Why did one of the best known startups in the Web3 space go to 0 after a ~$10m dollar raise?
by Timothy Coleman - 31/Mar/2024
Hype
It was the end of 2017, Bitcoin had reached the ‘dizzying heights’ of $16.642; a bargain by 2024 as it reaches an All Time High of $71,482, with optimism for another bull market.
Investment was freely flowing into Web3 tech projects, but one really stood out, with its growing team of 60+, and founder Scott who was highly experienced in supply chain management:
Blockchains were poised to change supply chains forever, promising to optimise management of transport in a $54 trillion industry: Sweetbridge had found their perfect market fit.
Blockchains would also change finance, allowing you (without a bank) to take interest free loans against your house. Blockchains were going to transform the world (or so everyone believed)!
Merger
I (as Unegma) had been consulting for a UK tech startup called Bheard for 4 years. Bheard had needed to pivot a few times as markets changed, but had a great team and lots of experience.
An old team member eventually connected us with Sweetbridge in the USA who were looking to move somewhere with a different regulatory environment and more room for industry growth.
Sweetbridge was strategically ready.
Bheard went through a buy out, and the team became the marketing arm for Sweetbridge. Almost the ENTIRE Sweetbridge team left their homes in the USA and moved to the UK.
It was an exciting time to be in the tech sector, we were presenting at conferences, meeting with KPMG, even chatting with airlines and government organisations. It was all up from here.
Crash
Due to the regulatory environment at the time, it was really easy for retail investors to buy in, and Sweetbridge managed to raise around $10million (some said $23m), mostly in Crypto Assets.
Retail investors suddenly had so much money due to the inflated price of Crypto, they had money to burn, and they wanted more. Some even remortgaged their houses in order to buy in.
“Be fearful when others are greedy”.
As in any emerging market, regulatory requirements changed quickly. Banks globally had become required to do more lengthy checks on companies before allowing withdrawals from Crypto.
Converting raised funds became a major challenge (Stablecoins weren’t as they are now). The bubble burst, the market collapsed, and with it Sweetbridge.
Retrospective
That was 6 years ago. As someone with a very analytical mind, I think about it a lot. I think about what went wrong and what could have been done differently.
Why do I think about these things, isn’t that a waste of energy? Search for any quote about ‘failure’ and you will see there are many by some of the most influential:
“The greatest teacher, failure is.”
As a Web Developer turned Technical Product Manager, my ability to articulate a perspective on what went wrong has changed and developed over time, and I will attempt to do so further below.
In addition to the major problem of not being able to convert funds (before the Crypto crash), I think there are other lessons to be learned, especially from a team perspective.
Strain
Scott, the founder was seen as the source of all truth on all matters supply-chain and blockchain. His time was golddust, and often well protected from questions deemed unnecessary.
As the marketing team, we needed to provide accurate messaging about what was being built, but it was often difficult to get enough time with Scott to verify that it was correct.
The stretched founder became the ultimate bottleneck.
Scott believed so much in the vision that he allegedly sold personal assets in order to make it work, but for whatever reason, he had become the pivotal point on which the whole operation relied.
Even in our external facing chat groups (including a Telegram group containing early investors), participants would eagerly demand and expect answers to questions directly from Scott.
Foundations
The journey of a founder is a difficult one. Having to decide between sticking with a plan, or pivoting.. a team relying on you.. ultimate responsibility for others’ decisions.
Scott’s ideas were way ahead of their time though, nowadays we have new language to talk about the same things, and we might have just marketed them as:
Using NFTs for logistics management.
It was really hard to let go of Sweetbridge at the time, and due to my inexperience of being part of a failing startup, I found it incredibly tough. But I am grateful for what I learnt during that time.
Despite going to 0, Sweetbridge does continue to exist, maybe one day it will rise from the grave.. Happy Easter/Beginning of Spring. Disclaimer: writer holds Sweetcoin (SWC).