Jonathon Perrelli Epilogue Part 3 (revised)
Prologue to the Jonathon Perrelli Epilogue
Two weeks ago, I posted the first of a 3 part series Jonathon Perrelli Fortify VC Part 1 with a follow-up Part 2 last week. Yup, there goes Mr. Cranky picking on a poor pioneer of DC’s Startup Ecosystem.
Not one of the people who protested about the series did so by refuting any of the facts presented in those posts. JP didn’t respond to my request for information, nor did he reply in comments, except possibly under the pseudonym “goonsquad” in the comment section of the first post. All of the folks who protested my first two blog post protested with the same response… but he helped me or he is nice to me. That’s not relevant to the discussion. That’s changing the subject. Imagine this conversation:
Victim of Madoff Scandal, ” I lost my house, my retirement, everything because of Bernie Madoff”
Opera Lover, “Oh but he’s such a good guy, he donated $1 million to the Metropolitan Opera”
That doesn’t help Victim-of-Madoff-Scandal who hates opera and even if he loved opera he can no longer afford a ticket.
Try and stay on topic!
As a rule, I don’t censor my comment section of this site. I censor hate speech, racial slurs, total disrespect of others, and spam. I censor when someone tries to hijack the comment section by saying something like, “My Fanboy Rebuttal” and then makes no rebuttal comments but just posts a link to their site. On this post, in this comment section, I will delete any response that doesn’t address the facts. That doesn’t stay on topic. I’m sure JP has helped a lot of people. I’m sure he was a “pioneer” who started an early, and yet not the first accelerator in DC, that he was one of DC’s first 700 VCs, that he’s a visionary if regurgitating the vision of and becoming a poor man’s Dave McClure is visionary. I’m not questioning any of that. I’m presenting facts that a healthy startup ecosystem should not ignore. Facts that should also be considered alongside JP’s application for Sainthood.
Refute the facts or tell me why they are not important, or your comments in this post will be deleted. This is old man Mr. Cranky’s lawn and I want you off my lawn!
Salute to Real Pioneers
- Venture Capital in DC was Pioneered in 1977 by Frank Bonsal, of New Enterprise Associates
- Launchbox Digital Pioneered Accelerators in 2007
- Steve Case and AOL were arguably the pioneers in DC Tech Startups
- Dave McClure the original shaved-head, t-shirt wearing, provocative, tech-nerdy cool accelerator founding guy
Even here below in the comment section, you will see a current investor in JPs latest future failure attack based on one question, legitimately asked. He refused to refute facts…. because he could not. I’ll leave his off-topic comment on as an example of what I’ll delete.
Other Peoples Money
In the three years that JP has been spending his and other people’s money on LifeFuels. What has he accomplished? How many bottles has he shipped? How much revenue has he generated? Can you count up to Zero?
How has JP invested the millions of dollars he’s raised from the company and who actually put up $5 Million reported? Only one named individual has been listed in the money raised? Did Sean Parker’s check finally come through? Does Sean want that to be a secret so he’s not listed (When JP was raising money for Fortify, he kept telling potential investors that Sean Parker would be investing alongside them… this never happened). Was there a Venture Fund who invested but doesn’t want to be named? Or is $5 Million just another empty boast. How much did Fortify put into LifeFuels? Perrelli’s Fortify LPs have no idea how much of their money was invested in Perrelli’s company but Fortify is listed as a LifeFuels investor (read that last sentence again and think about that).
Clearly, money has been spent.
In 2015, LifeFuels was awarded a “Coveted” CES Innovation Honoree. Folks, a CES Innovation Honoree award has as much value as a last place youth soccer team participation trophy. As an example, in 2013, CES awarded 342 Innovation Honorees… it’s a pay to play award. According to the Verge, companies paid between $750 – $1,200 to be an Honoree. Honorees don’t even have to attend the show. But LifeFuels did attend the show in 2015. How much did that cost investors? Booth space, booth, internet, electricity, staff travel cost (airfare, hotel, food). My experience is that would cost more than $25 thousand and less than $100 thousand. They had their own booth and one year after the award and the show, LifeFuels product sales jumped from $0 to $0. You can’t sell a product you don’t have.
According to the Washington Business Journal in April 2017, LifeFuels, a company with zero sales, that doesn’t manufacture their own product, that outsources bottle design had 20 employees and was cutting back to 12. I think I can build nothing and sell nothing with way fewer than 12 employees over a 2 year period. And I certainly wouldn’t house those fewer people in a Glitter Traction DCInno Office Envy Award Winning office. LifeFuels is a startup that rents their own space and has one of the best office spaces in the DC Metropolitan area. LifeFuels is a vehicle to feed the fame of its founder.
Check out where investor dollars were expended in these Twitter pictures from the Reston HQ of LifeFuels. How many bottles did they sell?
Here’s the thing LifeFuels is an IoT bottle with nutrients (i.e. vitamins) that monitors your hydration and nutrient intake. You must buy the proprietary bottle and proprietary Fuel Pods from a company that won’t be in business to sell you new Fuel Pods a year from now when the company is out of business.
I’m doing my own startup! It’s a LifeFuels competitor called… AquaVital. Send me $75 and I’ll send you a $14, 20-ounce Camelback water bottle and an $8 bottle of Flintstones Chewable Vitamins with Iron. It automatically monitors your nutritional intake. Every time you drink a bottle of water, you drank 20 ounces of water. Every time you chew the tasty Flintstones Multivitamins Supplement with Iron Mixed Fruit Chewable you receive a precious amount of energy supporting vitamins including B6, B12, thiamin, riboflavin, niacin and iron, immune health with vitamins C, E and beta-carotene, eye health with vitamins A, C and E. And best yet? They’re shaped like Flintstone Characters. The batteries never need charging!
