Jimmy Odom and his co-founders at WeDeliver, a same-day delivery platform, had a lot going for them when they launched in 2013. The buzzed-about Chicago venture won the local Startup Weekend and quickly grew to provide deliveries for 100 area companies. WeDeliver also launched Locally, a stand-alone app that allowed businesses to sell products online for same-day delivery.
But in June of this year, WeDeliver announced it was being acquired by California-based Deliv, a similar but larger service that crowdsources its drivers. The outcome was in part due to a failed funding round—money the company expected that never quite materialized.
“We always wanted to build a national delivery company, but we just didn’t have the capacity,” Odom says. “Our angel investors believed in us, but angel investors cannot fund a company that should be venture-backed.If you can’t get into the VC world, it’s a chasm where you perish.”
We Deliver was on the brink of securing Series A funding last year with a Chicago VC, Odom claims, when another local fund made a sizable investment in a similar company elsewhere in the U.S. “We were looking at a $2 million round,” Odom says. “We were practically counting the money, because the meetings were going so well. We met all the partners; they loved our growth, our trajectory, our plans for the future. But when they heard about this other fund, they wanted to know why they chose to invest in another delivery company over one that was right in their own backyard.”
That led to some awkward conversations. “We tried to explain that we were a different model, but the truth is that the news hit us from out of left field. We spent so much time focusing on this one VC and didn’t diversify like we should have,” he says. “It was easier for them to pass and move on to another deal with a company they felt was completely clean.”
Even if the papers are signed and the champagne has been poured, a funded entrepreneur’s balance sheet doesn’t necessarily go from red to black. Checks can fail to materialize for a host of reasons.
Virginia Barnett, co-founder and CEO of Gr8Code, which offered coding boot camps in Florida, says a lack of due diligence before partnering with an investor led to the demise of her business. She’s suing Steven Brickner, his investment fund and her former co-founders, claiming improper transfer of assets and failure to carry out their duties to the company.
In the suit, filed in January in Florida, Barnett claims that Brickner failed to provide $100,000 in seed money— part of $5.4 million in promised venture capital—and ousted her from management. A joint press release about the partnership went out in advance of the deal being finalized, a move Barnett says was “too soon.”
(Brickner calls Barnett’s claims “hogwash,” saying the “promise of $100,000 was derived from her saying she had students, but she did not.” He claims Barnett issued the press release early because she “wanted to make a big splash.”)
You can read up to 3 premium stories before you subscribe to Magzter GOLD
Log in, if you are already a subscriber
Get unlimited access to thousands of curated premium stories, newspapers and 5,000+ magazines
READ THE ENTIRE ISSUE