Some rights reserved by Bob AuBuchon
This is an unfortunate story that entrepreneurs should read and understand.
We start companies for a number of different reasons. We want to change the world. We want to solve problems. We are unemployable. We are crazy. And we stay up at night worrying about taking care of our employees, our customers, our investors.
So it is hard to understand how well regarded funds wind down companies without providing information to employees.
Investor immorality: The strange case of Blue Noodle
Start-ups fail all the time. But there is a right way and a wrong way to do it. This is an example of the wrong way.
On Monday, most employees of social media startup Blue Noodle didn’t get paid. They called their lead venture capital firm, which wouldn’t discuss the situation with them. They called their former CEO, who refused to pick up the phone. They called their lender, who said to call the venture capital firm. And thus the circle began anew.
“In my more than 20 years of working in Silicon Valley, I’ve been involved on more failed companies than I’d like to admit, but there is always an orderly win-down process,” says John Montgomery, chairman of law firm Montgomery & Hansen. “It sounds like the VCs in this case are treating the company like a car they abandon in a parking lot with the keys in the ignition.”
