The Future of Print

The Spot Runner Saga Continues: Founders Accused Of A “Pump And Dump” Scheme

Posted in Doom by futureofprint on April 19, 2009

TV advertising startup Spot Runner really is running on fumes. According to a lawsuit filed by one its irate investors, advertising giant WPP, Spot Runner has “expended all but approximately $20 million of its investor capital, while losing money at the rate of $35-$45 million a year.” The company has raised $100 million since 2006, and at one point employed more than 500 people before a string of layoffs cut that number down significantly.

The lawsuit states that the company had a loss of $45 million in fiscal 2008, on revenues of only $9 million. And in fiscal 2007, it lost $35 million on revenues of $5 million.

And here’s the zinger. While Spot Runner was losing all that money, its founders and two early investors Index Ventures and Battery Ventures sold shares worth $54 million. CEO and founder Nick Grouf took the lion’s share of those proceeds, netting $26.7 million in five transactions between Feb/March, 2006 and March, 2008. Battery and Index each sold $11.7 million worth of shares nearly doubling their initial investments of $6 million each. While co-founder David Waxman walked away with only $3.6 million and investor Bob Pittman $365,000 worth of shares. The main complaint of the lawsuit states:

Rather than working to make Spot Runner a successful and profitable venture, they perpetuated a “pump-and dump” scheme in which they aggressively promoted the Company to new investors often by promoting that WPP was an investor in and supporter of the Company and then sold new investors large quantities of their own secondary shares at ever-increasing valuations.

Via TechCrunch

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: