SF mayoral candidate Mark Farrell touted his business success during his failed run for mayor, but the company he described as his “most successful” venture capital triumph is now facing tough times and a potential delisting from the NASDAQ exchange.
When former SF supervisor and one-time interim mayor Mark Farrell announced he was running for mayor again in February, a central argument for his campaign was that Farrell’s 15 years as a venture capitalist at Thayer Ventures proved he had a magic business touch that other career government bureaucrats could not duplicate. And the Chronicle reminded us during the campaign that when Farrell was asked what his greatest VC success was in a 2021 interview, he did not hesitate to say it was Thayer Ventures’ investment in an SF-based, Airbnb-style short-term rental company called Sonder.
“For sure, our most successful one has been Sonder,” Farrell said in the 2021 interview. “We’re huge, huge supporters of what they do. Definitely believe in their long-term vision. I think they’re still just getting going. But they’ve done incredibly well. It’s been a great financial investment for us and our fund.”
You may recall that Sonder was the company that managed a 52-unit building at Church and Market after it was completed in 2019, offering corporate, month-to-month rentals — something the neighborhood was not happy about after approving what they thought was new, regular, market-rate rental housing. Sonder then sued to get out of that lease in 2020, after the pandemic no doubt impacted their occupancy rate.
But much like Farrell’s mayoral campaign, things have gone south for Sonder. Farrell’s words above came shortly before Sonder’s 2022 IPO, which was a SPAC merger, and left Sonder with a nearly $2 billion valuation. But the stock has since tumbled by 98.3% and lost nearly all of its value, and the SF Business Times reports that Sonder is in danger of being delisted from the NASDAQ exchange.
Though that’s not because of the extremely weakened stock price. Sonder stopped reporting their earnings earlier this year because of a massive financial error. They’re apparently still sorting through that, as the Business Times notes that Sonder admitted it “will be unable to immediately file its Form 10-Q report for the quarter ending Sept. 30 and so expects to receive a notice of noncompliance from Nasdaq market staff.”
Sonder is likely to appeal the potential suspension, but warned investors that "there can be no assurance that the [NASDAQ] panel will grant the company's request."
The company has previously come close to being delisted over its stock price trading at less than a dollar for 30 days or longer, and remedied that with a reverse stock split in 2023. That dd not solve the company’s woes, as they had to lay off more than 100 employees in February, which was 17% of their workforce. And not even two weeks ago, Sonder announced that their Chief Financial Officer, Chief Accounting Officer, and Chief Legal Officer were all resigning.
Sonder has never been profitable in its ten-year history.
This may be considered typical of venture capital investments, where VCs make a lot of risky bets that often fail. But to many who work for small businesses outside of the tech industry, such long periods of non-profitability seem unfathomable. Either way, Mark’s Farrell’s “most successful” investment, in retrospect, does not appear to be particularly successful.
Image: @MarkFarrellSF via Twitter
