All Eyes on Jonathon Perrelli and Fortify
So there’s this guy in town (DC) who likes to play dress up. While all the other kids were playing Cowboys and Native Americans, this guy dressed up like he was a Venture Capitalist. I’m talking about Jonathon Perrelli and Fortify. Back in the day, he played big venture capitalist boy. Today, all the other kids are playing astronaut, but little Jon is playing big-time CEO of a hot, water-bottle startup (not hot water but a hot startup and regular water).
Nine years ago, there were some people in town who gave little Jonny P, real money which he spread around DCTech like cash was apple seeds and little Jon was Jonny Appleseed. Dressed up like a VC, he indiscriminately spread the cash randomly with no thesis, strategy or plan, throwing some here and there. Ninety percent of JP’s investments were or are dogs.
But just like a blind squirrel… this Perrelli kid found a few acorns.
For instance, there was a little gem called Hinge… unfortunately for Jonathon Perrelli and Fortify investors, Perrelli cashed out of Hinge early… his investors have no idea where that money went… he didn’t distribute the cash as the custom with non-pretend, real big boy Venture Capitalists. He didn’t meet his SEC required reporting requirements. Fortify is a black box.
Now on October 16, this Jonny Appleseed, blind squirrel boy found another acorn… Social Tables. Congratulations to JP! You picked 40 turds and one of them had an acorn in it. Now I expect the clown to beat his chest about his brilliant vision and investment prowess (I started writing this at 9 AM, by 10:45 he already took his attention off his failing startup to expend limited resources to brag about a win. See update at the end of this post below). Yet two days ago Jonathon Perrelli and Fortify didn’t even have a website anymore. He had moved on to the big-time business of consumer electronics while the poor folks who invested in Jonathon Perrelli and Fortify didn’t have a clue what he was doing with their money. In the last eight years, Perrelli has never met the minimum legal annual reporting requirements he promised in the Fortify prospectus and mandated by the SEC.
The poor schmucks who trusted this clown, have no idea what JP did with their money. Where did the distribution from Hinge go? How much investor money did Perrelli “invest” in his former girlfriend’s joke of a company… Handpressions? And if that wasn’t failure enough, the Handpression spinoff Pawpressions? He invested in a joke called MonthsOfMe and a scam called Speek (A company that was infested with criminals like Danny Boice and Andy Powers). He brags that Speek, a company that raised $8 million dollars, was an exit. Hey folks, it was a $150 thousand dumpster fire sale of which I’m pretty sure Jonathon Perrelli and Fortify investors received exactly zero dollars from that deal (the details of the deal were not publically revealed except in this court document). Yes, you heard me (well technically read me), zero as in zilch, nada, nothing!
Jonathon Perrelli and Fortify invested in LifeFuels, run by one of DC’s most undisciplined, incompetent, and unethical CEOs… Jonathon Perrelli (yes Fortify invested in a company run by the Managing Partner of Fortify). LifeFuels raised $5 Million. Wo knows how much of that $5 million came from JPs Venture Fund and Limited Partners. JP will say he donated the stock to the fund and just like Donald Trump’s taxes, you’ll have to take his word for it because that’s all the documentation on how much money and in what firms Jonathon Perrelli and Fortify invested.) to produce a water bottle that in 4 years still does not exist! After 4 years and $5 million dollars LifeFuels has produced nothing but press for Jonathon Perrelli. Let me say that again, Fortify run by Perrelli, invested in LifeFuels run by Perrelli and after burning through $5 million in investments and 4 years of time this company has not been able to produce a product. Are they building a rocket ship? Are they developing a cure for Cancer? No! It’s a frigging water bottle!!!
So all eyes will be on Jonathon Perrelli and Fortify in the near future… will the clown distribute the funds from the Social Tables exit? If he does, will he skim his 15 – 20% carry that covers the expense of running a fund that he isn’t running while he’s running a company that has accomplished nothing in which his fund that is underwater invested? Did he skim the carry off of the distribution from Hinge? No one knows because JP doesn’t do annual audited reports. Isn’t the carry supposed to pay for management of a fund, outside audits, independent portfolio valuations all the things Perrelli doesn’t do? He doesn’t have time… because he’s the busy CEO of Lifefuels a company that does nothing but keep Jonathon employed and surrounded by adoring employees.
In all fairness, I invested in 10 companies over the same period as Perrelli. I only have 2 winners, Social Tables, and Veenome. I have one other small exit that returned cash at a significant loss, Spotflux. I invested in several good companies that have not exited or unlikely to have a positive exit and two absolute dumpster fires, HugeFan (co-invested with Fortify) and Spinnakr. But… I didn’t skim a carry from me. On the other hand, I did report to me on a regular basis on the value of my portfolio and the disposition of my cash so at least I earned my carry that I didn’t take from me.
