I think Spinvox actually raised money like a combo of an old dotcom and an old business–because they let shareholders cash out during susequent rounds. (Although Spotrunner has a rather interesting take on this )

If you run the numbers of Spinvox, based on the leaked accounts in today’s Sunday times, it is hard to maek the numbers add up:

Either
A: Spinvox has raised less money than we commonly believe
B. Spinvox did its ‘emergency’ funding round while still having £10ms in the kitty, so not emergency at all
C. Spinvox was actually running out of money and doing so because much of the later money it had raised had gone to paying out earlier shareholders for tranches of their holding (a classic play by early investors/founders bringing on wads of dumb money).

It it, sadly, turning out not to be posterchild of European tech success….

“SpinVox: £30m debt due by Christmas”

http://www.theregister.co.uk/2009/08/21/spinvox_debt/

http://www.phoneplusmag.com/hotnews/cisco–avaya-sued-visual-voicemail-patent.html

I note the concept that VC’s are investing in bigger funding rounds with less risk with horror. Without VC’s taking risk in Europe we will get nowhere. Caution is a poor excuse for lack of ability in my judgement.

Im a spinvox user who couldnt care less how it works, just like that it does.

Whether they did the translation manually or not is irrelevant, since the Internet is all about sourcing low cost labour to do intensive tasks which we cannot automate. If spinvox did that great, isn’t that what alot of companies using mturk are doing.

Losing spinvox is not a biggie, who uses it, and even if it does close it does not say anything about the UK startup scene. VC’s backing for startups should be avoided like the plague anyhow, there exit cycles and returns they want are so much longer and larger.

I recently met a knowledgeable VC who mentioned all startups should be looking for a 20-40 million exit, even in the US, since industry is moving so quick now, people /users get bored and jump ship, hence you need to re-cycle….and fast.

The VC model is broken, and they know it, they have increased the size of their funds, since the get more management fees, but companies which have real revenue to justify those huge valuations do not exist (lets not talk about facebook, twitter), and hence exits do not exist. The VC’s know this, and slowly you will see their model start to change.

Kudos to the pro-founders and TAG who see this.

Iqbal

The baseline of the now almost broken SpinVox record is this:

(a) The company has failed miserably to release information to the press addressing the concerns that some actions derived (CFOs jumping ship, inability to appoint new ones, superstar non-execs joining from the top of the industry mysteriously defecting just 60 days later, declarations to media from ex-employees that challenge the company’s technology, etc.). Instead of honestly keeping a working and collaborative relationship with the press, the company has forced journalists to become chasing hounds that – very pissed off in most cases, have relentlessly unveiled everything that was wrong and more. Huge mistake. As a CEO of a failing ship that last thing you do is run from those who are holding you accountable.

(b) The end user did not give a monkey if translating robots or humans did the transcripts. What concerned all of us – me included, as a SpinVox customer – was to receive messages that began to make less and less coherence. What concerned the industry was how the devil the company was going to scale up to the operator pipeline that it had signed on. Maybe more costly humans? How about A-level students? They seem to be doing pretty well answering the NHS SwineFlu hotline (are you as horrified as me?)

(c) SpinVox is not going to have a negative effect on the startup and venture funding European scene because its demise has occurred almost at the same time when another “dumb money??” backed business (Blyk) has had to face the MVNO leasing network music and transfer its business to the networks. In Blyk’s case at least they can keep a very high-held head: they did what they promised to do and more. It is just that the ad-funded model is not enough to keep operations. Dumb or smart money, bad investments happen to everyone – hey, we still need to see the end of FB and Twitter and where all of that takes their current investors.

Is there a lesson in the SpinVox saga?

Know how to innovate your business if your technology fails to scale and for Chrissake, do not attempt to dodge the media because they will get you out of the White House Mr. President