Message to Alan and Matt at IMGUR.com about funding controversy.

July 13, 2014

Hello Matt

Hope all is well with you and Alan in S.F.

I run Corvus Ventures, start up “concept” companies, serve on the Sundown Rundown board and try to do what all entrepreneurs who create new companies “do”.

Disrupt is one of those things, both in business and in process and thinking of the public and potential investors. I have always been disconcerted with government being in business development and investing public monies as a basic philosophy.

Most taxpayers feel that if “they” are going to take Taxpayers money and invest it in companies that they should be held to a standard at least as high as a voluntary LP would have of a VC.

We have two controversies in the minds of your former neighbours in Athens Ohio:

1- Alan and Matt ignore, downplay, gloss over the role O.U. Innovation had in their success and you insulted all of Appalachia Ohio by calling us “NOWHERE” Ohio and that basically we suck and you could not have fled to sunny S.F. fast enough.

Sadly that my actually be true, this area is backward for many reasons, too many to list here.

2- And most importantly is the discussion: “should governments and public institutions invest tax dollars in areas besides roads, bridges, education and keeping law and order”?

If governments invest Taxpayers money in business to “grow jobs” should they do so with the same rigour and methodology as an experienced Angel or a VC? lets assume the answer is yes.

We know that only 0.07% of startups become “Unicorns” with billion $ plus valuations and that 90 % fail very fast. This means you have to invest over a wide array of type, geographies and number of start ups to have a chance at the Unicorn. You may also wish to hedge for additional safety.

In the case of Ohio University Investing cash, incubator space and time + effort of human capital into IMGUR to create jobs and an ROI for Ohio. “They” failed in their fiduciary duty to the taxpayer and the politicians who set up “Third Frontier”. We are checking to see if policy is in place to prevent this dereliction of duty now, as we all learn from our mistakes.

If a company funded by Taxpayers in any way fails (90%) that’s ok, IF we get the upside of the 10% and the occasional Unicorn.
At a bare minimum if a company succeeds and moves out of State the investment should be:

1- Paid back with interest.

2- Bought out at what ever “X” the valuation a VC has set, to be able to reinvest in more startups. Lets say Andreesen invested $40 million for 20%. Years earlier when Ohio taxpayers invested $25K plus services, a normal incubator would have taken at least 5%. Meaning Ohio’s taxpayers should have a valuation of $12 million.

3- A proper investment into IMGUR would have included a non-dilution clause, the opportunity to sell its 5% or invest more in Seed and coming rounds.

Ohio, O.U. Innovation Ctr., Techgrowth, Third Frontier, State Development “professionals” all failed investing 101.

Brash young entrepreneurs can be forgiven for Dissing their elders back home (with a proper apology). The politicians and administrators who failed the taxpayers need to be replaced.

I am very interested in a response from Alan, Marc and yourself
especially if I am wrong or have a misconception. Thousands of entrepreneurs and you former neighbours and alumni from “NOWHERE” Ohio are very interested. and want the story clarified.

Regards

Brett Bringardner
@kaffegeek

Corvus Ventures

einsteinsurplus.com
libriloop.com
mariettamagnetics.com (beta)
smartasstoiletpaper.com

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