Yesterday, Vice Media filed for Chapter 11 bankruptcy in the U.S. A consortium of previous lenders led by Fortress Investment Group with additional backing from Soros Fund Management and Monroe Capital agreed to purchase the company's assets for $225M unless it can find another bidder willing to pay a higher price. The consortium invested $20M in Vice to help it with bankruptcy dealings and find a buyer. The price offered for Vice's assets represents a significant markdown from its peak valuation of $5.7B in 2017. The firm expects the Chapter 11 process to conclude over the next two to three months.
Vice Media joins the list of VC-backed startups that raised over $1B yet declared bankruptcy or shut operations. Vice joins the likes of biotech startup Intarcia, digital video upstart Quibi, blood testing startup Theranos, and most recently, cryptocurrency exchange FTX, all of which flamed out. Sequoia Capital, which invested $214M into FTX, marked down its entire stake to zero after the exchange declared bankruptcy late last year. Intarcia, Quibi, Theranos, and FTX had raised $1.98B, $1.75B, $1.05B, and $1.97B, respectively, from investors. Now the newest addition to the list, Vice Media has raised $1.6B from investors and VCs to date, including 21st Century Fox, A+E Networks, Technology Crossover Ventures, The Walt Disney Company, TPG, and others. Vice Media entered bankruptcy after failing to find a buyer. Earlier this year, CNBC reported that Vice had restarted its sale process at a lower price after it failed to find bidders willing to buy the firm for between $1B and $1.5B. Vice lowered the asking price to below $1B, but the move failed to entice buyers. The firm considered selling itself in parts, per Axios.
Vice Media's valuation peaked at $5.7B in 2017 when it raised $450M from private equity firm TPG. Per Axios, the firm mostly raised debt funding since then at lower valuations. Troubles at the firm started when several sexual harassment allegations emerged in December 2017. After the news surfaced, A+E Networks roped in Nancy Dubuc to succeed then-CEO Shane Smith. Dubuc laid off 10% of staff months after joining in a bid to restructure the firm. Vice acquired Refinery29 for $400M in 2019 to grow its revenues. It attempted to go public via a SPAC merger with 7GC & Co Holdings at a $3B valuation in 2021 before the market cooldown disrupted its plans. The firm struggled to match up its revenues against its lofty valuations. Per WSJ, the firm reported $600M in revenue in 2022, missing its revenue target by over $100M. The firm's revenue reported in 2018 was between $600M and $650M. Earlier this year, Vice secured $30M in debt financing from existing backer Fortress Investment Group to pay overdue bills. Vice is not the only media company to struggle. Peers Vox Media and BuzzFeed are in similar boats. Earlier this year, Vox raised $100M at a $500M valuation, half its previous valuation. BuzzFeed earned $400M in revenue last year, yet it has a market cap of less than $100M. |
