Rothenberg Ventures
 | A major contributor to this article appears to have a close connection with its subject. (July 2017) |
| Company type | Private |
|---|---|
| Industry | Venture capital |
| Founded | 2012 |
| Founder | Mike Rothenberg |
| Headquarters | 1062 Folsom Street , San Francisco, California |
| Website | rothenbergventures |
Rothenberg Ventures, known briefly as Frontier Technology Venture Capital,[1] is a venture capital firm headquartered in San Francisco, CA. It is headed by CEO Mike Rothenberg.
In August 2016, the firm was alleged to be under SEC investigation, with multiple key employees departing and the website being taken offline.[2] In a February 2017 TechCrunch article about the firm, Sean McKessy, the former chief of the SEC whistleblower's office, said that "investigations can take anywhere from two to five years."[1] Former Chief Financial Officer David Haase and Chief of Staff Katie Fanelli filed separate lawsuits against the firm in the summer of 2016.[3][4]
As of January 2017, Martin V. Mayo served as Chief Legal Officer for the firm.[5]
History
Founded in 2012, the firm began with a $5 million seed fund raised by Rothenberg.[6]
On November 4, 2013, data research company Mattermark awarded Rothenberg Ventures' portfolio its highest average ranking.[7]
Frontier Tech Ventures built the world's first virtual-reality startup accelerator, River,[8] and has invested in 30-plus VR companies to date, including AltSpaceVR, Fove, and Matterport.[9]
In May 2014 Frontier Tech Ventures hosted Founder Field Day at AT&T Park.[10] Hundreds of founders were selected, given customized schedules, and attended fireside chats by industry luminaries in Rothenberg Venture's network. The day ended in a Third Eye Blind concert at The Fillmore. The day was free for all attendees. The firm hosts 8-10 curated networking events a month. The event was the subject of a Harvard Business School case.[11] The case study was covered in a TechCrunch article titled "For HBS students, a case study in what not to do."[12]
Portfolio and exits
Frontier Tech Ventures has $20M in assets under management, with more than 60 companies in its portfolio.[13] The firm invested in Revel,[14] Robinhood,[15] Gusto,[16] August Locks,[17] Luxe,[citation needed] Bustle,[18] SOLS,[19] Matterport,[20] Patreon,[21] and SpaceX,[22] among others.[10]
The firm has had three liquidity events to date: Swing by Swing,[23] Propeller,[6] and 1-Page. 1-Page went public on the Australian Stock Exchange and lost more than 96% of its value, slipping to less than 20¢ AUD per share.[24][25] The Motley Fool described the crash as "what happens when companies spend heavily and can't generate sales."[26]
Controversies
In August 2016, the firm's former Chief Financial Officer, David Haase, filed a lawsuit against the firm, claiming that he was directed to run up more than $100,000 in business expenses on an American Express account at the direction of Mike Rothenberg and never repaid.[3] The following month, Katie Fanelli, Mike Rothenberg's former Chief of Staff, filed a separate lawsuit, alleging violations of labor laws and that the company failed to provide employees with their final paychecks.[4]
In September 2016, the firm's CEO, Mike Rothenberg, was reported to be under investigation by the SEC, DOJ, and FBI for deceptive financial practices including wire fraud, bank fraud, breach of fiduciary duty, and retaliation against a lower-level employee who was fired and allegedly threatened with a lawsuit after bringing these allegations to the SEC.[27] The potential charges reportedly stem from Mike Rothenberg wiring himself large payments and loans without the knowledge or approval of his limited partners.[27] Other reports suggest that the investigation is due to the discovery that Mike Rothenberg had founded and funded his own virtual reality production company with $5 million from Rothenberg Ventures without informing his investors or disclosing the investment in annual reports, despite the size of that investment being allegedly 50x larger than the firm's standard investment.[22]
In October 2016, the San Francisco Planning Department issued an enforcement letter ordering the firm to cease violating Planning Code Section 102 — operating a general office on the third floor of 1062 Folsom Street.[28]
In November 2016, Mike Rothenberg, along with Elizabeth Holmes of Theranos, was listed by Bloomberg BusinessWeek as a CEO under 40 having a "rough year."[29] In December 2016, Mike Rothenberg was listed by Forbes on its list of "The 12 Worst Career Crashes Of 2016" and by Business Insider on its list of the "22 biggest tech scandals of 2016."[30][31] The firm's use of investors' money to finance Mike Rothenberg's side startup, River Studios, was included in Fortune's "The Ugly Unethical Underside of Silicon Valley" piece.[32] A Wall Street Journal piece states that River Studios' funding prompted limited partners to raise conflict-of-interest questions.[33] River Studios was not listed on the portfolio section of the firm's website until sometime after October 9, 2016.[34][35] In February 2017, a limited partner stated that Mike told limited partners he had used an outside investment for River Studios rather than use their funds and that "Mike 100 percent did not ever disclose the investment in River."[1] On February 25, 2016, River Studios received a $2 million wire transfer. That same day, Mike Rothenberg wired $1.7 million from River Studios directly to his personal bank account.[1]
On February 8, 2017, Transcend VR filed suit in California civil court against Mike Rothenberg and River Studios, alleging contract breaches and fraud.[36] The lawsuit's seventh cause of action states that in emails to Rothenberg Ventures limited partners in August 2016, Mike Rothenberg stated that "over a two-year period, one or more of Rothenberg's venture funds had invested $5 million in River Studios, such that one or more of those funds held economic rights, i.e. beneficial ownership, in and to the equity interests of River Studios."[37]
References
- ^ a b c d Rothenberg Ventures is going back to the same old Rothenberg Ventures | TechCrunch
- ^ Buhr, Sarah; Loizos, Connie. "At Rothenberg Ventures, the rise and fall of a virtual Gatsby". TechCrunch. Retrieved 2016-08-19.
