Salorix

What did it do?

Salorix developed an analytics platform that let brands scan real-time conversations on social media and rank the most important topics and the most influential people. With its product Amplfy, brands could monitor the people talking about them, engage with them and run their social marketing campaigns from one place.

Why did it shut down?

Founded by a team from digital media companies such as AOL and Yahoo, Salorix raised a USD 3.5 million Series A round from Inventus Capital Partners and Nexus Venture Partners in November 2011. The Santa Clara-based company's product team was in Bangalore. According to The Economic Times, in a March 2014 report confirmed by CEO Santanu Bhattacharya, an acquisition offer from Google set the founder against the investors; the investors were warm to the offer, but Bhattacharya was not convinced. The disagreement could not be resolved and the company ceased operations in May 2013; the closure only became public in March 2014. Bhattacharya joined Facebook in 2014.

The story

Salorix was founded in 2009 by a team from digital media companies such as AOL and Yahoo. With its headquarters in Santa Clara and its product team in Bangalore, the company was led by Santanu Bhattacharya, previously the founding director of AOL's analytics solutions centre. Salorix's platform scanned social media conversations in real time and ranked the most important topics and the most influential people, allowing brands to engage with those people and measure their campaigns.

After raising a USD 3.5 million Series A round from Inventus Capital Partners and Nexus Venture Partners in November 2011, the company was working with United Online, HP's Palm unit and media agencies such as Mediacom and OMD. Later, with its product Amplfy, it won customers such as Nielsen, LinkedIn, Levi Strauss and Microsoft.

In the end it was not the product or the market that finished the company but an offer that landed on the table. According to The Economic Times, in a March 2014 report confirmed by Bhattacharya, an acquisition offer came from Google. The investors were warm to the offer, but Bhattacharya was not convinced, and the two sides could not reach agreement. Only with this report did it emerge that the company had quietly ceased operations in May 2013. Nexus Venture Partners declined to comment.

There was a Facebook angle to the story too. According to a TechCrunch report cited by MediaNama, acquisition talks with Facebook in October 2013 had come to nothing, and Facebook had hired Bhattacharya in early 2014. A partner at Inventus, however, said that report was wrong on almost every point. The closure of Salorix showed how even a company with well-known customers can fall apart when founder and investors have not built a shared understanding about an exit.

Lessons for founders

• Before any acquisition offers arrive, discuss with your investors the terms on which each side would agree to a sale and set out a shared framework.
• The sale, consent and drag-along or tag-along rights in your shareholders' agreement decide the company's fate when an offer comes in; negotiate these clauses carefully at an early stage.
• If a deadlock between founder and board drags on, even strong customers will not keep the company alive; appoint an independent board member or mediator for such moments.

Sources

1. Social Media Marketing Startup Salorix Lands $3.5M Series A (TechCrunch, 2011-11-14)
2. Salorix, Bangalore-based data analytics startup that said no to Google, shuts operations (The Economic Times, 2014-03-04)
3. Social Media Analytics Startup Salorix Shuts Down (MediaNama, 2014-03-04)
4. Santanu Bhattacharya (data scientist) (Wikipedia)

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