Rothenberg Ventures

Rothenberg Ventures
Private
Industry Venture capital
Founded 2012
Founder Mike Rothenberg
Headquarters 1062 Folsom Street
San Francisco, California, USA
Website rothenbergventures.com

Rothenberg Ventures, known briefly as Frontier Technology Venture Capital, is an American venture capital firm based in San Francisco, California, and founded in 2012 by Mike Rothenberg. It has invested in more than 100 companies, including Bustle, Revel Systems, and SpaceX, and has focused its investments on virtual reality and other "frontier" technologies.

Rothenberg Ventures became the subject of an investigation by the U.S. Securities and Exchange Commission in 2016, and multiple lawsuits have been filed against the firm. In 2018, the SEC charged Mike Rothenberg and Rothenberg Ventures with fraud.[1]

History

Founded in 2012, the firm began with a $5 million seed fund raised by Rothenberg.[2]

On November 4, 2013, data research company Mattermark awarded Rothenberg Ventures' portfolio its highest average ranking.[3]

Frontier Tech Ventures built the world's first virtual-reality startup accelerator, River,[4] and has invested in 30-plus VR companies to date, including AltSpaceVR, Fove, and Matterport.[5]

In May 2014 Frontier Tech Ventures hosted Founder Field Day at AT&T Park.[6] 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.[7] The case study was covered in a TechCrunch article titled "For HBS students, a case study in what not to do."[8]

Portfolio and exits

Frontier Tech Ventures has $20M in assets under management, with more than 60 companies in its portfolio.[9] The firm invested in Revel,[10] Robinhood,[11] Gusto,[12] August Locks,[13] Luxe, Bustle,[14] SOLS,[15] Matterport,[16] Patreon,[17] and SpaceX,[18] among others.[6]

The firm has had three liquidity events to date: Swing by Swing,[19] Propeller,[2] 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.[20][21] The Motley Fool described the crash as "what happens when companies spend heavily and can't generate sales."[22]

Controversies

In July 2016, the U.S. Securities and Exchange Commission (SEC) opened an investigation into Rothenberg Ventures' financial management practices, centering on allegations of excessive executive compensation without investors' knowledge. Media reports have cited bank fraud, breach of fiduciary duty, whistleblower retaliation, and wire fraud as possible areas of investigation, which the SEC has not confirmed.[23]

Several executives left the company during July and August 2016, including Fran Hauser, who had served as a venture partner since May 2014.[24][23] Multiple lawsuits have been filed against the company, including one by a former chief of staff alleging Rothenberg Ventures owed payments to 50 employees,[25] and another by a former chief financial officer who claimed he was never paid back for more than $100,000 in business expenses. Rothenberg was ordered to pay its former CFO $166,000 in damages on October 30th, 2017.[26][23]

Mike Rothenberg has been accused of investing $5 million from Rothenberg Ventures' second and third funds in his own startup company, River Studios, a VR production house established in May 2015.[18][23][27] River Studios' first contract was with Birchbox, and the company has subsequently created VR content for Björk, Coldplay, the Denver Broncos, and the Sacramento Kings.[18] In defense of these allegations, Mike Rothenberg hired a forensic accounting firm to examine the company's financials.[18][28][23] In 2017, Transcend VR sued Mike Rothenberg on allegations of breach of contract, deceptive financial diversions, and fraud.[29]

The company's name was briefly changed to Frontier Tech Ventures, from September 2016 to February 2017.[18][23][25] In October 2016, San Francisco's Planning Department received notification that the firm was operating from a building not properly permitted for use as general office space. The property, which was reportedly purchased in 2015 for $4.5 million, also housed co-working space for startup and portfolio companies, including Liquidspace.[30] In late 2016, Rothenberg Ventures was mentioned in year-end stories about corporate crises by Bloomberg Businessweek,[31] Forbes,[32] and Business Insider.[33]

On August 20th, 2018 the SEC charged Mike Rothenberg and Rothenberg Ventures with fraud.[1] Rothenberg settled the charges[34] and has stepped down from his position. As part of the settlement, Rothenberg has agreed to be barred from the brokerage and investment advisory business with a right to reapply after five years.

