

The betrayal of Bntr - rokhayakebe
http://techcrunch.com/2011/04/15/the-betrayal-of-bnter/

======
aepstein
\- "Bnter was so star-struck by Spark"? I've never heard of entrepreneurs
being star-struck by investors.

\- 4 months of due diligence? Many rounds are dead if they drag out past 2
months.

\- "Only then did it occur to the Spark team to check with Tumblr founder
David Karp to make sure he wouldn’t view this as a competing company"? This is
usually step 1 of the due-diligence process. Things like this don't just
randomly "occur" to professional VC companies.

There are so many odd things in this article, I'm not sure if it's just Sarah
Lacy embellishing with her writing, or what...

~~~
pclark
I don't understand why you'd be star struck if you'd already raised funding
from Chris Dixon and Ron Conway.

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edanm
I'm usually a big TechCrunch fan, but I really dislike this article.

From the last paragraph:

"It remains unclear exactly why Spark– a firm known for treating entrepreneurs
well– acted this way, and there’s enough he-said-he-said behind the scenes
that we may be missing some details."

A VC that is known to be entrepreneur friendly, they know they probably don't
have all the details, and yet they still write an article that portrays Spark
in a terrible light? I would really rather have all the facts first.

~~~
ariels
Sarah is a very thoughtful and serious journalists, she wouldn't write this
story if there wasn't something here. She is pretty open about the fact that
she obviously doesn't have all the details - that is good reporting.

------
twidlit
To me , the classless one is the Tumblr guy getting incensed with a barely-
related-possibly-in-the-near-future-if-they-dont-pivot startup that was
getting funded.

~~~
sunchild
Bntr is essentially just Tumblr chat posts, no?

~~~
OoTheNigerian
Perfect if BNTR it is buitlt on top of Tumblr

------
pg
Spark is actually one of the VCs I like best. In general they are pretty
upstanding.

This shows how careful VCs have to be nowadays though.

~~~
_pius
_This shows how careful VCs have to be nowadays though._

... and startups.

------
sanj
I've known Bijan for a few years now. He's consistently been forthright,
honest and remarkably generous with his time. He's also not one to badmouth a
company that he and Spark chose not to invest in -- he's classy enough to not
take part in a mudslinging match.

I don't know what happened -- nor do I expect to find out -- but I'm certain
that there's more to this story. And that Bijan navigated what may have been a
bad situation with as well as he could.

Happily mixing metaphors, I believe that is sour grapes blown out of
proportion and then fanned by a TC article.

~~~
fredwilson
i second everything sanj says. there is always two sides to a story and sarah
only told one side in her post

------
inkaudio
"Bnter was so star-struck by Spark, the company hadn’t widely pitched itself
to other investors, but told the ones that it had talked to it’d be going with
Spark"

Two things,

1.) I never heard of anyone getting star-struck by investors, but If you do
get "star-struck" by investors you'll have a hard time getting their money.

2.)Another lesson: If you can bootstrap than bootstrap. You're better off
thinking about how you're going to monetize your business. If you don't
understand this please read getting real and rework by 37signals.

------
geofflewis
Weird and classless that they refused to pay a break-up fee.

~~~
greattypo
One that wasn't contractually obligated? I'd be shocked if they got it.

~~~
avichal
The VC and angel world are tiny and it all revolves around reputation and
trust. The negative perception is going to cost Spark a lot more than the
breakup fee. I'm shocked that they DIDN'T get it.

~~~
boucher
Though, $200,000 on a $2 million raise is a bit high for break up fee I think.

------
crux
With regards to the startup in question: it's not actually a messaging product
as stated in TFA, is it? It seems just like something where you paste in an IM
conversation and the app formats it nicely.

~~~
jarin
Tumblr has the same thing.

~~~
brandnewlow
Bntr looks to do to Tumblr what Twitter did to Facebook and OKCupid did to
Craigslist: Build a service around a feature of a larger platform that does
lots of stuff.

------
djahng
"Bnter was so star-struck by Spark, the company hadn’t widely pitched itself
to other investors, but told the ones that it had talked to it’d be going with
Spark."

That seems like a pretty big mistake. It sounds like Bnter could have probably
still come away from this with VC backing.

------
shadowsun7
The good news is that having this article written about them in Techcrunch
would probably be to their advantage. They _do_ have several things going for
them - investment from Dixon and Conway, for instance.

I'm fairly confident that they'll bounce back.

------
OoTheNigerian
This case buttresses the point that if it is not signed, it does not exist. I
hope they bounce back strong.

~~~
boucher
Not that much. Term sheets aren't binding, so the fact that it wasn't signed
is pretty much just decoration in this story.

~~~
martinkallstrom
All agreements are binding, term sheets as well if they are formulated as
agreements. But what you agree upon in a termsheet is formulated as "if we do
a deal, these are the terms". According to the story, in this case there was
also a substantial break-up fee written into the agreement. It might be the
case that the signature is all that is missing to make it enforcable.

However, there is without a doubt more to the story than revealed in the
article. The missing signature might as well be a red herring, but not because
"term sheets aren't binding".

------
random42
> _The deal isn’t done until the money is in the bank._

Is this not commonsense? No offense implied, but I, a just-another-software-
developer, have said "Thanks, but No thanks" or "Lets get over with the
formalities first" on few occasions myself, when due-diligence was not done
yet or the other party was hesitant to do it.

Its upto each individual/entity to secure one's interests, isn't it?

------
bootload
_"... when Spark– investors in such rock star companies as Twitter and Tumblr–
came after Bnter, she and her partner were flattered. At the encouragement of
existing investors and mentors, they took the train to Boston to pitch the
partnership. Spark loved it and negotiations continued for months. ..."_

How do you tactfully say to yourselves, entourage & VC's _"not at the
moment"_?

------
random42
This is journalism at its absolute worst. When an
article/story/incident/conflict essentially just shows one side of the story,
it is ALWAYS, without exception biased.

------
ariels
Very surprised they didn't pay the breakup fee, simply to avoid articles and
threads like these. Reputation is all you have in this business.

------
credo
_> >Spark refused to pay a $200,000 break up fee to help cover the expenses
the lean company had started to take on .. _

So this "lean" company spent around $200,000 on expenses relating to the
_possibility_ of getting VC investment that they apparently didn't need (and
didn't originally plan for)

In the VC/angel funded world, I guess this passes as "lean".

------
appdk
$200k. I don't know what the legal cost is but 200k seem a little too much for
a $2m round.

~~~
mbreese
I didn't read that as 200k for legal fees, but as a break up fee. Something
akin to: sorry it isn't going to work. It's not you, it's us. We know we
caused a major disruption for you, so here's something for your trouble

~~~
appdk
I read that 200k was the cost that bnter had incurred because of the deal. I
don't know what else there could be other than legal fees. Maybe a lease for a
much bigger space that they had needed.

~~~
jerrya
Wasn't there the salary of a new employee who would not have been hired at
that stage?

