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.
Catch up on the day's biggest business stories
Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter
Stay on top of the latest market trends
Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.
Sports news worthy of your time
Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.
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.
Get the inside stories
Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.
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
Want a daily digest of the top Denver news?
Get a daily digest of the most important stories affecting your hometown with Axios Denver
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
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
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
Want a daily digest of the top Charlotte news?
Get a daily digest of the most important stories affecting your hometown with Axios Charlotte
Illustration: Sarah Grillo/Axios
Spark Capital last month won a competitive process to lead a $20 million Series A investment in Dispo, a retro photo-sharing app co-founded by YouTube star David Dobrik. Late Sunday night, Spark said it is severing all ties with the startup, which had been valued at $200 million.
Why it matters: Based on the currently available information, this situation is confounding.
Driving the news: Dobrik recently came under fire after a former member of his so-called "Vlog Squad" named Dom Zeglaitis was accused of rape. The accuser says she was incapacitated by alcohol and was referenced to as having had sex with Zeglaitis in a 2018 Dobrik video, at the end of which Dobrik said: "Dom just had a threesome ... I think we're all going to jail.”
- Axios has learned that Dispo communicated to at least its "core investors" by mid-Sunday that Dobrik would be stepping away from the company.
- Hours later, Spark tweeted its plans to "sever all ties with the company," which included stepping down from the board and "making arrangements to ensure we do not profit from our recent investment in Dispo."
- Fellow Dispo investor Seven Seventy Six, led by Alexis Ohanian, tweeted on Monday that it would continue to support the startup, but would donate any profits "to an organization working with survivors of sexual assault."
The big question is why Spark bailed on Dispo after Dobrik quit.
- Dobrik co-founded Dispo, but he wasn’t its CEO or even a fulltime employee. One company investor describes Dobrik’s recent involvement as minimal, instead crediting the rest of the team for the app's rapid growth and ability to raise the Series A round.
- There are no public allegations against any other members of the Dispo team, although it’s unclear what other members of the “Vlog Squad” may own shares.
- Investors don't usually cut ties with an entire company over the misdeeds of one individual, particularly if those misdeeds didn't involve fraud or something else involving the company itself. In other words, it feels like there's still a missing piece to the puzzle.
Spark asked limited partners to write big checks, and just weeks later is walking away from its fiduciary duties.
- Perhaps Spark plans to reimburse its LPs but, as of right now, I’m not hearing that. It also could seek to sell its position, but hard to see how it would even get cost, given the circumstances. Unless Dispo is willing to return the money, which perhaps is where this is heading.
- Spark has been a wildly-successful firm. On the one hand, that means its partners could cover the reimbursement. One the other, it means they know LPs won't complain too loudly, lest they risk losing future fund allocations.
- Seven Seventy Six LPs might approve in theory of the charity plan, but it certainly diminishes their alignment of interests.
What they're not saying: Spark and Seven Seventy Six declined to comment beyond their tweets. The company and Dobrik didn't return requests for comment.