Startup Partially Funded By Ashton Kutcher Can’t Pay Staff

Silicon Valley tech startup Neighborly is having money woes and can’t make payroll, Bloomberg reported on Monday (Oct. 7).

Anticipated funding did not close and the firm’s chief executive officer Jase Wilson told employees to stop working, according to a memo obtained by Bloomberg.

“As of tonight, we are not in a position to compensate you,” Wilson said in the Sunday (Oct. 6) memo. Employees will be compensated for the prior week’s work, he said.

Neighborly was launched in 2012 as a community investment marketplace to connect investors to local projects via municipal bonds in smaller increments. Ashton Kutcher at Sound Ventures, Maven Ventures and Stanford University all participated in early funding.

Wilson said in July news reports that Neighborly was shifting gears away from municipal bonds as a focus and into fiber broadband networks. He said the company was planning to layoff 25 percent of its employees.

“We are all aligned on what we need to do, but this still comes with another difficult period of reorganization,” he said in the memo.

Wilson told Bloomberg on Monday that it was necessary to halt payroll so the company could reorganize as it shifts to broadband. He said he did not foresee Neighborly closing its doors but declined to comment about the possibility of bankruptcy.

In July 2017, the startup raised $25 million in a funding round co-led by 8VC and Emerson Collective. Existing investors in the round included Ashton Kutcher’s Sound Ventures, Maven Ventures, Bee Partners and Stanford University. With the $25 million, the company was able to raise a total of $35 million.

The City of Lawrence in Kansas used Neighborly to raise $650,000 for a new fire truck for its fire department. Neighborly has also helped raise $5 million for new bike paths in Burlington, VT. It is now helping finance an affordable housing project in the San Francisco Bay Area.

The main challenge the firm experienced came from competition from other brokers and underwriters who handle bond sales for cities.