More importantly, every time I was distracted and took my eye off the ball, I was the only person I cheated. Like Fortify, the return of my investment is going to likely be about 120 percent in 9 years significantly exceeding the risk and under-performing the return of investing in the S&P for that same period.
So.. while Mr. Cranky is kicking himself in the ass for missed opportunities, Jonathon Perrelli, if he does actually distribute the proceeds from the Social Table sale, will be patting himself on the back and pivoting the story he tells about himself from visionary successful entrepreneur who has raised $5 million dollars and produced nothing but PR, back to his original narrative of an uber-successful VC who by taking massive risks has significantly underperformed the S&P and real VCs.
Update: And just as I finish writing this, and as predicted, the self-congratulations for earning a participation trophy has begun. I reader pointed out that Jonathon Perrelli, who is supposed to be working on building a company, has released a press release from his dormant Zombie venture fund which doesn’t even have a website any longer (jeez, even 3Si has a website), Fortify.. patting himself on the back.
Fortify Investors who hadn’t heard a peep about the fund or performance received a downright giddy email from Perrelli within hours of the M&A announcement. Craving validation and vindication for one win out of forty tries, He had blocked one of the people who invested in his fund but like one of the characters from mean girls… he gloated over text to say, I’m at a party and you’re not. I don’t know if that is hilarious or sad.
When I use to coach my kids in sports, I would emphasize that they should act with class when they scored. Act like you’ve been there before. JP had a success.. but he has an excuse for his little over-exuberant victory dance. He’s only acting like he’s not been there before because he’s never been there before. The sad thing is he’s celebrating a win and the game ain’t over yet.
What is it about you, Johnny? Did your parents not give you enough love? Was your brother the only successful Perrelli? Was your brother the golden boy who got all the pats on the back?
Let me help you out Jonathon Perrelli and Fortify! Okay, good job you visionary guy you! Great work! Social Tables could not have done it without you… You are a god!
Do you feel better now?
Part II Why do I Care?
I care for several reasons.
- Local Tech “Journalists” – Our local tech “journalists” are as effective as rubber nosed woodpecker in a petrified forest and a flamboyant, hey-look-at-me Perrelli, attracts lazy “journalists” like Kanye West attracts Prozac salesmen. Because the real guys who are doing real work, the Raj Bhaskirs and Sean Griffeys of the worlds have their noses to the grindstone, the attention whores like JP become the face and the shining example of what it takes to be a startup success. In other words failure is presented as success to the unknowing naive masses. Someone has to mention that the emperor is naked.
- Burned Limited Partners – He raised money for a Venture Fund and then treated his limited partners (his investors) like shit. There is no transparency to what he’s doing with their money. Many of these people have a bad taste in their mouth and will never invest in startups again. This does serious damage to the long-term health of the DCTech startup ecosystem. Someone has to warn investors before they burn their cash by “investing” in Fortify Fund II.
- Burned Good Money Promoting Trash – Perrelli promoted and lied about portfolio companies like Speek and Lemur. After he invested in several companies he went out to other nascent funds promoted these garbage companies in order to pump up an imaginary Internal Rate of Return. Pumping-up his worthless companies and getting suckers to invest in up-rounds look good on the books when trying to raise more money. One of these investors now focuses on Real Estate and will never come back to Startups… thanks JP! Someone has to let unsuspecting investors that when JP is promoting a company, they need to do a little more diligence than take his word.
- Burning LifeFuels Investor Cash – Is Perrelli the CEO of LifeFuels or the Managing Partner of Fortify? I’m going to let you in on a little secret. Jonathon Perrelli is not Elan Musk. Elan can run a Tesla and a SpaceX, Perrelli can’t even wipe is little tushy without adult supervision, much less run one company competently. Yet while he’s raised $5 million dollars in LifeFuels, and in four years has not been able to turn that money into a product or anything of value to his investors, he’s off promoting his one win at Fortify, he’s teaching people the secrets of his non-success, as a frequent speaker. He does not have the eye on the ball he’s committed to bringing across the goal line. I’ve been a turn around CEO, and I’ve followed CEOs like Perrelli. There are going to be employees out of work and investors left with nothing but write-offs. Maybe I can get one future employee to go to a good company instead of a dumpster fire.
- Snowflake – He craves praise and hides from detractors. Perrelli has blocked people on social media, on his phone, in order to hide from criticism. He’s blocked some of the investors in his fund… although he took time out to text them and brag about the Social Tables exit. JP has not updated his investors of any of the significant events, going out of business, investments, etc in Fortify but yesterday… he got on the megaphone to crow. It’s like he just scored a field goal in the closing seconds of 48 to nothing, losing effort of a football game. A guy who constantly fails won’t listen to criticism is unlikely to learn to succeed. Maybe he’ll stop being such a baby and be open to learning.
- He’s a Liar and His Feet Stink – I can’t verify the second part of that statement but I can site too many examples of material misrepresentations that have affected peoples decision making and caused loss and I’m trying to drive up the stock price of odor eaters.