Last month we reported on a large round of layoffs at Archetypes, a New York startup with $19 million in venture backing. The startup has one of stranger stories I’ve heard in NYC tech, involving dolls, big-name bankers, a billionaire cosmetics tycoon, a modeling agency, a lawsuit for fraud and a lot of cash.
Now we know how the story ends — for now at least. On Friday the company filed for Chapter 11 bankruptcy protection. Archetypes listed between 50 and 99 debtors, assets of between $1 million and $10 million, and liabilities of between $10 million and $50 million.
The filing, first pulled by our friends at Chapter11cases.com, reveals that Archetypes had burned through its $19 million in the two years since it was founded, having completely discarded the original version of its “content, commerce and community” site in 2012 and starting over from scratch.
This year the company tried to raise $20 million in Series A funding and failed. Archetypes had 40 employees, around 100,000 sign-ups, and no revenue. The company raised some debt along the way, according to these SEC filings. One round of debt was a bridge loan from Cristina Carlino, Archetypes’ co-founder and Executive Chairman who founded the hugely successful beauty brand Philosophy. The company wasn’t able to secure more financing, so it laid off 32 of its employees last month. Now it has filed for Chapter 11.
The bankruptcy filings are not exactly a straightforward read. For one, thing, Archetypes has four subsidiaries: ArchetypeMe LLC, Archetypes Publishing LLC, Archetypes Brands LLC (which owns an 88 percent interest in Archetypes Idolls LLC), and Archetypes Productions LLC. There is also something called Archetypes Genetic Management, LLC, which the company also owns.
Archetypes’ parent company is a firm called Revolate Holdings, which is a hybrid of an agency and investment firm whose investors include former Barclays CEO Bob Diamond. Revolate invested $9.5 million into Archetypes for its 45 percent stake (now 44.5 percent), and played a key role in the formation of the company. From one filing:
Revolate helped assemble the company’s business plan and strategy and generally facilitated its advancement through accommodations such as the use of Revolate’s offices and infrastructure support. Importantly, the free use of Revolate’s staff, along with Revolate’s investment and guidance, allowed Archetypes to get off the ground.
Revolate permitted and encouraged Archetypes to liberally access, at no cost, other senior executives to assist in the formation process and operations and provided Archetypes a jump start by introducing them to major retailers. Further, Revolate recruited key talent for Archetypes and assisted Archetypes tremendously with their graphics and branding, including building their website at a highly discounted rate.
Revolate also backed Lipman, the modeling and talent agency which is being sued by Harry Winston for fraud and in September, filed for Chapter 7 liquidation. David Lipman, owner of the Lipman agency, was also billed as a co-founder of Archetypes, and at one point, held the role of Chief Creative Director. He is also an executive at Revolate. (So to be clear: an executive at an investment firm also holds a position at two of its portfolio companies.)
The other big Archetypes shareholder is Carlino, who owns 49.5 percent.
CEO Michael Mendenhall, the former CMO of HP who owns 1 percent of the company, has resigned. Mendenhall is also an executive at Revolate. A filing states that “Mendenhall was ‘sent’ from Revolate, where he was Director, to Archetypes, through what was essentially an inter-company transfer.”
Former CEO Lisa Sun, who left in June 2012, owns 5 percent of the company.
It’s not over yet, though — Archetypes’ Chapter 11 filing outlines plans to remain a going concern and try to sell itself. Odyssey Capital Group is running the sale process, but Archetypes anticipates that Carlino will acquire the company, according to the filing.
Thomas Gallagher, a member of Archetypes’ board who worked at a molecular diagnostics company and Goldman Sachs, is Archetypes’ Interim President. The site is still live, although the articles I was shown when I logged in were published in April and August.
When I first wrote about Archetypes’ layoffs, an outside spokesperson said the layoffs were necessary cost-cutting steps to modify the business in order to preserve the vision for the company. The spokesperson provided the following statement from Gallagher:
We believe in Archetypes, we expect little to no disruption to the user base as the website will continue to operate. The filing will provide Archetypes with the ability to restructure its debt so it can focus on improving and expanding our business.