I’m not surprised that JP, the PT Barnum of DC Tech has been able to gin up support for a better mousetrap that not only doesn’t catch mice but cost more and works worse than a traditional mouse trap. JP wouldn’t be the first person to come up with a stupid idea poorly executed. But whose money is he spending on CES Awards, CES Exhibition space, and meaningless office envy garbage before he has anything anyone can even buy? To the people who directly wrote a check into LifeFuels… I’ve made dumb investments too… don’t feel bad. But Fortify is listed as an investor. And Fortify hasn’t informed it’s investors of it’s latest investments or cash position in years. Fortify didn’t ask Fortify LPs if they wanted to invest in an IoSI (Internet of Stupid Idea) device. In other words, Fortify LPs didn’t make a dumb decision to invest in LifeFuels…. their bonehead move was to invest in Fortify. How many Fortify investors feel good about having the managing partner of their fund invest in LifeFuels.. a company he founded and runs?
Many people will tell you that JP has done well by them… he’s funded them, backed them, mentored them. One of DC’s up and coming startup CEOs, Dan (pronounced Don) Berger credits JP with helping him get to where he is today. There’s no refuting that JP has done well in and for DC Tech.
Many of his current investors who directly made the ill-advised decision to invest in a company which is building a Flintstone Vitamins Water Dispenser that don’t yet realize they invested in a joke… their belief system is being attacked, they’re up in arms today… I’m a bad guy. Heck, I expect vitriol the Chief Strategy Officer who’s strategy I’m mocking. Go ahead and question my motives and my integrity. I’m confident that in 3 years when the dust settles, you will wish you invested in real-estate or Alphabet, or pet rocks or my Camelback/Flinstone competitor instead investing in JP’s fame and Glitter Traction.
I’ve made bad investments. I’m not a naive investor. I’ve been an LP in a legitimate Venture Fund and lost $86,000 with no complaints. I’ve directly invested $100,000 in a company and have no quarrel that my only tangible return was a coffee mug. I made my first investment in a private company in 1988. When I invest, I expect to have 1 winner out of 15 and the majority of the investments to be losers. I do however expect the founders and the General Partners with whom I invest to make an honest effort. If founders were baseball players, I’d want my investment founder to eat well, diligently exercise, get a good night’s rest the night before the game and when that founder gets up to the plate and strikes out… I have no issue. When they show up for the game drunk? That’s when a strike-out is not just a part of the game…. it’s maleficence.
So when it comes to JP, I believe that when you’re looking for help, a mentor, a hand-up, or thinking about investing in someone’s fund or company… you might want to check all reviews of that person.. positive and negative and make up your mind for yourself. Read past the Cheerleading rah rah Tech “journalists.” Look for other truths. Ask a real VC… I’ve talked to more than one on this issue and I know why they didn’t invest.
As presented in parts one, two and three there are multiple instances of lapse of judgment, conflicted action, and possible unethical behavior. They include:
- Promoting an unqualified woman with whom he was romantically involved to General Partner of Fortify. While she drew a salary and made no cash investment in the fund, the other General Partners earned no salary and were required to invest.
- Exaggerating the amount of money he had raised and who was writing him investment checks in order to convince others that they were investing alongside other smart people.
- Possible conflicted Investments of Limited Partner capital in companies he owns and/or companies owned by someone with whom he had a romantic relationship
- Not meeting the reporting requirements he committed to in the Fortify Funding documents.
- A lack of transparency
Using someone’s Bottle Idea to found LifeFuels– Nope! That didn’t happen… my bad.
Why is this important? Because I’m a suspicious old man and I was originally sucked into the gravitas and charm of this man. Less experienced people who read all the rah rah cheerleading in the press could be led to believe that JP is the second coming. He just may be… yet people would be wise to approach anyone in the ecosystem… Mr. Cranky included with caution before developing a relationship. Before just ceding your trust to them. No one is all saint or all sinner. Do your due diligence before you risk your reputation, your time or your treasure.
You are invited to call me cranky old ass hat, you can quote your trite little positive Hallmark slogans at me but I have a Hallmark Slogan too… We rise by lifting sheep out of the jaws of wolves. When I look at the young, naive nubies in the DC Tech ecosystem, I think of my sons. I’d want my son to step lightly in this swamp. I’d want someone to yell, “Hey! Don’t take that step… you’re about to walk into a pile of poop.” That’s how we rise… by warning others of danger. By not letting them step off that cliff. And remember, when you do want to point out why I’m wrong…. come at me refuting my facts, come at me with facts, don’t change the subject.
Is JP a Wolf of Startupland? I think so. You can make up your own mind.
October 23, 2017 – Update
What do you call a company that was founded on April Fools Day, 2014 and 3 years and 5 months later still doesn’t have a product to ship? According to LifeFools web site, you can’t buy their overpriced bottle of water. You can get on the waiting list. I’ll lay 2:1 odds that the Silver Line will open at Dulles Airport (scheduled to open in 2020) before you get your water bottle.
What has this company done with the alleged $5 million they purported to raise? They didn’t raise $5 million either but it makes a good story… doesn’t it? Nobody raises $5 million from nobody. Who invested? Why wasn’t it reported…anywhere?