Startup Funding: Who To Blame for the Lack of #DCTech Cash?

Who should we blame for the lack of startup funding in DC?

  • Angel Investors – Let’s blame the Angel Investors! Why aren’t people like Mr Cranky investing in startups anymore? After all, wasn’t Glen Hellman the #1 Angel Investor in the United States according to Tech Cocktail ( readers? Actually, no he wasn’t and he, who is I, never was the #1 angel anywhere. He who is I, is (or am) also no longer an Angel Investor and the rest of this article describes why.
  • Venture Capitalists – Let’s blame the lack of startup funding on all the VC’s who just don’t “get it.” Which isn’t true if “it” is not understanding the value of a groovy app like Sick Weather. There is no it to get with apps like Trustify and Sick Weather.  The it that VCs do get however is the actually it that is the problem.  The it that is keeping them from actively investing in this region is that too few its have proven themselves to be worth it in DC as of late. That’s why there used to be over 40 active VC’s in this town and now there’s only 4 or 5 or 6.
  • The Government – Let’s blame the Government. Boys and Girls, the Government didn’t make Microsoft, Amazon, Google, Apple, Facebook, or Tesla. If you’re waiting for help from the government then you’re not an entrepreneur… you’re a welfare-preneur. I promise you that Jeff Bezos never said, excuse me, Mr. President, could you change the Tax Code, could you create a co-working accelerator, could you lend me a dollar. So let’s leave government out of this. Government isn’t designed to invest in high-risk, high-reward startups.

So what’s the problem? Here’s how Mr. Cranky sees it:

  • Lack of Lucrative Exits – Just a cursory look at DC Tech companies in the decade from 1991 – 2000, shows 28 sweet IPOs. In the seventeen years from 2001 until today, I count 8 (see the table below which is not meant to be an all-inclusive list). You know what that tells me? There were exits, liquidity, and profits for early-stage investors 20 years ago. The last 17 years have not been as lucrative. Investors haven’t been making money. The difference between an Investor and a philanthropist is making money as opposed to donating money.
  • Sloth – I just look at a few of the crappy, lazy, or chickenshit entrepreneurs with whom I invested and wonder if other investors are as disappointed in the people with whom they trusted their funds. Do you want examples? Well, I’m not shy:
    • Spnnkr – Michael Mayernick and Adam Bonnifield. Michael was one of the big supporters and promoters of the DC Tech Scene until he snuck out of town after he raised money for his company from dopes like me in December 2011 (thankfully only $20K). Total Radio silence from these guys until July of 2014, when I read in that Mikey has either started a new company or has a new pivot. So a company that took a million dollars from investors, leaves town, goes silent and then works on another product/company without a word to prior investors.Then in 2015, I received an update that appears to be softening me and other investors up for a new investment request. I make fun of the fact that they only communicate when they want money and boom, radio silence again. I have no idea if this thing is still a company or just a website. I sure would like to write this piece of crap investment off for this tax year. I have no idea what this investment is worth but if anyone wants to buy my stock for a dollar, I’ll pay you a dollar to do that.
    • HugeFan – I’m not a huge fan of Chris MacDonald and HugeFan. Another guy who had no problem taking money… or stealthfully moving to San Diego in the middle of the night. Another $25K in the trash. I wonder if any of that helped start a beard oil company called Beardashery.

These clowns are just two examples of many wantrepreneurs that are either too lazy or too chickenshit to give the bad news to the people they had no problem asking for an allowance. They never asked for help from their investors… like good companies do. Perhaps they don’t want help from people so stupid they would give them money. They feel no obligation to keep the people who invested money in their dreams informed of their progress… or lack thereof.

Want to know why I don’t invest in startups anymore? Because there are too many clowns like this raising money and not enough high-quality, people of good character like the guys at TalkLocal who are working hard at making their company a valuable enterprise and not ashamed to share with their investors how hard it is to build a company. They ask for help, they keep investors in the loop with good and bad news and as an investor, I am proud to be a part of their effort. I hope these guys make it but if they don’t, I have no qualms that I invested.

Even when an idea doesn’t work out like when I invested $40K in YouEye… the team not only made a valiant effort… they tried, but they kept their investors constantly informed. It’s not so much the losing, it’s the being treated like a John (as in the customer of a prostitute) or a Mark (as in the target of a conman).

