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Venture capital backers fail to profit from ShoeDazzle sale

22 Aug 2013

shoesThe venture backers of e-commerce company ShoeDazzle got a negative return on their investment when the business was sold to women’s fashion retailer JustFab.

Lightspeed partner and early investor in ShowDazzle Jeremy Liew told the Wall Street Journal that the company was valued at well over $30m in the acquisition. ShoeDazzle raised $40m in May 2011 in a round that valued it at $240m.

Liew said, “It was less of a question of, ‘Is the valuation lower than last time?’ than, ‘Was it the right decision for the company right now?’”

“We believe that (the combined company) will be a powerful company going forward. It was the right thing to do.”

He said the option of raising another round of funding was considered.

ShowDazzle’s existing investors Andreessen Horowitz, Lightspeed, Polaris Partners and Crosscut Ventures have invested a total of $66m in the company and are now shareholders in JustFab.

The only backer that has managed to profit from its investment is Crosscut, which exited 90 per cent of its stake when it was valued at $240m, according to VentureWire.

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