Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Earlier this month came reports that mobile search startup Quixey was in the process of shutting down, after blowing through over $130 million in VC funding from investors like Alibaba and Eric Schmidt's Innovation Endeavors. What wasn't reported, however, was the key role that Alibaba played in the Silicon Valley-based company's ultimate demise. For those unfamiliar with Quixey, it was focused on the deep linking of apps, an effort to make it as easy to link within apps as it is today among different Web sites.

Neither the Quixey nor its backers are publicly discussing what went wrong, but Axios has put together a timeline after speaking with multiple sources:

October 2013: Quixey raises $50 million in Series C funding at around a $130 million pre-money valuation, led by Alibaba. Existing investors like Atlantic Bridge Capital and U.S. Venture Partners also participated. Several months later, Quixey signed a separate $100 million commercial contract with Alibaba (which could have grown larger depending on implementation with Alibaba partners).

September 2014: Alibaba goes public, in the largest tech IPO of all time. Changes to the corporate structure mean that Quixey is now working with different people (Alibaba's Joe Tsai, for example, is no longer directly involved), and quarterly road-maps are soon supplemented by weekly deliverables (sometimes sent directly to Quixey engineers from Alibaba engineers, as the latter company's various fiefdoms become more pronounced). Quixey finds the changes disruptive and doesn't believe Alibaba is holding up its end of the monetization bargain.

March 2015: Quixey raises $60 million in Series C-1 funding at a reported pre-money valuation of $540 million. Alibaba again is the lead investor, bringing its total investment in the company to around $80 million. Other new shareholders include Goldman Sachs and SoftBank.

April 2016: Quixey founder Tomer Kagen is replaced as CEO by serial chief executive Mark Lazar (LoopNet, etc), but remains on the board of directors. It appears that Quixey's displeasure with Alibaba is now mutual, particularly as the burn rate continues to soar and the tech is behind schedule.

Summer 2016: Quixey believes it is owed around $37 million from Alibaba on the commercial contract. Alibaba, on the other hand, doesn't believe terms of the agreement have been met.

The two sides reach a private settlement whereby Alibaba pays Quixey $10 million in cash and agrees to provide a $30 million secured loan (the latter of which gets reported, but without specific mention of Alibaba). The loan terms include 18-month repayment, a 2.2x liquidation preference and effectively gives Alibaba veto power over future equity investments into Quixey. Alibaba also switched up its board representative, replacing chief strategy officer Zeng Ming with a U.S.-based investment officer named Peter Stern.

November 2016: Mark Lazar is fired as Quixey CEO, and replaced by John Foster (ex-CEO of Zed USA). The company also begins fundraising again.

February 2017: Insiders, led by Atlantic Bridge Capital, agree to effectively recap the company with around $10 million of new equity. It's not enough to repay the Alibaba loan (due in November), but Quixey hopes it will provide enough runway to secure a big new customer contract (it was in early talks with Lenovo) or a new outside investor. Internal belief is that the much-delayed tech is finally ready for prime-time.

Negotiations on the new round had begun several months earlier but, in the end, Alibaba refuses to allow the new investment. Soon after, layoffs are announced and Quixey hires an outside firm to help find a buyer for Quixey's IP.

March 2017: In a statement, Alibaba says: "Unfortunately, the development of the company did not meet expectations and the board made a decision to end the business." It declined to elaborate further, and no other company investors nor employees would go on the record.

Takeaways:

  • Debt can be a very dangerous game for VC-backed startups, as we discussed last week with Modcloth. Just because the check clears like equity doesn't mean the cash is equal, and taking a large amount of secured debt can make it prohibitively difficult to solicit a new outside equity investor.
  • Commercial partnerships with strategic investors may feel like aligned interests, but they just aren't if one company is worth $265 billion and the startup is still seeking unicorn status. This goes double if there are inherent cultural differences, such as with a seat-of-your-pants Silicon Valley company and a much more disciplined Chinese conglomerate where deadlines are sacrosanct.

Go deeper

It's harder to fill the Cabinet

Data: Chamberlain, 2020, "United States of America Cabinet Appointments Dataset" Chart: Will Chase/Axios

It's harder now for presidents to win Senate confirmation for their Cabinet picks, an Axios data analysis of votes for and against nominees found.

Why it matters: It's not just Neera Tanden. The trend is a product of growing polarization, rougher political discourse and slimming Senate majorities, experts say. It means some of the nation's most vital federal agencies go without a leader and the legislative authority that comes with one.

Exclusive: Hundreds of kids held in Border Patrol stations

Migrants cross the Rio Bravo to get to El Paso, Texas. Photo: Herika Martinez/AFP via Getty Images

More than 700 children who crossed from Mexico into the United States without their parents were in Border Patrol custody as of Sunday, according to an internal Customs and Border Protection document obtained by Axios.

Why it matters: The current backup is yet another sign of a brewing crisis for President Biden — and a worsening dilemma for these vulnerable children. Biden is finding it's easier to talk about preventing warehousing kids at the southern border than solving the problem.

Pompeo plots 2024 power play

Mike Pompeo in Washington on Feb. 12. Photo: Samuel Corum/Getty Images

Mike Pompeo has quickly reentered the political fray, raising money for Republicans, addressing key political gatherings and joining an advocacy group run by Donald Trump's former lawyer.

Why it matters: The former secretary of state is widely considered a potential 2024 presidential contender. His professional moves this week indicate he's working to keep his name in the headlines and bolster a political brand built largely on foreign policies easily contrasted with the Biden White House.