References

  1. 1 2 "The SEC has charged Mike Rothenberg with fraud". TechCrunch. Retrieved 2018-08-21.
  2. 1 2 Meet Mike Rothenberg, The 28-Year-Old Whose Seed Fund Could Be The Best Bang For Your Cap Table Buck | TechCrunch
  3. ↑ Mattermark Startup Investor Benchmarking Analysis - November 2013
  4. ↑ Rothenberg Ventures Opens Virtual Reality Accelerator Offering 10 Startups $100K And A Clubhouse | TechCrunch
  5. ↑ Why Rothenberg Ventures is Gung Ho About Investing in Virtual Reality
  6. 1 2 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.
  7. ↑ Founder Field Day - Case - Harvard Business School
  8. ↑ For HBS students, a case study in what not to do | TechCrunch
  9. ↑ https://www.crunchbase.com/organization/rothenberg-ventures
  10. ↑ https://www.forbes.com/sites/alexkonrad/2014/07/09/vc-millennials-rothenberg-ventures/
  11. ↑ Pando: Robinhood gets $3M to take from Wall St. and give to Main St. with its mobile-first, zero-commission brokerage
  12. ↑ Investors | Gusto
  13. ↑ August Raises $38 Million in Series B Funding - August
  14. ↑ http://fortune.com/2014/12/18/bustle-raises-15-5-million/
  15. ↑ SOLS, a 3-D Printing Start-Up, Raises $6.4 Million - The New York Times
  16. ↑ http://matterport.com/in-the-news/matterport-raises-16-million-series-b-financing-lead-3d-expansion/
  17. ↑ https://www.crunchbase.com/organization/patreon
  18. 1 2 3 4 5 Smiley, Lauren; Hempel, Jessi (September 13, 2016). "Mike Rothenberg's VC Firm Was Young, Splashy, and Loaded with Cash. Now It's All Come Crashing Down". Wired. Condé Nast. ISSN 1059-1028. OCLC 24479723. Retrieved June 22, 2017.
  19. ↑ http://www.back9network.com/article/back9-acquires-top-ranked-golf-app-swing-by-swing
  20. ↑ Silicon Valley start-up 1-Page surges on ASX debut | afr.com
  21. ↑ Rise and fall of 1-Page, down 90 per cent in nine months | afr.com
  22. ↑ Why the 1-Page Ltd share price has crashed in 2016 | Motley Fool Australia
  23. 1 2 3 4 5 6 Buhr, Sarah (February 8, 2017). "Rothenberg Ventures is going back to the same old Rothenberg Ventures". TechCrunch. Retrieved May 31, 2017.
  24. ↑ Buhr, Sarah; Loizos, Connie (August 18, 2016). "At Rothenberg Ventures, the rise and fall of a virtual Gatsby". TechCrunch. Retrieved May 31, 2017.
  25. 1 2 Carson, Biz (October 3, 2016). "A former employee is suing troubled VC firm Rothenberg Ventures, claiming unpaid salary". Business Insider. Axel Springer SE. Retrieved May 31, 2017.
  26. ↑ Buhr, Sarah; Loizos, Connie (October 30, 2017). "Rothenberg Ventures founder Mike Rothenberg ordered to pay former CFO $166K in damages". TechCrunch. Retrieved October 30, 2017.
  27. ↑ Zakrzewski, Cat (September 21, 2016). "Big Bet by Rothenberg Suggests Conflict, Some Investors Say". The Wall Street Journal. Retrieved 2 October 2017.
  28. ↑ Loizos, Connie (September 4, 2016). "A former Rothenberg employee is now suing over breach of contract and more than $100K in Amex charges". TechCrunch. Retrieved May 31, 2017.
  29. ↑ Buhr, Sarah (February 16, 2017). "Transcend VR sues investor Mike Rothenberg for fraud and breach of contract". TechCrunch. Retrieved June 1, 2017.
  30. ↑ Buhr, Sarah (October 17, 2016). "Rothenberg Ventures could face fines over setting up its office in a building zoned for residential use". Retrieved June 1, 2017.
  31. ↑ Tarmy, James (November 30, 2016). "Five CEOs 40 or Younger Having a Rough Year". Bloomberg Businessweek. Bloomberg L.P. ISSN 0007-7135. Retrieved June 1, 2017.
  32. ↑ Strauss, Karsten (December 21, 2016). "Phony Accounts, Plummeting Fortunes and Bridgegate: The 12 Worst Career Crashes of 2016". Forbes. Forbes, Inc. ISSN 0015-6914. Retrieved June 1, 2017.
  33. ↑ Hartmans, Avery (December 21, 2016). "The 22 biggest tech scandals of 2016". Business Insider. Retrieved June 1, 2017.
  34. ↑ Levy, Ari (2018-08-20). "Party animal venture capitalist Rothenberg accused by SEC of bilking investors". CNBC. Retrieved 2018-08-21.
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