A Tough Neighborhood: Ashton Kutcher-Backed Startup Can’t Pay Employees
Neighborly, a San Francisco-based startup backed by Kutcher, announced yesterday that it won’t be able to pay its employees for the foreseeable future. In an internal memo that was viewed by Bloomberg, the decision to cut pay was described as “needed” due to the company’s current phase of change it is experiencing as it pivots from one marketplace to another.
The business was founded in 2012 with the intention to connect investors to local projects through municipal bonds available in small increments. In July Neighborly announced its intentions to move away from this industry and cut 25% of its workforce, while in August CEO Jase Wilson wrote a Medium blog post discussing the company’s plan to shift into the information infrastructure market. Due to the municipal bonds market being “less reliable” than originally thought, Neighborly would no longer aid the raising of funds for projects such as a new fire truck in Lawrence, Kansas or new bike paths in Burlington, Vermont, instead it would prioritize the expansion of fiber-extensive broadband to communities it classifies as ‘under-connected.’
Or at least that was the plan. “As of tonight, we are not in a position to compensate you,” wrote Wilson in the internal memo before notifying employees that they wouldn’t be required to work going forward. Asked by Bloomberg whether or not this meant that Neighborly would be applying for bankruptcy protections, Wilson declined to comment but said that he didn’t see closure on the horizon. Instead, he asserted that the business’s investors “are all aligned on what we need to do, but this still comes with another difficult period of reorganization.”
Currently, Neighborly has projects in South Portland and Katahdin, Maine, as well as Stockton, California. It was reported that its previous efforts to develop Cambridge, Massachusetts using municipal bonds was not impactful, with the company only being credited by local authorities as a Senior Manager on 12 municipal bond transactions, most of which being under $20 million.
Kutcher’s Sound Ventures was part of a $5.5M funding round in 2015.Last modified: October 9, 2019
Brendan Garrett was a Reporter at deBanked.