Music videos distributor Vadio has laid off most of its staff and is looking for a buyer, despite signing high-profile deals with Warner Music Group and Shazam in 2016.
“We were on a massive trajectory. Frankly, we didn’t raise enough capital out of the gate,” CEO Bryce Clemmer told the Portland Business Journal. “Given all the deals that needed to be done, a company like this in the music video vertical ultimately requires upfront investment to secure the content from the owners and build the team.”
Vadio did raise quite a bit of capital: $10m, including $7.5m in its 2015 Series A round of funding. The ending of a partnership with Vevo in 2015, forcing Vadio to strike direct agreements with labels, appears to have been the start of a slippery slope.
“This expedited the timeline to work directly with labels for content. That was something we didn’t raise capital to do,” said Clemmer.
Given many VC’s wariness of investing in a startup only to see that money go straight out of the door to music rightsholders – not to mention a wider squeeze on follow-on funding rounds – it is not surprising that Vadio has struggled. The question now is whether it can find a buyer.