Mode Media, once a $1 billion valued company, shuts down abruptly

Mode Media, a Silicon Valley-based company that raised at least $186 million to build a new age media giant, has abruptly shut down, according to a source close to the matter.

The WSJ first published a piece about the closure this evening. We’ve confirmed that the U.S team met at 11 a.m. this morning and has decided to shut down the U.S. offices today. The company’s international offices are expected to shut down next, since the company’s business, including ad sales, is run from the U.S.

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Mode was founded in 2003 and was initially called Glam Media. Led by CEO Samir Arora, the company first gathered together a number of fashion, lifestyle, and other enthusiast web sites and sold advertising around those sites. Questions surrounded the sustainability of the company’s business, but Mode continued to raise money and pivoted several times. It kept growing and just three years ago talked of filing to go public.

Two years ago, in a last-ditch effort to save itself in an increasingly competitive media landscape, it turned to video. Mode offered a video-heavy hub for professional content producers and sought to appeal to advertisers looking for alternatives to YouTube or Facebook. It boasted some initial successes, which VentureBeat reported on. However, somewhere around the beginning of this year, something went terribly wrong.

The company generated about $100 million in revenue last year and was losing around $5-7 million, after excluding debt payments made to pay off acquisition of a company called Ning, according to our source. Cofounder Samir Arora stepped down as CEO in April and was replaced by interim CEO Jack Rotolo. Around that time, the company’s lead investor, the German company Burda Media, stepped up its management of the company, led by Martin Weiss.

The big question is how a company once valued at $1 billion and making $100 million in revenue, at not too high of a loss, suddenly shuts down without a buyer. Mode had apparently been seeking a buyer for months without success, according to the WSJ article.