Another sad story involving Comventures popped up today, this time involving Zantaz (no, not the antacid Zantac). Long story short, although the now ill founder, William Bankert, busted his ass to a $375 million payday for the company, he only cashed out for $650,000 because of stock dilution brought on by a late 5th round of financing at a lower valuation in 2002. The company lawyer, Gerry Niesar, has been fighting with the company’s board since 2004 over the matter.
It’s yet another time the VC firm has gotten in hot water. Sequoia sued them for ripping off web design from one of their startups, and they allegedly left Filmloop for dead.
All this leaves a bad taste in my mouth. I value trust and think it’s particularly important between VCs and entrepreneurs. The valley is extremely reputation based, which is one of the reason all these social applications have caught on here. Questionable actions on the part of any firm throw the venture model on its head. If they can’t trust each other, they can’t focus on what brings in the money, competing and innovating. It all sounds pretty disgusting. I’m interested to see how the firm responds.
July 8th, 2007 at 6:34 am
A friend of mine was recently interviewed by a startup. After learning ComVentures is among the investors he essentially interrupted the interview saying “thank you, I’m not working for them”. Community awareness is a great weapon. No entrepreneur would take money from a fund if they new they will not be able to attract people as the result.
Developers beware! A word just popped up in my mind - ComVultures.
July 9th, 2007 at 1:55 am
ouch
August 16th, 2007 at 12:30 pm
Yeah, the partners at ComVentures have little entrepreneurial operating experience and have a history of vulture deals. I would not touch comventures with a 10 foot pole. Vulture capitalists for sure.