The Betrayal of Bnter | TechCrunch
Ottway Ducard stashed this in VC
According to sources, Karp was incensed, viewed them as clearly competitive and told Spark he wasn’t OK with the firm doing the deal. Fair enough. Whether anyone else agrees or not, Spark asked Karp his opinion and most ambitious entrepreneurs see their future markets as broader than they may look today. But what wasn’t fair was what Spark did next. The firm not only pulled the termsheet, but when existing Bnter investors cried foul, Spark refused to pay a $200,000 break up fee to help cover the expenses the lean company had started to take on as a result of having a signed term sheet and — it thought– $2 million on the way to its bank account. No one has argued Spark forced the company to take on those extra expenses and there’s a dispute about when the occurred, but the company clearly took them on thinking money was on the way.
The company had already hired an Android developer to get that version moving as quickly as possible– and now it was in a lurch. Some three months ago it was a hot, up-and-comer in the New York tech scene, backed by some of the biggest name angels in the business. It had no intention of fundraising this soon, but now that it had committed to the process and to growing the company more aggressively the rug had been ripped out from under it.
Incensed is right.
Rule 1: Nothing happens until it happens. Don't even trust a signature until the cash is in your bank account!
Cash in a bank account? I prefer ingots in my bunker.
Jason's right. Talk is cheap. Until it's real, it's not real.