20 worst VC investments of all time

November 19, 2007 | Matt Marshall | Comments | |

vcbombs.jpgInsideCRM has a list of what it says are the twenty worst VC investments of all time. See full details here, but here’s the quick list:

  1. Amp’d Mobile: $360 million raised, ended in bankruptcy.
  2. Procket: $272 million, sold for $89 million.
  3. Webvan: Valued at $1.2 billion, went bankrupt in 2001. Ate through $800 million in venture capital, ended with $830 million in losses.
  4. Caspian Networks: >$300 million in funding, closed doors.
  5. Pets.com: $50 million from Hummer Winblad Venture Partners, Bowman Capital, and Amazon.com Inc., did sock-puppet ads, then crashed.
  6. Optiva: $41.5 million, crashed.
  7. Kozmo.com: $250 million, liquidated.
  8. CueCat: $185 million from investors like The Coca-Cola Co. and General Electric Co., bombed.
  9. DeNovis Inc.: $125 million, closed.
  10. PointCast Inc.: Tens of millions of dollars in venture capital and a $400 million buy offer, then sold for $7 million.
  11. eToys: Backed by VC firms Idealab, Highland Capital Partners and Sequoia Capital, ended in bankruptcy.
  12. AllAdvantage: $135 million in venture capital down the drain.
  13. FastForward: $54 million into the company, bankrupt.
  14. Xoma: This 26-year old company has not earned a profit since its inception in 1981. [Update: This one should be taken off the list. It entered the black for the first time two weeks ago!]
  15. Flooz.com: $50 million, went broke.
  16. Vanguarde Media Inc.: $60 million in VC funding, went under.
  17. Pixelon.com: $16 million not remarkable, but burned through with remarkable style.
  18. Bolt Media Inc.: >$60 million in venture backing, shut down.
  19. DigiScents: $20 million in investment, shut down.
  20. Boo.com: $120 million, went bust.

[Update: Dan Primack has since produced another list, using a different method]

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  • Jason
    Who every came up with this list did a great job. All the main players are listed here. The fact that Procket, Alladvantage and Boo are all listed just shows how good the list is.
  • James Currier
    eToys was actually a great investment for venture firms like Highland and Sequoia. They got in and got out before the bust came and made $100's of millions.
  • tom
    What about OmniSky? $240M in private and public funding, then bankrupt, assets sold in firesale to EarthLink.
  • If only this were accurate. Unfortunately, there are countless other flameouts out there that took tens of millions (or more) of dollars in financing and then crashed before a liquidity event. I have been keeping a list for sometime, maybe I'll toss them up on the blog soon.
  • Miles Mellough
    That top 20 covers most of the greatest hits of the era, but there were other notable flame-outs. Don't forget the $35 million bomb called Greatentertaining.com. Who would have thought that the world would not go crazy over themed party supplies? (If only there was a place today to overpay for Hannah Montana party cups!) Classic case of a bad idea poorly executed, and backed by blue-chip firm Benchmark among others.
  • James, are you sure about Sequoia. I recall they came in very late on eToys -- right before it went public -- and with lock-up they may not have gotten out before it crumbled. I don't know, but would prefer to be certain before updating.
  • ArgleBargle
    "eToys was actually a great investment for venture firms like Highland and Sequoia. They got in and got out before the bust came and made $100’s of millions."

    I can tell you for a fact that Highland lost all of the money it invested in eToys. They rode it all the way up and all the way back down.

    So many memories... Calient, Asera, Photuris, Brience, Corvis, StorageNetworks, Cierra Photonics, CoreExpress, Ensemble Communications. And we haven't even listed any CLECs yet!
  • recoveringvc
    What about Pluris? Had to have gone thru $150 million...did a $100 million Series D round. Not as bad as Caspian and Procket...glad we passed on those :)
  • Jin
    Where is F*cked company these days? And where is Pud's ad network?
  • founder
    It shows how visionary most of the VCs are!
  • Mark P.
    Information on at least one of these companies is incorrect and outdated.

    XOMA turned a profit in Q3 of this year
  • Bob
    Candescent should be on the list they went through over 200mm before the internet bubble.
  • Thanks Mark, will note that. That seemed to be the weakest link on the list anyway.
  • David P. Hamilton
    There are plenty of good life-science examples beyond Xoma. One that just crossed my transom is Vascular Architects, a medical-device firm that raised more than $42 million and just sold itself for $2.8 million.
  • Lee C.
    Would be interesting to see this list with list of funding rounds, (estimated) valuations and participants over time.
  • Patti
    Quokka Sports was yet another truly spectacular flameout. One of the most memorable moments of the dot-bust was walking through their office space during the viewing before the bankruptcy auction. It was a veritable temple of overspending.

    The problem with a list like this is that 20 isn't nearly enough.
  • James Currier
    Matt, yes, you may be right. I am really only certain about Highland's investment, because I was in VC at the time in Boston, and our Monday meeting after that investment was announced, the firm I was at - which generally competed with Highland -- stopped investing in anything with the word "Internet" in it because the valuations were getting crazy and the business models didn't seem to work. That was 1996. :-) We had looked at the eToys deal and declined because, specifically, their cost of customer acquisition was $107 and the lifetime projected profit was about $10. I was in my mid twenties at the time, and I remember following that deal and learning that these bubbles go longer than you think, and if you get in early enough, you can get out a make a lot of money.
  • This dates me a bit - it far precedes the net mania, but Amdahl's Trilogy Systems ~1984 had accumulated ~$250m in investor funding and closed due to wafer yield problems and heat dissipation?, but mostly due to low yield from a nickel based wiring interconnect metallurgy - cracking and delaminating.... I only saw the prospectus from a distance....

    I am guessing ~$250m in 1984 dollars is considerably more in circa 2000 dollars of most of the net firms cited...
  • RJ
    General Magic :)?
  • dbiz
    PowerAgent, and less for the sheer $ raised but instead for the intensity and velocity of the flameout: huge PR hype packed into an incredibly short timeframe ... black star-like in its density and smallness. Vapor at its best. Not even listed on Carlick's LinkedIn profile!
  • Nice thought..
    Eileen
    ==================

    foreclosure auctions