Uber rival Karhoo shut down earlier this week because it ran out of cash, despite reportedly raising $250 million last year. But a Bloomberg story published today reveals that Karhoo never actually raised that much cash:
According to internal financial documents, it had raised $39 million as of September and was bleeding money as it attempted to take on Uber Technologies Inc. In its two-year life, Karhoo generated about $1 million in net revenue, according to the records shared with Bloomberg.
Employees told Bloomberg they had no idea this was the case:
Karhoo employees said they were largely unaware of its dire position until a recent Friday, when managers told them the company didn't have enough funds to make payroll. There were no severance packages and people weren't paid for the previous month's work . . . Many employees were left wondering how the company could have blown through what they thought was $250 million in the bank. Some of them joined Karhoo because they were told in interviews that the company had raised that much money, making it more stable than a typical startup.
CEO Daniel Ishag used the corporate credit card for all sorts of personal purchases, including designer shoes and clothing, first-class flights, and a "blowout in Las Vegas" complete with Cuban cigars emblazoned with the Karhoo logo, employees told Bloomberg.
The company shut down reportedly owing $30 million to "creditors, employees, property managers, advertising agencies, and other contractors." PM