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https://www.businessinsider.com/jim-heckmans-maven-was-losing-millions-last-year-sec-filing-2019-10?op=1
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Maven, the startup founded in 2017 by Jim Heckman, was sustaining heavy losses last year, according to a quarterly Securities and Exchange Commission filing.
As of July, the company had raised about $112.8 million but still didn't have enough resources to fund its operation through June, according to the filing.
The serial entrepreneur Heckman founded Maven in 2017 as a platform to help independent publishers compete in a Facebook- and Google-dominated digital-ad market. Maven is in the spotlight now, having recently licensed the right to operate Sports Illustrated from ABG, a branding, marketing, and entertainment company that bought the title from Meredith Corp. Sports Illustrated laid off employees, and Maven announced plans to use contractors to help feed the site, prompting employees to beg Meredith and ABG to drop Maven and "save SI."
Even Bernie Sanders shared his support.
Heckman's past business practices have also been the subject of scrutiny by NPR and other outlets.
Other highlights of Maven's filing:
As of June 30, Maven had cash of $116,187, losses of $8.7 million, and a deficit of $17.2 million.
"As a result, management has concluded that there is substantial doubt about the Company's ability to continue as a going concern" through 2019, the filing said. Those doubts were echoed by the company's independent accountant.
In June 2018, Heckman put $1 million of his own money into the company to keep it running.
The filing showed other weaknesses in the company's operations. Its former accounting firm, BDO, which has since resigned, found Maven lacked effective controls and procedures and accounting resources as it expanded its operation through complicated financing transactions. As a result, the company fell behind on filing required financial reports on time in 2018 and 2019, according to the filing. In the filing, Maven said it has begun addressing the issues that the accountants raised.
The company also incurred penalties for failing to meet certain public-information-disclosure requirements and registration-rights penalties.
The company hasn't filed a quarterly financial report since the period covering the three months ending June 30, 2018.
Today, Heckman says he expects Maven to be profitable in 2020. Maven just raised another $20 million through an investment firm called B. Riley Financial. About half the money was raised from 10 directors and executives at Maven, including Heckman. Heckman said the company fell behind on filing financial reports because companies it acquired hadn't been audited and that he expected to be caught up on filings by the end of 2019.
Of course, it's common for startups to lose money, and as a public company, Maven's finances are subject to public scrutiny. Maven also has been on an acquisition tear. It acquired the publisher-tech platform Say Media for $20 million in cash, stock, and debt, and combined it with HubPages, a collection of niche-content sites, last year. Earlier this year, Maven acquired TheStreet for $16.5 million and paid $45 million to ABG for three years of licensing fees for Sports Illustrated, according to financial filings.
Where Heckman got its funding
Maven started in 2016 as a Delaware shell company, Integrated Surgical Systems Inc. Shell companies can be a way for a new company that's losing money or showing little revenue to gain access to public financing.
Maven was initially backed by the longtime Heckman investor MDB Capital, an investment bank that has been described as known for backing early-stage companies that have no revenue, and pitched itself as an alternative to venture capital, according to The Business Journals. Some critics have suggested that MDB has a "history of underwriting tantalizing stories that don't materialize," according to the report. CEO Chris Marlett was a director of Maven.
MDB also was there when Heckman started Scout Media in 2001, a network of sports sites, and 5to1 in 2009, an ad-tech company.
More recently, B. Riley provided the backing for Maven's deals for TheStreet and Sports Illustrated.
Later, 5to1 sold to Yahoo, and Scout sold to Fox Interactive. Heckman bought back Scout from Fox in 2013, and it went bankrupt three years later.
But despite these troubles, Maven, in a filing, said it was following the playbook its founders followed at 5to1, Scout, and Rivals.com, which started in 1998 and, like many other websites at the time, collapsed in the dot-com bust.
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“There is no fate that cannot be surmounted by scorn.” -Albert Camus
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