Verelo

What did it do?

Verelo was an online service that monitored websites' availability and performance, scanned for malware and reported on site health. Emerging from an incubator programme in Toronto, the company gave site owners analysis of outages and speed problems.

Why did it shut down?

Verelo was founded in March 2012 on being accepted into the Extreme Startups incubator in Toronto, and it officially launched in June 2012. The service won a loyal user base but did not find enough traction or funding to carry on independently. In mid-December 2012, just six months after launch, the company announced that it would close and return the remaining money to investors. In January 2013 the DNS company Dyn bought Verelo and planned to offer the service free to its own customers rather than sell it as a separate product. In 2014 Verelo was folded into Dyn's services and ceased to exist as an independent service.

The story

Andrew McGrath and Michael Curry founded Verelo in March 2012, when they were accepted into Extreme Startups, a newly launched incubator programme in Toronto. McGrath was the company's CEO and Curry its chief technology officer. The product was a service that monitored whether websites were up and how fast they ran, while also scanning for malware and reporting on site health.

Verelo graduated from the programme and officially launched in June 2012, quickly winning a loyal user base. But that interest did not turn into traction strong enough to grow the company independently. In mid-December 2012, just six months after launch, the founders announced that they had decided to close and would return the remaining money to investors.

At this point the story took an unexpected turn. In January 2013 Dyn, a DNS company that had raised a $38 million Series A in October 2012, bought Verelo. Rather than sell the service as a separate product, Dyn planned to offer it free to existing customers and use it as a sales tool with prospective ones. Only one or two members of the team were expected to join Dyn; McGrath, meanwhile, was thinking of starting a new venture with the proceeds of the sale. McGrath said the sale was a perfect outcome for investors and that the service would live on.

But that life was short. In 2014 Verelo was folded into Dyn's services and ceased to exist as an independent service. Verelo's brief story shows that even an open and honest closure announcement can open an unexpected exit, but that a small acquired product often dissolves inside the buyer.

Lessons for founders

• Announcing a decision to close openly can bring unexpected buyers forward; a transparent shutdown can be a way to recover investors' money.
• A feature that is hard to sell on its own can make sense when offered as added value to a larger platform's customers; assess your product from that angle too.
• When entering a crowded market for monitoring tools, set a measurable traction target for the first months, and if you miss it, decide before you burn through your resources.

Sources

1. Verelo (Wikipedia)
2. Deadpool No More: After Planning To Shut Down, Verelo Is Acquired By Enterprise DNS Company Dyn (TechCrunch, 2013-01-02)
3. Dyn Acquires Website Monitoring Startup Verelo (Business Wire, 2013-01-02)

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