List: Worst Venture Investments of All Time

Inside CRM has out an amusing list of the worst venture investments of all time. While I don’t disagree with the contents in general, I would put Webvan ahead of Ampd (even if Om might disagree).

My other comment: Why the hell does biotech get off so easy? Over-capitalized disasters are legion in that unpredictable business, and yet biotech bombs are nowhere to be seen in the list.

  1. Amp’d Mobile: Amp’d Mobile takes the crown for money-burning, with $360 million that ended in bankruptcy. The company’s major problem was its customers’ ability to pay. While other mobile providers check for an ability to pay bills within 30 days, Amp’d let it go to 90 days and marketed to these risky customers. It has been reported that 80,000 of the company’s 175,000 customers were unable to pay their bills.
  2. Procket: Networking company Procket was once one of the most highly valued telecom startups in the U.S. It had $272 million in venture-capital funding and a valuation of $1.55 billion but was ultimately sold to industry behemoth Cisco Systems Inc. for a disappointing $89 million.
  3. Webvan: Webvan was a grocery-delivery business that served nine metropolitan areas. Once valued at $1.2 billion with plans to expand to 26 cities, the company went bankrupt in 2001. Despite millions in sales, the company’s demise was brought on by a money-burn that exceeded sales growth. Major purchases included $1 billion for warehouses, enterprise servers and more than 100 Aeron chairs. Additionally, it acquired HomeGrocer just a few months before going under. This fast expansion proved to be too much for Webvan. This company that once had about $800 million in venture capital ended up with $830 million in losses, with about $40 million on hand.
  4. Caspian Networks: Caspian Networks, originally founded as Packetcom Inc., had a number of ups and downs, including a washout in 2002; the company finally shut down in 2006. Caspian Networks fluctuated from more than $300 million in funding and 323 employees to less than 100 employees and closed doors.
  5. Pets.com: This icon of the dot-com bubble died out in November of 2000, going from a listing in NASDAQ to liquidation in just nine short months. The site sold pet supplies and accessories online. Once backed with $50 million by Hummer Winblad Venture Partners, Bowman Capital, and Amazon.com Inc., Pets.com had promise and even bought out competitor Petstore.com. But in the end, its stock bottomed out at 19 cents per share. Remembered for its sock-puppet ads, the expense of its $1.2 million Super Bowl ad, as well as large infrastructure investments, proved to be too much. Pets.com’s sock puppet lives on as the icon of BarNone Inc.

Rest of list can be found here.

Related posts:

  1. Flight to (Perceived) Quality & First-Time Venture Funds
  2. Howard Anderson on Software: There Are No Good Investments
  3. Funding First-Time Venture Funds
  4. A New Venture Fund Bubble?
  5. Venture Exits in 2006: Life Sciences Sees Big Gains

Comments

  1. reeb says:

    I think that the risk reward formula for Biotech has not actually developed yet. Simply put – longer term Biotech will be the bastion of hope for many science … it is still a quite young science.

  2. rick says:

    man if they can only come up with FastForward and Optiva,they haven’t done their homework!
    What about Nexsi Systems who blew thru at least $110 mil in 3 years(!) when one of their venture investors (from Sequoia, no less!) came in to run the place. He made smart moves like buying their building(!) next to the Cisco campus. When they shut the doors they left $1mil of half-finished boxes on the production line at Flex.
    http://www.lightreading.com/document.asp?doc_id=14170
    http://www.lightreading.com/document.asp?doc_id=23203
    Good times.

  3. rick says:

    btw – the same guy blew thru more that a quarter billion(!) bucks at Mahi Networks before they gave up and merged it into Meriton for peanuts.
    http://www.opticalkeyhole.com/obspost/meritonnetworks.asp

  4. Curtis Abbott says:

    Hey, back in the 80′s Trilogy burned through about $500M in today’s dollars. How quickly we forget!

  5. One of the main problems is that VC’s want to do BIG deals instead of giving companies what they really need. Many only need $2-5MM and there are very few who want to invest so little!!! Too much money can cause managerial hubris at many of the small companies.

  6. RG says:

    I’m pretty sure Trilogy’s number from #4 is wildly inflated. In any case Trilogy burned through its profits, which isn’t quite the same.