Lateral Capital Management, LLC

Acme Media Company

Acme Media Company (AMC) makes website-management applications for local youth sports leagues. Their software manages website content like photos and blog posts, as well as back-end operations such as collecting membership dues. The company received 3 rounds of VC investment, following Angel investments from a regional fund. We did not invest.

  • Assessment: We were concerned that the “we love sports” style of company management distracted them from their main mission. For example, they bought the rights to an amateur winter sport championship event which was completely off strategy. This was, after all, a software company.
  • Outcome: We tried to lead a bridge financing round on behalf of an angel fund, which they refused. This was smart for them since they quickly negotiated a significant direct equity investment with West Coast VCs at an attractive priced valuation.
  • Learning: This company has turned out to be a great success; one where we really missed the boat. There were two issues. First, we didn’t trust their ability to focus. The sports championship was off strategy, but it allowed them to attract top flight younger talent, because management was clearly seen as sports fans first. Maybe we didn’t understand that there was a strategic method to what we saw as madness. Second, we didn’t really get the sports league management product they were selling. We didn’t understand or believe that the consumer need – moms and dads running the local soccer league – was real. Lesson learned, for sure. This company was sold to a media consolidator for perhaps a 10X return to the early investors.