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Men’s skin care brand Disco filed for Chapter 7 bankruptcy and has shut down.
Disco — formally named Let’s Disco, Inc. in a Delaware court filing from Thursday — has estimated assets of up to $50,000 and estimated liabilities from about $1 million to $10 million. The brand has between 50 and 99 creditors. Once administrative expenses are paid, no funds will be available for unsecured creditors.
Disco founder Benjamin Smith shed light on the decision on LinkedIn this week.
“This unfortunate outcome left shareholders with nothing, disbanded our great team, thousands of subscribers were left out to dry, and countless vendors were not paid,” Smith said in the post. “Shutting Disco down resulted in the loss of millions of investor capital from friends, family, close connections, and funds I respect and trust.”
The brand raised over $8 million in funding while the company was “a successful growing business” from 2020 to 2021, per Smith. Disco secured $5 million of that through a seed funding round that included Midnight Venture Partners in April 2021, according to a press release.
But during 2022 and 2023, Smith said the brand struggled to raise more capital to fund the company.
“As our options shrank, my fiduciary obligation as the founder to keep the lights on at all costs kicked in to find us a soft landing,” Smith said. “We attempted to raise capital, underwent 3 failed acquisition processes, and explored restructuring through Chapter 11 Bankruptcy. In a bid to salvage the business, we reduced our burn rate, right-sized our unit economics, and maintained a lean team.”
Disco’s mounting debt became overwhelming and its debt provider foreclosed on it during the summer, with the brand shutting down shortly after.
The founder attributed several reasons to what went wrong at Disco, including the company’s neutral brand never resonating with men at scale within a competitive market, its overreliance on a hero product and customer acquisition issues from digital marketing associated with Apple’s iOS 14.5 update.
Smith is the founder of early-stage investment company Paradigm Capital, which is named in a court filing as owning 49.12% of Disco.
via https://www.aiupnow.com
Dani James, Khareem Sudlow
