If you’ve been listening closely at tech parties and events over the last month, you could begin to hear the tectonic rumblings of a reckoning. The bubble in seed stage funding that saw hundreds of start-ups raise capital during 2010 is coming to an end. And many of the companies who raised less than $1 million are now running out of cash.
This morning we got an anonymous tip, since confirmed, that flash sales aggregator MyNines, which raised $750K back in April of 2010, has shut down. The company’s website is currently offline. Founder Apar Kothari has been named vice president, head of business development and strategic partnerships at private sale shopping destination site Rue La La. (Sounds like that emerging talent pool we told you was coming.)
Without a doubt there are many young companies in New York who will survive. Firms like OnSwipe, SeatGeek and Yipit which have raised significant funds or found a healthy revenue stream can continue to build their business, although a severe economic downturn, as intimated by the plummeting stock market, will hurt all companies, tech and otherwise. But for many who were not around during the dot-com days (Betabeat included), this will be the first experience with death.
“Raise your money now” is the rallying cry. We heard it last night from Movable Ink CEO Vivek Sharma, who saw his first start-up, Blue Martini Software, go from a few employees to a public company worth billions. “One day the stock was trading over $70 and the six months later it was down below $6, then eventually below $1. The smart start-ups today have already raised their series A and those who haven’t need to now. At this point, they are already going to have to accept much lower valuations, because the bargaining power is back with the VCs.”
As USV Albert Wenger wrote earlier this week, get your paperwork done quick and that money in the bank because investors are thinking more about sovereign default than LinkedIn’s stellar first quarterly report or the fact that your start-up got a dope review on TechCrunch. Time to break out those back issue of Fucked Company and start boning up on how to build a start-up for the bear market.
The email from founder Apar Kothari is below:
Dear Friends & Colleagues,
After an incredible two years chasing my dreams as CEO/Cofounder of MyNines, I’m thrilled to continue the next phase of my techfashion career as Head of New Business Development & Strategic Partnerships at Rue La La.
While MyNines embodied the perfect blend of my passion for fashion & entrepreneurship, I didn’t have the resources to scale it. I’m super-excited to not only leverage the assets I acquired at MyNines, but also to work with a rockstar exec team at RLL. I’ve learned a ton & my deep experience in the flash sale/fashion world provides the optimal springboard to identify game-changing opportunities for RLL.
That said, I want to express my sincerest gratitude to those of you who followed & supported me through MyNines – my amazing Advisory Board (Steve Hafner CEO of Kayak, Mark Menell CFO of Shoprunner (the GSIC family), Nick Pahade CEO of Traffiq (also previously from the GSIC family), Jack Kennedy EVP Ops at FOX, and Suzanne Norris, former VP Commerce at Kate Spade), Friends & Family, and my loyal team at MyNines. I couldn’t have done it without you guys & can’t wait to find ways to work together in the future!