The early stage investment world is one of risk and reward. It is an entrepreneurial space, at times fraught with dangers at every turn...competition, technology risk, funding concerns, intellectual property challenges, and more. BrightStar applauds those who have the fortitude to enter it. This is the first year we have lost companies in our portfolio due to them closing their doors. Undoubtedly there will be more, as it is part of the equation necessary for success. We will update you when this happens, so we can celebrate their efforts and also show the many obstacles and struggles early stage entrepreneurs face along the way. Here are the stories behind the two that didn’t make it.
Beekeeper Data: We invested in Beekeeper in 2014. It was a software company that rolled out their platform to allow businesses to easily communicate metrics to employees and customers. The company found clients used their system in a pilot setting but had trouble converting them to paying customers. Beekeeper’s smaller customers used mainly free open source alternatives and larger size customers bought full solution packages from national competitors---the team could not crack the medium sized client opportunity and ceased operations in August.
Dairyvative: The company ceased operations and dissolved in 2019. BrightStar does not anticipate a return of its capital. The company had an incredible technology with multiple Fortune 1,000 companies wanting to partner and co-develop market, but the strategic investors could not coordinate direction and activities with each other. This venture is a prime example of needing a strong quality, lead investor familiar with start-ups and venture capital investment that will do what is necessary to help drive the opportunity forward.
FloraSeq: This company was founded by two extremely capable PhD’s who spent over two years of their lives and significant amounts of their own money trying to perfect an ingestible capsule to treat deadly gastrointestinal diseases. The team received innovation awards and other praise and in early clinical trials saw some patients enjoy truly life changing benefits. Nothing in trade publications, conference abstracts or industry meetings would have suggested that two prominent physicians in the space with non-public game changing funding would suddenly arise with substantial research to jeopardize FloraSeq’s anticipated head start on the market. This is what occurred, and despite the early clinical successes, the management team made the difficult and high-integrity decision that taking in additional investment and proceeding was not the best use of capital resources. The company ceased operations in December.