CB Insights predicted a Series A crunch 16 months ago—1,000 early stage startups would die because the couldn’t raise another round of funds.
But there’s another thing that often happens to early stage companies—they realize it’s too hard, there’s too much competition and they’re not growing at the clip they need to turn a decent profit any time soon. It’s just not worth raising more funds.
That was the case for Argyle Social, a Durham startup early in to social media and marketing automation, an industry segment that has exploded in the last two years due to large venture capital raises and major acquisitions by giants like Salesforce, Adobe and Oracle. Last week, founder Adam Covati notified his employees and customers that he’ll shut down the platform at the end of May. WRALTechWire covered the news here.
Covati told me in an email that though about 500 companies had used Argyle during its four years, which at mid-market prices provided decent revenue for the small firm, it was an uphill battle to compete with the giants.
As automation became a buzz term—Gartner Group wrote in 2012 that by 2017 a CMO would spend more on IT than a CIO—Argyle received more interest from customers. But more companies entered the field, vying both for those customers and for venture capital dollars. Argyle Social last raised $1.24 million in 2011; it launched with $325,000 in funding in 2010. Covati says he wasn’t in the position to raise more funds.
In recent months, Covati spent much of his time trying to find partners to help grow the platform, which allowed marketers and marketing agencies to manage multiple social media accounts and integrate with other marketing software. Argyle had successful integrations with industry leaders like Silverpop, Marketo and Pardot.
“There was strong interest from vendors and savvy customers, things looked promising—we had some exciting integrations and technology,” Covati said. “But in the end, our strategic partners started seeing the same as us that it was exciting, but still a bit early. (…) It was time to admit that we were fighting a losing battle.”
Some competitors are already taking advantage of the news. Type Argyle Social into Google and the top result is for a Blacksburg, Va. company called Heyo, advertising itself as a replacement for Argyle. It raised a $2 million series A in March.
Covati has responded graciously to customers and friends who have reached out following the news. In an email to fellow tenants at American Underground in Durham, he wrote:
It’s fun to collectively celebrate our successes, but being part of a startup ecosystem means that we occasionally have bad news to share too. (…) It’s a tough call to decide to shutdown your company, but sometimes that’s the right move.
Thanks to everyone for the help, support, and fun times here at the underground. We’ll still be around for a few more weeks and look forward to hanging out, sharing coffee, and enjoying the free pizza while we can!
All that being said, don’t forget that you can celebrate failures too. I’m quite proud of what we did accomplish at Argyle over the last 4 years, and it was a hell of a ride.
Take care and enjoy your ride, Adam
I asked him to share at least one regret, one thing he wished he’d done differently, that might have impacted the company’s future.
His response? Not continuing to invest in its own marketing as Argyle helped its clients invest in theirs.
“A common problem with tech companies is that they fail to deliver on marketing themselves as much as they should,” Covati said. “We invested heavily in marketing early on, which was a great move. In retrospect we probably should have kept piling it on there, but it’s tough call to make when you are running more on your own steam than piles of VC cash.”
Covati has promised a sit-down interview soon, so ExitEvent can share more about his journey with entrepreneurs dealing with or hoping to avoid a similar fate. Stay tuned.