The betrayal of Bntr | Hacker News Reader

The betrayal of Bntr

techcrunch.com

73 pointsrokhayakebe39 comments

- "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...

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

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.

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.

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.

Bntr is essentially just Tumblr chat posts, no?

Perfect if BNTR it is buitlt on top of Tumblr

Don't assume David Karp was incensed just because the article claims so. This is Sarah Lacy's writing after all.

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.

This shows how careful VCs have to be nowadays though.

... and startups.

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.

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

"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.

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

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

I'd imagine they won't be getting any deals with those angels though. Part of the point of the fee, maybe.

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.

exactly.

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

We don't know if they ever agreed to a break-up fee.

Shit happens. Move on. And it looks like Bnter did, with this post which will likely resolve their financing problem.

Nothing weird or classless about business as recommended.

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.

Tumblr has the same thing.

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.

"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.

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.

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

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

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".

> 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?

"... 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"?

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.

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.

>>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".

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

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

I'd never heard of a break-up fee before. It makes sense, but it's a gesture of good faith that I honestly never would have expected to see in the business world. (This also makes sense in the context of a close-knit and trust-based community; I had just underestimated these properties of the startup world.)

Does anyone have experience with a break up fee situation? And if it's not private, what were the amounts involved? It'd be nice to have a sense of scale.

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.

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

There's also opportunity costs for having to try to make the deal work. They had to spend time on the deal as opposed to something else the company needed.

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