Did We Miss the Historic Retail Tipping Point?

Nailed it. Take a look at this January 2014 piece from A16Z's Jeff Jordan. Nearly everything - but for maybe a Nasty Gal reference - has continued to play out exactly as he indicated back then. This is, in part, why PETITION is spending a lot of time looking at what the people on the front-end of companies are saying and doing - rather than being reactionary, as the restructuring industry often tends to be. Notably, the e-commerce outliers he identifies are still holding: "food and beverage" and "health and personal care." But the former is under siege. The latter has held strong - Ulta being a real success story - but maybe that, too, is just a matter of time. The bottom line is that this retail trainwreck was entirely foreseeable. Perhaps just not by the management teams at the helm.

Will the VC & PE-backed Tech World Converge with the Restructuring World?

At some point, the tech bubble will burst.  When it does, there'll be a fast and furious convergence between the worlds of (venture capital and private equity backed) tech and corporate restructuring. Expedited 363 sales of intellectual property are coming.

Why highlight this now? First, a recent Bed Bath & Beyond (*click for ticker) public filing highlights that the brick-and-mortar retailer purchased once-popular e-commerce retailer One Kings Lane for a mere $11.78mm. This easily makes OKL one of the largest VC-backed failures EVER. Approximately $200mm had been invested in it at a presumed valuation of nearly a billion dollars. Certainly NOT a successful exit for a near-unicorn. 

And second, Jason Goldberg re-emerged on a new Bloomberg podcast discussing the epic failure of his unicorn startup Fab.com. 

Now, to be fair, neither of these e-commerce platforms ended up filing for bankruptcy. But that is only because they effectively sold for parts before having to. 

Other tech companies, however, haven't been so lucky. There is a growing roster that have filed for bankruptcy lately:

1. NJOY - $145mm raised mostly from PE (incl. Morgan Stanley, Sean Parker)
2. Quirky - $176mm raised mostly from VC (incl. A16Z, Kleiner Perkins, Lowercase Capital)
3. Karmaloop - $19mm raised mostly from PE (Comvest Group).
4. Jumio - $50.3mm raised mostly from VC (incl. A16Z, Eduardo Saverin)
5. Fuhu - $49.7mm 
6. Filip Technologies - $8mm 
7. Homejoy - $39.7mm raised mostly from VC (Google Ventures, First Round Capital, A16Z)(note: also a unicorn and Y-Combinator darling)

Next up: Jawbone. Unlike most tech/startup companies, Jawbone actually has debt on it (via Blackrock and Kuwait Investment Authority) on top of VC (incl. A16Z, Kleiner Perkins, Khosla Ventures, Sequoia Capital).

Note, also, that Air Fast Tickets is another recent bankruptcy filing; it sought an asset sale under the fog of fraud. This brings to mind Theranos & Hampton Creek, two other high-flying startups currently plagued with fraud-related scandal. 

We'll spend more time on these topics in the future but, for now, any restructuring professional who thinks there's no business emanating out of the Silicon Valley frenzy ought to think again...