  • Chicanery and Bamboozelry – Then you have the fakers like Danny Boice, that bilked people out of money at Speek and is currently shitting all over securities laws at Trustify. People like Evan Burfield, who has never had a success as a startup founder or investor forming “K Street Crapital.” In this endeavor, Evan was going to recruit non-tech, well-healed, suckers…. newbie investors who were non-traditional angel investors (i.e. Lawyers, Doctors, Lobbyists). He then directed people to invest in unspeekable dumpster fires like Speek, disgraced Paul Singh’s -Disruption Corp. Some high school musical thing called Hallway.Thanks, Evan, those investors will never dip their toes in startup market again. Speaking of Lemur… that’s Will Fuentes puppy in partnership with Burfield. Will stood up and told investors that he had a working MVP and according to people close to the company, all they ever had were menu screens… a mock-up of a user interface. Evan’s been an advisor, promoter and pitchman for some of this regions silliest things that should never have been things including 1776, Study Hall and Lemur. Evan is DC’s, Snake Oil, Music Man-like salesman selling hope and delivering poop. Don’t even get me started on Jonathan Perrelli and The Fort. He got a bunch of people to invest in his fund and then grossly mismanaged it.

Do you want to know why there’s no startup funding? There are too many clowns raising money and playing in this market and not enough serious founders, heads down, banging away, working on the business. Too many wannabee glitter whores and not enough grinders. Want to know why there are so few people willing to look like fools, losing money investing in clowns? My money is better invested in Hurricane Relieve than Beardasheries. At least the charity says thank you and doesn’t sneak off into the night or use my money to buy summer homes in New Jersey. At least I don’t have to beg for a write-off like I am begging the Spinnakr boys to stop pretending their company is a thing… enough… let’s write it off already.

Blame the Paul Singh’s who raised money for a piece of crap idea called Disruption, and then while failing simultaneously started an Accelerator, Crystal Tech Fund, a total distraction. Is it any surprise he failed at both the company and the accelerator. Paul left former investors in both ventures fuming. Hell, the Vornado investors were so pissed they handed his fund off to an even worse steward… Burfield. If you can’t-do one thing well you might as well juggle two things you can suck at. Fail fast right? Twice as fast with two failures. Paul’s investors in Disruption were screwed when he took his eye of the Disruption ball and started an accelerator and screwed again when he slipped out of town… or should I say, trailered out of town in the middle of the night. The investors found out about the fail in the newspaper.

There’s not enough, hot water, soap, and bleach in this world to take the slime away from dealing with the Danny Boice’s and other slime bags in this startup town.

If you want to know, why I no longer make investments in DC, it’s because of Danny Boice, Evan Burfield, Speek, Trustify, Lemur, HugeFan, Spinnakr, 1776. It’s the high ratio of turds to gold in this ecosystem. There are too few golden boys like Kevin Lenanes, who founded Veenome and too many turdish Beardasherers. It’s all about the current state of the turd to gold ratio.

Want to place blame on the lack of startup funding? Blame it on us suckers who feel we have been burnt by a bunch of non-serious, amateur, pretenders selling digital-snake oil.

Fool us once… shame on you.

Fool us twice… shame on us.

There will have to be a good number of serious exits and delousing in the startup world for money to start flowing back into DC.

So you legitimate startup hopefuls, frustrated that there’s a lack of funding… don’t blame the investors… blame those who proceeded you and burnt and abused Investors. Blame those that salted the earth before you could sow your seeds.

 Unofficial Notional List of DC Tech IPOs

Company Year
AOL 1992
Nextel 1992
UUNet 1995
PSINet 1995
Cyber Cash 1995
Trusted Information Systems 1996
Digex 1996
Yuri Systems 1997
Ciena 1997
Deltek 1997
Condor Technologies 1997
Software AG America 1997
Landmark Solutions 1997
Network Solutions 1997
Best Software 1997
Visual Networks 1997
Teligent 1997
MicroStartegy 1998
Costar 1998
Proxicom 1999
CareerBuilder 1999
US Internetworking 1999
AppNet 1999
TeleCorp 1999
WebMethods 2000
Net2000 2000
Sequoia Software 2000
OTG Software 2000
Blackboard 2004
Comscore 2007
Elequa 2014
Cvent 2013
2U 2014
Opower 2014 2015
Appian 2017