BloomThat: Navigating the Ups and Downs of a Silicon Valley Start-up

David Bladow and Matthew Schwab, close friends and former college roommates, left their jobs and moved to San Francisco to start a new venture together. After exploring the gifting industry, they ultimately focused on floral delivery. They launched BloomThat, an on-demand service that made sending flowers as easy as sending a text message and gained initial traction over Valentine's Day in 2013. On the back of this success, the team was accepted into Y Combinator for the summer of 2013, raised $3.6 million of seed funding over the next year, and in December 2014, secured $4 million of Series A financing. Problems arose soon after BloomThat expanded to Los Angeles in early 2015, and by the summer, the company teetered on the brink of collapse. Aggressive restructuring saved BloomThat, and existing investors provided bridge financing in late 2015. In the end, however, the turnaround was not enough to attract new investors. When the case picks up in May 2017, Bladow and Schwab must decide what to do next. One option is to shut down BloomThat and move on. The other is to search to sell the start-up to one of the large companies in the industry, with the cofounders knowing that the process will take multiple months, would yield a low valuation and require them to go work for the incumbent for a meaningful period of time. Given their position in the capitalization table, the co-founders are unclear how the value from such a transaction will be divided with the venture capital and venture debt investors. With this uncertainty, the co-founders need to decide how to proceed.