![]() Startup failures are not uncommon, but a billion-dollar company that has raised huge pools of money going belly up remains a rarity. ![]() ![]() These funds, which mange funds of hundreds of billions of dollars, invested $12.7 billion in private tech companies last year, up from $2.2 billion the year before, according to CB Insights. The Kuwait Investment Authority led a $165 million investment in Jawbone just last year, when its prospects had already dimmed to the point that most of its original investors were unwilling to put up new funding. The Jawbone case also underscores the risks that non-traditional startup investors such as sovereign wealth funds face as they ramp up investments in Silicon Valley. “I expect there will be a lot more deaths by overfunding.” “They are basically force-feeding capital into these companies,” said Sramana Mitra, a tech entrepreneur and consultant, and founder and CEO of startup accelerator One Million by One Million. The irony is Jawbone could have been a suitable acquisition target some years ago, these people say, had it just kept its valuation lower by raising less money from venture capital and sovereign wealth funds. Jawbone’s fall after raising more than $900 million provides a stark example of how the flood of cash pouring into Silicon Valley can have the perverse effect of sustaining companies that have no future, technology executives and financiers say. It now ranks as the second largest failure among venture-backed companies, based on total funding raised, according to the research firm CB Insights. Ultimately, all that money couldn’t save San Francisco-based Jawbone, which began liquidating proceedings in June after its fitness-tracker product failed to take off. Top-tier venture capital firms Sequoia, Andreessen Horowitz, Khosla Ventures and Kleiner Perkins Caufield & Byers, and then a sovereign wealth fund, invested hundreds of millions of dollars in Jawbone, lifting its valuation to $3.2 billion in 2014. That may have ended up being its biggest problem. SAN FRANCISCO, July 10 (Reuters) - Consumer electronics company Jawbone had more than enough money to take on Fitbit and other health-tracking devices in the “wearables” market. ![]() (Repeats to additional customers with no changes to text) ![]()
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