Amp’d Files for Chapter 11


Amp’d Mobile on Friday filed for Chapter 11 bankruptcy protection. Here is the filing: Ampd_Ch11.pdf

In a formal statement, Amp’d said that the move was made because its “back-end infrastructure was unable to keep up with customer demand.” That explanation seems to wash with folks I’ve spoken with – and with Rafat, who broke the story at MocoNews – but is nonetheless a stinging indictment of both the company’s management and its investors. The primary reason Amp’d raised so much venture capital funding – around $360 million to date – was in order to handle the scale of a nationwide mobile platform. If the scaling didn’t work, it wasn’t for lack of funds. It was for lack of operational execution and (apparently) hands-on oversight.

It also was for lack of a cohesive vision. I reported a few weeks back that the company effectively had 20 board members (including observers), and there were some deep splits over whether Amp’d should become more of a content producer than a mobile virtual network operator (its original charter). There also was an interesting dynamic whereas the initial venture investors no longer held terribly significant stakes in Amp’d. According to the Chapter 11 filing, Columbia Capital, Highland Capital Partners and Redpoint Ventures each hold less than 10% stakes. This compares unfavorably to a strategic investor like Vivendi, which holds over 12 percent. I can’t say that some battle lines were drawn that neatly, but strategic investors often have different priorities than venture investors.

Please note that Amp’d is not going away (at least not yet) – this is a Chapter 11 filing, not a Chapter 7 filing, and Amp’d said that it will continue “normal business operations” and that it is in the process of obtaining financing from an existing investor. I had heard earlier that the biz plan required another $100 million or so, although I don’t know if the debtor-in-possession round will be that high.

There also have been reports that two investors have left the Amp’d board of directors, although specifics are hard to come by. One likely departee is Jon Auerbach of Highland Capital Partners, given that Highland has removed Amp’d from Auberbach’s website bio. In fact, Highland also has removed Amp’d from its online list of portfolio companies. A Highland spokesman did not return requests for comment, while I got “no comments” from folks at both Columbia Capital and Redpoint.

Other Amp’d shareholders include MTV Networks, Intel Capital, Rho Ventures, Tudor Investment Corp., Qualcomm and Quilvest. More on this story later today…