How long before P2P file-sharing service BitTorrent crashes and burns? The company raised $17 million in a third round over the summer, but according to TechCrunch, it has returned most of those funds to investors DAG Ventures, DCM and Accel Partners in exchange for a smaller, $7 million round.
BitTorrent has been trying to develop a more advertiser-friendly online video service, but in a shareholder letter leaked to TechCrunch, the company said its products “were not gaining sufficient traction” and that it would “significantly miss its projections” — causing lead investor DAG Ventures to push for the funding renegotiation.
BitTorrent has raised about $40 million in funding since its inception in 2004, but said that this latest development “substantially reduces” its valuation to about $28 million. This news comes about a month after a massive exec shakeup in which both co-founder and president Ashwin Navin and CEO Douglas Walker departed, and about half the staff was fired.