- ^ a b A former Rothenberg employee is now suing over breach of contract and more than $100K in Amex charges | TechCrunch
- ^ a b Former Rothenberg Ventures chief of staff files lawsuit - Business Insider
- ^ McDermott Keeps Hiring, Plus More Lateral Moves | The American Lawyer
- ^ a b Meet Mike Rothenberg, The 28-Year-Old Whose Seed Fund Could Be The Best Bang For Your Cap Table Buck | TechCrunch
- ^ Mattermark Startup Investor Benchmarking Analysis - November 2013
- ^ Rothenberg Ventures Opens Virtual Reality Accelerator Offering 10 Startups $100K And A Clubhouse | TechCrunch
- ^ Why Rothenberg Ventures is Gung Ho About Investing in Virtual Reality
- ^ a b Konrad, Alex (July 9, 2014). "VC For The Millennial Set: How Upstarts At Rothenberg Ventures Scheme To Connect Founders". Forbes. Forbes. Retrieved September 3, 2014.
- ^ Founder Field Day - Case - Harvard Business School
- ^ For HBS students, a case study in what not to do | TechCrunch
- ^ https://www.crunchbase.com/organization/rothenberg-ventures
- ^ http://www.forbes.com/sites/alexkonrad/2014/07/09/vc-millennials-rothenberg-ventures/
- ^ Pando: Robinhood gets $3M to take from Wall St. and give to Main St. with its mobile-first, zero-commission brokerage
- ^ Investors | Gusto
- ^ August Raises $38 Million in Series B Funding - August
- ^ http://fortune.com/2014/12/18/bustle-raises-15-5-million/
- ^ SOLS, a 3-D Printing Start-Up, Raises $6.4 Million - The New York Times
- ^ http://matterport.com/in-the-news/matterport-raises-16-million-series-b-financing-lead-3d-expansion/
- ^ https://www.crunchbase.com/organization/patreon
- ^ a b Smiley, Lauren (2016-09-13). "Mike Rothenberg's VC firm was young, splashy, and loaded with cash. Now it's all come crashing down". Retrieved 2016-09-13.
- ^ http://www.back9network.com/article/back9-acquires-top-ranked-golf-app-swing-by-swing
- ^ Silicon Valley start-up 1-Page surges on ASX debut | afr.com
- ^ Rise and fall of 1-Page, down 90 per cent in nine months | afr.com
- ^ Why the 1-Page Ltd share price has crashed in 2016 | Motley Fool Australia
- ^ a b Buhr, Sarah. "Mike Rothenberg allegedly wired $5.2 million from Silicon Valley Bank without investor permission". TechCrunch. Retrieved 2016-10-11.
- ^ Rothenberg Ventures could face fines over setting up its office in a building zoned for residential use | TechCrunch
- ^ Tarmy, James (November 30, 2016). "Five CEOs 40 or Younger Having a Rough Year". Bloomberg. Bloomberg. Retrieved December 5, 2016.
- ^ http://www.forbes.com/sites/karstenstrauss/2016/12/21/bridgegate-pro-football-flameout-and-plummeting-fortunes-the-12-worst-career-crashes-of-2016/#1b33dd297e38
- ^ Biggest tech scandals of 2016 - Business Insider
- ^ Fraud in Silicon Valley: Startups Show Their Unethical Underside
- ^ https://www.wsj.com/articles/big-bet-by-rothenberg-suggests-conflict-some-investors-say-1474481730
- ^ Frontier Tech Ventures
- ^ http://frontier.tech/
- ^ Transcend VR sues investor Mike Rothenberg for fraud and breach of contract | TechCrunch
- ^ Super Court of California, County of San Francisco, Case Number CGC-17-557005
