A website designed to help people with their personal finance, and a market leader when it started off. Launched in 2005, it analyzed a person’s financial data and came up with advice on how to save money, and was on its way to becoming a very successful enterprise until the launch of a rival company called Mint, two years later, who ended up winning the first TechCrunch 40 conference, overtaking Wesabe and then going from strength to strength. They became the industry giants, and being second best was as valuable as not existing at all; so Wesabe shut down while Mint was acquired by Intuit for $170 million. There was only space for one player in the market.
Nouncer was a Twitter clone before they knew about Twitter, and while Twitter and Jaiku were being introduced to the market, Nouncer was still being developed. So its founder decided that it wasn’t worth competing with the rest of them, since they had now lost that all too important “first in the market” niche, but instead decided on diversifying his investment portfolio, focusing all of his energies on now building the technology for instant message delivering. So, he invested all of his money in that. And he lost all of his money. Not quite the shining star and successful entrepreneur he thought he was.
This is a chilling reminder that nothing can be taken for granted in the investment world and that promises are worth nothing. Bntr was a self-made business, an internet site with a bright future. So, Spark Capital, a venture funding firm, decided to back them to the tune of $2 million – they thus sent them a term sheet, basically a guarantee of funding which they said they can ‘consider as signed’. But then the founder of Tumblr, also part of Spark’s investment portfolio, complained about what he perceived as competition and Spark pulled out of Bntr. Bntr had already accrued a lot of expenses by then, thinking that they’ve got it covered with the $2 million they got coming, which essentially sunk them.
It’s by now pretty well documented with the film The Social Network, that Mark Zuckerberg allegedly took a lot of the ideas for Facebook from his former friend(s) and business partner(s) when they came upon the idea of a site called ConnectU. However, this is not really a tragic tale since they settled out of court for $20 million and a lot of Facebook stock. It could have turned out much worse.
A lot of investors lost a lot of money in this venture. A new photo sharing app called Color managed to attract as much as $41 million dollars in 2011 before it was even made available to the public. However, with Instagram’s rise and a failure by Color to capitalize on their success, the firm shut down a year later and its investors were left potless.
A brilliant idea that can definitely be considered part of the alternative investments landscape – a fantastic cool building in Bushwick, Brooklyn, taken over and turned into a huge multi-faceted space to be used as a creative oasis with tricked-out studios and classes and performances, which people could attend by paying monthly fees, or an unlimited lifetime fee. Jason Goodman managed to raise almost $4 million from different investors; however, he overreached with very aggressive growth plans and a desire to have lots of well-paid staff on board from the start, and the whole thing collapsed within two years. The investors lost their money.
This is a very clever and successful investor – after all, his investment portfolio includes being the first Facebook institutional investor, and founder of PayPal. However, not all of his investments have been a success and his hedge fund, Clarium Capital, managed to lose 90% of their $7 billion worth of assets while investing in currencies and oil. Then again, after all is said and done, he is now worth about $1.5 billion. So we guess it’s not that tragic.