In November 2018, two founders wrote a bigger cheque than they had ever received. Althea Lim and Vincent Ha paid US$8.2 million to get back control of the company they had started. Three years earlier, they had sold 62% of Gushcloud to a South Korean firm for US$7.5 million.
To understand why, go back to the start. Lim and Ha had earlier co-founded a digital agency, The Barnett Group, and in 2011 they began Gushcloud as a social sharing platform. It was officially launched in February 2012. Then the business found its true calling: representing the young bloggers and video creators that brands could not reach through ordinary advertising. Gushcloud signed talent, sold their reach to advertisers and grew fast.
A raise of about US$11 million followed, though other reports say US$15 million.
Growth had a price. In 2014 the blogger Xiaxue publicly accused the company of unethical practices, and Gushcloud answered point by point. In 2015 there were new allegations, tied to a telco campaign, that paid bloggers wrote negatively about rivals. The telco and Gushcloud first denied it, and later apologised. For a company whose product was trust in a face on a screen, it was a rough few years.
Still, the sale to Korea's Yello Digital Marketing Global in 2015 gave the firm money and a push abroad. Between 2015 and 2018 it grew from three markets to nine, and more than 300 people worked there. In 2017 YG Group, the Korean entertainment house, invested US$3 million, with Japan's D2C Inc also joining.
What is easy to miss is how the 2018 buyback changes the story. The founders did not hold on tight and refuse to sell; they sold, learned what it felt like to answer to a majority owner, and then paid more to take the company home. That is a different kind of control. After that they kept building: DSTNCT, a marketing agency, was acquired in February 2019, Ribbit, a micro-influencer network, launched in April, and Russell Simmons, co-founder of Def Jam Recordings, became President that September. A raise of about US$11 million followed, though other reports say US$15 million. MODA Creative was added in 2020.
The closing thought is simple. Money from a strategic investor can speed a company up, and the same money can hold it. Lim and Ha took it, used it, and then decided that the stake was worth more to them than the price. Many founders sell and never get the chance to ask what the sale cost them.