Backplane
The business, the turning points, and the decisions behind them.
01 / WHAT IT BUILT
What the company did
Backplane was a social networking startup launched in 2011 by music manager Troy Carter with Lady Gaga, who took a 20% stake and put $1 million of her own money in. Its first product was LittleMonsters.com, a fan community for Gaga's 'little monsters' that grew into a platform for building niche social networks for fan groups and organizations. Backers included Google Ventures, SV Angel, Menlo Ventures, Sequoia Capital, Coca-Cola and Cirque du Soleil, and the company raised about $19 million in total. After the Little Monsters site stalled, the company pivoted to Place.xyz - a tool for organizations to build their own branded communities that grew to 15,000 communities with apps for Burning Man and LSU - but ran out of cash in 2016 and sold its assets.
02 / Backplane FAILURE REASONS
Failure reasons
Backplane burned through about $19 million in five years without reaching sustainability. CEO Scott Harrison said the big-name venture money came with tough liquidation preferences that would give early investors returns first in any exit, which scared away new investors once the cash ran out. A Chinese backer that was supposed to lead a $2.5 million rescue round dropped out at the last minute. The company had a large burn rate that management failed to control - the pivot to Place.xyz could not fix the economics - and it defaulted on loan obligations to lenders. Existing investors refused to put more money in, and the loss of credibility when Troy Carter and Lady Gaga parted ways in 2013 further damaged its prospects. With no funding available, the business was shut down and its assets sold.
03 / EVENT HISTORY
Events in the structured record
- Liquidation
Backplane entered liquidation.
04 / CONTEMPORARY REBUILD ASSESSMENT
Difficulty of rebuilding this project today
Material for this section is being gathered and checked. It will appear here once ready.
Overall assessment: Not completed
05 / CAUSAL CHAIN
How the factors connect
- 01
The company raised about $19 million in total: a 2011 seed round with Google Ventures, SV Angel, Founders Fund, Menlo Ventures, Tomorrow Ventures and I/O Ventures; a $12.1 million Series A in 2012 at a $40 million valuation; and $5 million in convertible debt in March 2015.
- 02
After the cash ran out, the company defaulted on loan obligations to lenders and could not close a rescue round when a Chinese backer's $2.5 million commitment fell through.
- 03
All of the company's assets - patents, software, code, office equipment, trademarks, URLs and other intellectual property - were sold through law firm Dorsey & Whitney LLP to investors, some of whom planned to restart the concept; the original business was shut down in 2016.