Social Startup Viddy Recapitalizes, Shuffles Board
Viddy will return $18 million of the $30 million raised in its series B round one year ago, leaving the company with $11 million in the bank. Lead investors in the most recent round were NEA, Khosla Ventures and Goldman Sachs, all of which will receive much of their money back.
“Viddy raised a substantial amount of capital last year, during different market conditions,” said JJ Aguhob, Viddy president, in a statement to AllThingsD. “A year later, Viddy is a leaner, product-focused organization that is steadily growing its audience and will soon be releasing new products. Our late-stage investors have been very supportive, but it just makes good business sense to return capital we do not need and have a clean balance sheet in the process.”
The market conditions Aguhob speaks of, I’d estimate, involve Facebook’s proclivity to giveth and taketh away. Viddy, along with other social video startups like Socialcam, rose to prominence last summer on the back of Facebook, when the social giant was delivering massive amounts of traffic to social video apps. Alas, after wide reports of Socialcam spamming users and general distaste for its viral reach, Facebook turned off the traffic funnel to social video apps, leaving companies like Viddy and Socialcam in the lurch.
So essentially, Viddy raised tons of money when traffic was rich and scaling, hiring and expanding resources rapidly made sense. Now, in its post-Facebook-aided future, Viddy is downsizing — both in bank balance and in team size. (The company laid off a third of its staff in February.)
As a result of the recapitalization, NEA partner Peter Sonsini will leave Viddy’s board of directors. “We remain shareholders and strong supporters of the company,” Sonsini said in a statement. “We came to an agreement that works for all parties, resulting in Viddy being a well-funded early stage company with a balance sheet that reflects its size and needs.”
Jason Rapp, managing director at L.A.-based Science Inc., will join Viddy’s board as chairman in the wake of Sonsini’s departure. Brian O’Malley of Battery Ventures and entrepreneur Sky Dayton remain on the board.
Including the recent departure of biz dev chief Chris Ovitz, Viddy’s remaining headcount is at about 16, down from around 30.