Sequoia Warns Founders of ‘Crucible Moment,’ Advises How to ‘Avoid the Death Spiral’

Vice Raises $85 Million as SPAC Talks End, Smith Yields Control

Vice Media is raising over $85 million in fresh capital from existing investors, as talks to go public via a special purpose acquisition company  have ended for now, according to people familiar with the situation. As part of the fundraising, Vice’s co-founder, Shane Smith, has agreed to give up his voting control, said the people. He remains chairman of the board.

The media firm had been hoping to raise money by going public through a merger with a SPAC backed by 7GC & Co., but a slowdown in the once-hot SPAC market has ended those discussions for now, one of the people said.  The existing investors, which include James Murdoch’s Lupa Systems, TPG, TCV and Sixth Street Partners, agreed to invest in Vice to help it get to profitability. The valuation of the latest round couldn’t be learned. Vice raised money at a $5.7 billion valuation in 2017, but it has fallen significantly since then.

The Takeaway
• Company is raising money from existing investors
• Vice rejiggers board composition
• Founder Shane Smith agrees to give up voting control

Although Vice has never been consistently profitable, CEO Nancy Dubuc has cut costs and thereby slashed its losses to around $20 million in 2020 from around $100 million in 2018. Still, the company regularly needs to raise cash. The current fundraising follows Vice’s raising of around $90 million last year, also from existing investors.

As part of the financing deal, Smith, who stepped down as CEO three years ago in favor of Dubuc, has agreed to give up voting control. Additionally, the company’s board is shrinking. While the details are still being worked out, the new board will include Smith, Dubuc, Murdoch as well as representatives from TPG, TCV and Sixth Street.

Vice will use some of the money it is raising to make payments to the founders of Pulse, the growing U.K.-based studio business behind Vice’s “Gangs of London.” Vice acquired a majority stake in the company in 2016, according to the people, and as part of that deal has to make another payment to maintain control.

Meanwhile, Vice has been taking steps to further cut costs. Last week, it announced a reorganization resulting in about 17 layoffs, about seven of them from Refinery29, which the company acquired in 2019, according to a person familiar with the situation. Vice has over 2200 employees globally.

Under Dubuc, who came to Vice from A&E Networks, Vice has focused on expanding its video production business, which makes shows that run on streaming services and TV networks, such as an upcoming “American Gladiators” documentary series to air on ESPN and true-crime show “Indian Predator” for Netflix. Vice has told investors that growth in that part of its business will help lift overall revenue next year to north of $750 million, from around $580 million last year and $604 million in 2019.

But that plan faces challenges. The TV production business in general isn’t a high-margin business. And neither are Vice’s two other major business lines, its advertising agency, Virtue, and its digital media outlets, including Refinery29. Meanwhile its Vice cable channel is steadily losing viewers as more people opt to watch shows and movies on streaming services.

Aside from the production business, news operations at Vice have also shown a growth in revenue, according to people familiar with the situation. Vice is planning to focus more on news as well as production. None of the layoffs last week came from the news side.

Jessica Toonkel is a New York-based reporter for The Information covering media and how the industry is being disrupted by technology. Before that, she spent seven years at Reuters covering a range of topics including media, mergers and acquisitions and financial services. She can be found on Twitter @jtoonkel.
Get access to exclusive coverage
Read deeply reported stories from the largest newsroom in tech.
Latest Articles
The Briefing Venture Capital Startups
Startups in Sequoia’s ‘Crucible Moment’; Musk Pledges More Funding for Twitter
Photo by Bloomberg
As we reported last night, Sequoia Capital has once again taken on the role of Silicon Valley soothsayer, releasing a 52-slide presentation on advice to startups, which it says face a “crucible moment” as the economy slows and central banks retract the monetary stimulus that kicked off the boom two years ago. In particular, the partners at Sequoia told founders to rethink how they consider...
Latest Briefs
Chinese Ride-Hailing App T3 Seeks $750 Million as Didi Global Struggles
Musk Scraps Margin Loan, Committing Another $6 billion in Equity for Twitter Deal
Twitter to Pay $150 Million to Settle FTC Privacy Case 
Stay in the know
Receive a summary of the day's top tech news—distilled into one email.
Access on the go
View stories on our mobile app and tune into our weekly podcast.
Join live video Q&A’s
Deep-dive into topics like startups and autonomous vehicles with our top reporters and other executives.
Enjoy a clutter-free experience
Read without any banner ads.
Roelof Botha, partner at Sequoia Capital. Photo by Getty
Exclusive Venture Capital Startups
Sequoia Warns Founders of ‘Crucible Moment,’ Advises How to ‘Avoid the Death Spiral’
Sand Hill Road’s doomsayer-in-chief—Sequoia Capital—is back with a warning to its startup founders: Don’t expect a recovery from the current market downturn to happen quickly.
(L-R) Jonathan Ive, Johny Srouji, Dan Riccio and Tim Cook. Photos by Bloomberg; Apple. Art by Mike Sullivan
Exclusive Apple AR/VR
Behind the Apple Design Decisions That Bogged Down Its Mixed-Reality Headset
Apple’s executives had a critical design decision to make about the company’s riskiest product in years.
(L-R) Cameo CEO and founder Steven Galanis, and Cameo co-founders Devon Townsend and Martin Blencowe. Photo by Getty. Art by Mike Sullivan.
Exclusive Venture Capital Startups
At Cameo, Boom Times Give Way to Sharp Sales Slowdown
By the beginning of last year, six-year-old startup Cameo was on a tear. Pandemic-induced lockdowns in 2020 had spurred demand for the personalized video messages celebrities sell on its website and app.
Brian Armstrong, chief executive officer of Coinbase Global Inc. Photo by Bloomberg.
Exclusive Crypto
Coinbase Slashes Costs, Freezes Hiring Amid Crypto Crash
Cryptocurrency trading firm Coinbase, whose revenue has shrunk amid a downturn in the sector, is pausing new business projects, freezing hiring for two weeks and aiming to slash its cloud spending on Amazon Web Services, among other cost-cutting measures, according to a pair of internal emails sent to employees this week and viewed by The Information.
Art by Clark Miller
The Big Read Crypto
Panic at the Discord
The crypto party was as raucous as ever—and then someone turned on the lights. After a year of record-high token prices and newfound support from legacy financial institutions like Fidelity and BlackRock, reality bit hard the second week of May when the algorithmic stablecoin terraUSD (known as UST) crashed, taking down some $400 billion in crypto market cap with it.
Art by Mike Sullivan
Opinion AR/VR
VR Is Failing the Very People It Could Benefit Most
Consider this: In The Climb , a popular virtual reality game, any user can virtually scale skyscrapers and majestic cliffs simply by turning their head and gripping a trigger —any user, that is, except one with a muscular, skeletal or neurological disorder that makes even those movements impossible.