In a highly unusual transaction, Zivity, a venture funded adult content startup, has spun off the majority of its assets, employees and venture funding into a new company called Top Fans. Zivity first launched at TechCrunch40 in 2007 and has raised a total of $8 million in venture capital.
Cofounder Cyan Banister takes the CEO spot at Zivity, which will continue to publish adult content. She also keeps Zivity-related software and other assets, two other employees and a portion of the $4 million or so that the company still has in bank.
Former Zivity CEO Jon Elvekrog will now become the CEO of Top Fans, and the remaining 7 employees will join him.
The original founding team of Zivity and the angel investors in their first round of financing are now the sole shareholders of Zivity. Venture funds BlueRun Ventures and The Founders Fund, who invested $7 million in Zivity in March 2008, will transfer their ownership to Top Fans.
The net effect of the transaction is to split assets, people and ownership between the two entities, with no overlap. The companies will now pursue separate strategies.
Earlier this year Zivity launched the Top Fans product as a separate strategy for growth. The product lets fans create celebrity “fan pages,” and then add content, such as images, video, and news, to those pages.
It’s been clear that the exec team and investors started to have diverging opinions on the future of the company since that launch. The founding team still believe strongly in the original vision. The newer execs and investors were pushing for the fan pages. The exodus of the founders was the likely outcome, but investors and senior employees worked to split the companies to pursue their separate destinies instead.
Frankly, I’m amazed they pulled this off without litigation. Hats off to everyone, particularly the investors who consented to this. They likely could have killed the deal, retained all the remaining venture capital in Top Fans and forced the founders out. That didn’t happen.
so, so, so happy that zivity lives on. i love that site.
I think the problem is more that I WANT to love Zivity, but have never been able to. The pricing model sucks, the content is far too lightweight, and it’s also a crappy solution for creating community with the models/photogs. Not the mention the complete lack of diverse content. It’s not really an enabler for the amateur to get paid for their content, because it seems to model only that side of things, and not the “give the customer what they want” side.
It’s very close to a good idea, but just shy. I wish them luck post split in getting the rest of the way there!
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There’s more going on here. It’s pretty clear Zivity (and thus the original founders) want to go more adult orientated and the funders want to stay away from that kind of content.
The middle ground Zivity tread of being “soft adult” hardly catered to “pro sex” audience and yet put off more conservative users. It was a no-win situation.
Cyan and Scott have a personal wealth to continue to run things themselves (Scott invested in Zappos according to an earlier TC story today) and presumably want to go down the adult route.
I wonder whether the investors freaked out, and so probably backed this idea.
For what it’s worth I think the “Top Fans” idea is pants and the money probably lies with Zivity being more pro-sex… It’s just too hot for institutional investment.
I was under the impression that @arrington was also an investor. Is that not the case?
Can’t see zivity ever gaining traction to be a major force in the adult market either way……..eventually deadpool and that’s what topfans crew obviously think !
Agreed completely. How on earth did they ever raise $8mill? Seriously, it seems like a massive stretch.
seemed like a deadpool idea right from the start. their traffic on compete is bottoming out big time.
Time to put it in deadpool.
Hats off to them indeed, but I’m actually more excited about Zivity. Think what you will about adult content — I’d rather see babes monetizing their own content, than fans building shrines to other people creating content.
Hats of, but the girls at Zivity can leave their hats on.
The FOUNDERS’ fund really kept their promise. A startup is an individual lifetime mission, and you can not dismiss it arrogantly like an amazon kindle ebook.
yes.
Shut up about Zivity already. It’s an uninteresting company that is going nowhere in a saturated market. I know Arrington likes to shill for them, it’s starting to hurt his credibility.
a venture-backed glossy site is never going to make it in the adult-content market. i’m sure zivity arouses nothing more than chuckles in the adult publishing community
adult publishing has its own business model, and its based mostly on link arbitrage. unless zivity wants to go the way of massive-gallery-with-hundreds-of-referrer-links (like everyone else in the business), then its game over
this will be a good case study as to why venture capital should stay far away from porn.
Congrats to Zivity, Cyan, and the Top fans team.
this makes me happy, i love zivity
I think that my last comment didn’t get through..
In SiliconValley a VC blowing out an entrepreneur can have major impact to that entrepreneur and family and friends.. here with Zivity the financiers did the right thing…think of all the innovation and creativity that they saved..
Mike: I think that you’re last point was the most insightful to the folks who don’t live and work in Silicon Valley. The path of least resistance is to fire the founders and retool the company as they say for a “new growth strategy” or “next step”.
I agree with you that it’s impressive and very entrepreneurial friendly that bluerun and founders fund take the time to understand the needs of the entrepreneurs beyond their own agenda. This is why a new breed of VCs are getting great deal flow – loyalty from founders.
It often takes months to years for founders to recover from a VC blow out. Here with Zivity and Top Fans its a win win.
Kudos to Zivity, Top Fans, Blue Run, and Founders Fund.
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