“The startup realm seems to rival even political coverage for the sheer amount of spin that’s employed each day,” he wrote.
It is hard not to read this as a reference to Paul Singh, the local investor whose company Disruption Corporation disintegrated very suddenly this year, despite the cheery bravado he had been serving up. In April, the company announced it was being acquired by 1776, its rival across the Potomac.
In his departing article, Kangarloo took a long look at Singh’s failure to create a sustainable business — and his canny ability to dissociate fact from reality in the eyes of investors, journalists and the public.
As this reporter can attest, gathering concrete information on the merger was a feat: 1776 cofounders Evan Burfield and Donna Harris are tight-lipped media pros, and Singh kept up appearances until the very end. All three ignored Kangarloo’s requests for comments; the article is based instead on reports from unnamed sources — investors and former employees — and documents.
Here are a few key points Kangarloo made in his nearly 3,600-word opus, “How Paul Singh’s dream died,” which is currently paywalled:
- The 1776 buyout was in the price range of $350,000 to $450,000. This is peanuts compared to Disruption’s $8.5 million valuation, a figure WBJ based off a purchase agreement dated October 2014.
- As was previously reported, Singh remained cryptic to his investors until the eleventh hour. On April 14, he announced in an email that “we’ve run out of runway to execute. … As of April 15, Disruption will be effectively out of cash.” But since early on, he had kept what appears to be purposefully spotty communications with his backers — more than 50 angel investors, by WBJ’s count. He “did a pretty good job of not getting us all on a call together,” one investor told Kangarloo.
- Practically everyone was enchanted by his aura, including investors but also real estate developer Mitchell Schear, whose Vornado Realty Trust invested $10 million in Singh’s Crystal Tech Fund, and offered Disruption a year-and-a-half’s worth of deferred rent. As a former Disruption employee put it to Kangarloo, he “sprinkled some Silicon Valley fairy dust on D.C.” after moving back to Virginia from Silicon Valley, where he helped found 500 Startups.
- Singh bit off more than he could chew in attempting to manage an investment fund and coworking space while also trying to create a complex data analytics program that could separate sound investments from failure-headed startups. The software, called Hubble, pivoted drastically from its initial iteration as a “communications tool” into an ambitions, network-based system which had yet to prove itself.
- After raising a $1 million seed round, Singh hired at a hungry pace. Within a year of its 2013 launch, Disruption had 14 full-time employees and had splurged on a head of public relations and a head of sales, as well as paid interns and part-time staff.
- One big stumbling block for Disruption was muddling through the paperwork. The company struggled to register itself as an official investment adviser, a task that was apparently too big to handle for Disruption’s internal staff.
- Disruption had apparently barely a couple of paying customers, and that included Vornado.