven’t been missteps in Silicon Valley leading VCs (Google Ventures being one) that no amount of investment money can fix.
Case in point: the Secret App. The startup announced it would be closing its doors last month to some VC investors’ chagrin. The app that allowed users to post anonymous, often scathing posts about people, places or things without their identity being revealed. The app was a big hit last year but has since fallen flat.
Founders David Byttow and Chrys Bader garnered the interest of Google Ventures and Kleiner Perkins Caulfield & Byers (two of the largest venture capital firms) early on after Secret generated a substantial following. The problem could’ve arisen when Secret attempted to raise a second round of investment of $25 million. This time, Google Ventures did not bite on the advice of Google Ventures managing partner Bill Maris:
“We told them [Secret] didn’t need the money. And raising that much money that soon, it was going to be impossible to meet the expectations in the future.”
But the startup did not heed the warning. Through Index Ventures and Redpoint Ventures, along with other angel investors, the company raised the $25 million; the two founders wanted $3 million each.
With the announcement that the startup would be closing their doors, they are vowing to return the remainder of the investment money, though no mention of the $3 million they took for themselves.
Mr. Maris compared them to bank robbers and should return all money, though he later retracted his harsh comments about the founders on a Medium post. Regardless of how the VCs and angel investors who invested in Secret think behind closed doors, it’s no secret that the startup was the epitome of a bad investment.
Case in point: the Secret App. The startup announced it would be closing its doors last month to some VC investors’ chagrin. The app that allowed users to post anonymous, often scathing posts about people, places or things without their identity being revealed. The app was a big hit last year but has since fallen flat.
Founders David Byttow and Chrys Bader garnered the interest of Google Ventures and Kleiner Perkins Caulfield & Byers (two of the largest venture capital firms) early on after Secret generated a substantial following. The problem could’ve arisen when Secret attempted to raise a second round of investment of $25 million. This time, Google Ventures did not bite on the advice of Google Ventures managing partner Bill Maris:
“We told them [Secret] didn’t need the money. And raising that much money that soon, it was going to be impossible to meet the expectations in the future.”
But the startup did not heed the warning. Through Index Ventures and Redpoint Ventures, along with other angel investors, the company raised the $25 million; the two founders wanted $3 million each.
With the announcement that the startup would be closing their doors, they are vowing to return the remainder of the investment money, though no mention of the $3 million they took for themselves.
Mr. Maris compared them to bank robbers and should return all money, though he later retracted his harsh comments about the founders on a Medium post. Regardless of how the VCs and angel investors who invested in Secret think behind closed doors, it’s no secret that the startup was the epitome of a bad investment.