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Hitting the Series A wall: One Boston founder explains how it happened

Posted by Scott Kirsner  December 10, 2012 02:54 PM

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This week's Globe column focuses on the question of what will happen in 2013, as scads of startups that have raised a some early funding over the past few years attempt to raise a more substantial Series A venture capital round.

I was hunting for examples of local companies that have already hit the wall, and in the article I mention a few. But this morning, my inbox provided another example: Tasted Menu, a "social dining" site and mobile app that encouraged users to take pictures and post reviews of individual menu items they'd tried at restaurants. The e-mail went out to everyone who'd registered as a user of Tasted Menu, notifying them that it will shut down as of the end of this month. (I covered the Brookline company last year, when founder Alex Rosenfeld told me it had collected about $350,000 in capital. At that point, the company had five employees.) Like many startups, it was trying to attract a large base of users so that it could spool up a business model, like selling advertising or promoting restaurant special offers. And like many startups, it was trying to raise additional funding to stay alive — about $1 million.

I asked Rosenfeld what had transpired since we spoke. Here's what he said:

We came very close to raising our first institutional round this past summer, with a lead investor and term sheet in place, and a majority of the round raised. Unfortunately, the rest of the raise stalled out as consumer funding slowed with the fallout from the Facebook IPO. Out of cash, I had to part with the remaining team at the end of the summer, and have known since then that winding things down was a real possibility. It was nevertheless a tough decision. I'm very proud of what our team accomplished and really believe that, with a fraction of the funding of our competitors, we built as good a product as any in the restaurant dish recommendation space. It would have been great to have a shot at expanding nationally.

As I know you aim to cover things from a Boston angle, I will say that the challenge of fundraising in Boston as an early stage and particularly an early stage consumer/content start-up remained an obstacle for us. (Most of our angel money came from New York and the west coast, and of the committed capital for our Series Seed, not a dollar was out of Boston.) The irony is that Boston is actually a *great* place to launch consumer products, with its young, social, tech savvy population. It was also an excellent area to recruit consumer talent, especially for non-technical roles, which as a media guy I'm sure you appreciate as essential for content-driven businesses. I hope this incongruence lessens, but having been on the ground for the past three years, I saw a lot of promising talk but not enough progress.


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Scott Kirsner was part of the team that launched Boston.com in 1995, and has been writing a column for the Globe since 2000. His work has also appeared in Wired, Fast Company, The New York Times, BusinessWeek, Newsweek, and Variety. Scott is also the author of the books "Fans, Friends & Followers" and "Inventing the Movies," was the editor of "The Convergence Guide: Life Sciences in New England," and was a contributor to "The Good City: Writers Explore 21st Century Boston." Scott also helps organize several local events on entrepreneurship, including the Nantucket Conference and Future Forward. Here's some background on how Scott decides what to cover, and how to pitch him a story idea.

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