Techcrunch Co-Editor Erick Schonfeld is in Canada this week at the Mesh Conference in Toronto but his presence is being felt on the West Coast as well.
While taking in StumbleUpon Founder Garrett Camp's presentation, Schonfeld befriended his audience neighbours and made their day by blogging about their live-blogging platform called ScribbleLive (no relation to Vancouver-based ScribbleWiki).
Unfortunately in his next post, Schonfeld threw Vancouver's Sxip Identity in the Deadpool and quoted our blog post last week as his source. Some Techcrunch readers feel that Schonfeld's tone was a little too nasty and that it was a personal attack on Sxip Founder Dick Hardt. The comment string continues to grow this afternoon and Hardt has entered the fray. Definitely worth a read.
I thought the TechCrunch post was pretty unpleasant and written with all the tact and intelligence of a five-year-old. As I noted in my comment on the post, I don't have any of the details of who's right or wrong in this story, but that puts me in pretty much exactly the same position as Erick.
Agreed Dan. My initial post simply summarized Curt Cherewayko's article in BIV which did a good job of outlining the facts. Unfortunately BIV hides their articles behind a pay wall that Erick Schonfeld most definitely didn't have access to.
Investors’ court action targets Sxip founder
y Curt Cherewayko
Technology entrepreneur Dick Hardt has been named as a defendant in a statement of claim that alleges he made misrepresentations during a pitch to investors who eventually invested US$370,000 into Sxip Identity Corp., a company Hardt founded.
Sxip Identity and Sxip Networks are also named as defendants in the April 23 B.C. Supreme Court claim.
According to the claim, plaintiffs Caliber Management Ltd., Polygon Financial 05 LLC, Ron Stevens and Danny Robinson advanced money to Sxip Identity – in the form of convertible bridge notes – after Hardt approached them last July seeking investment to fund the sale of some Sxip Identity assets.
The plaintiffs allege that Hardt, who is CEO and president of both Sxip Identity and Sxip Networks, failed or neglected to disclose that there were two Sxip companies and that only Sxip Identity would be a party to the notes.
Several months after receiving the advances, Hardt allegedly told the plaintiffs that his attempts to arrange a sale had failed, that Sxip Identity was insolvent and that the plaintiffs’ notes therefore had little or no value.
The claim alleges that Hardt told the plaintiffs he was in negotiations to sell Sxip Identity to Google, Microsoft or other technology companies, when in fact, he was not. Thus, according to the claim, Hardt misrepresented the risk involved in entering the notes.
Hardt told BIV roughly a year ago that he was in talks with major vendors to sell off Sxip Identity’s Access business unit – which provides identity management for salesforce.com customers – but those negotiations failed to yield a sale. He added that the sale of Access didn’t generate the values he was seeking and that he “ended up executing a sale at a lower value of the assets, which gave us a graceful exit.”
In February, Sxip Identity sold Access to Denver-based Ping Identity.
On April 14, it sold a management software tool to California-based Tricipher, the final step in allowing Sxip Identity to focus energy on Sxipper, its consumer-based service.
Sxipper helps users manage passwords and personal online identity. Hardt said the product has more than 10,000 users.
Hardt described Sxip Networks as a shell company that’s one of the main shareholders of Sxip Identity, the active company.
He added that all of Sxip Networks’ technology has been rolled into Sxip Identity.
A March 1 balance sheet provided to the plaintiffs indicated that Sxip Identity owed Sxip Networks $4.7 million and owed Hardt $274,798.
According to the balance sheet, Sxip Identity’s total assets at the time were $972,659. The debt owed to the plaintiffs constituted 6.9% of Sxip Identity’s total debt.
“They clearly had a small part of the entire debt,” said Hardt. “Rather than meeting to figure out how we move forward around the Sxipper asset, they just demanded they want all their money paid back.”
The plaintiffs claim they rejected two options proposed by Hardt that included selling their notes to an unnamed third party or converting their notes into preferred shares in Sxip Identity.
They allege that – due to the “related creditor” debt that Sxip Identity owed to Hardt and Sxip Networks – Hardt and the company had already redirected to themselves any value Sxip Identity had.
A serial entrepreneur in Vancouver, Hardt co-founded and is a former CEO of Vancouver’s ActiveState Corp., which was sold to the U.K.’s Sophos Plc for US$23 million in cash in 2003.
Three of the plaintiffs could not be reached for comment.
Robinson declined to comment on the case specifically, but said that he and Hardt had a relationship prior to the case, because both are longtime members of Vancouver’s small community of technology entrepreneurs.
“I’m friends with Dick,” said Robinson the CEO of Strutta, a dot-com firm that launched this April.
“Hopefully, when it all blows over, we’ll still be friends.”
Robinson is also co-founder of Peerflix, an online peer-to-peer DVD trading company, and adviser to a number of other small tech startups in Vancouver.
Lance Tracey, co-founder and chairman of Peer 1 Networks, said he’s a consultant to plaintiffs Polygon and Caliber and was involved in brokering the deal with Sxip.
But he declined to comment further on the case.
Polygon, based in Bow, Washington, invested in another Vancouver company, Ignition Point Technologies (TSX-V:IPN), in March 2007.
Caliber has a Vancouver address. Stevens is based in San Francisco.
The plaintiffs claim an order for restitution and rescission for the money they each advanced to Hardt, as well as damages.
Hardt said he’s examining his options. He added that the case puts him in a difficult spot for raising additional funding for his firm.
“These guys are experienced investors in high-tech startups, so it seems rather ridiculous that they weren’t aware that there was risk associated with investing in a high-tech startup.”
Ah, the paywall. Is there anything that shouts "we don't get it" louder than a paywall on a content-based website?
aywall work around - http://www.bugmenot.com/view/biv.com
