Dvdplay Funding Today

Enter , a Seattle-based VC firm focused on digital media. In February 2006, DVDPlay closed a $4.5 million Series A . The term sheet was brutal: 8% preferred liquidation preference, a full ratchet anti-dilution clause, and a board seat for Voyager’s managing director.

The funds were earmarked for one thing: . DVDPlay ordered 500 new kiosks from a manufacturer in Ohio. They hired 50 part-time “route drivers” to restock discs. By Christmas 2006, they had 600 kiosks in 19 states. Revenue hit $8 million. Losses hit $2.1 million. dvdplay funding

Note: Figures adjusted for inflation and based on Oregon Secretary of State filings, SEC Form D notices, and bankruptcy docket #12-00321 (District of Oregon). Enter , a Seattle-based VC firm focused on digital media

The funding was deployed to launch (a kiosk that also rented Blu-rays) and a doomed pilot program with 7-Eleven to put mini-kiosks (200 discs) on convenience store counters. Both failed. The 7-Eleven pilot cost $800,000 and generated $42,000 in revenue over six months. Act V: The Death Spiral – Convertible Notes and Fire Sales By early 2011, DVDPlay was burning $400,000 per month. Redbox’s market share hit 38% of all physical rentals. Netflix’s streaming service had 23 million subscribers. DVDPlay had no strategic buyer—Redbox didn’t want the technology, and Coinstar wasn’t interested. The funds were earmarked for one thing:

The funding had bought growth, but not profitability. By 2008, the financial crisis was freezing VC wallets. Redbox, backed by McDonald’s real estate and Coinstar’s cash flow, dropped rental prices to $0.50 for a limited time. DVDPlay’s average revenue per kiosk fell from $1,100/month to $600/month.

In January 2012, DVDPlay filed for Chapter 7 liquidation. Total capital raised across all rounds and debt: . Total recovered for secured creditors: $3.1 million (mostly from selling kiosks for scrap metal and disc inventory to a liquidator in Texas). Unsecured creditors, including the Oregon drivers who had been paid in stock options, received nothing. Epilogue: What the Funding Bought (and What It Didn’t) The DVDPlay story is a textbook case of misaligned funding cycles . They raised equity when they needed debt, debt when they needed a strategic partner, and a growth round when they needed an exit.

“We didn’t know what venture capital was,” Mark Phillips told a local business journal in 2007. “We just knew that Blockbuster had late fees, and people hated them.”