Color goes dark: Board votes to shut down company, source says (updated)

Update: Color’s story got even crazier last night, and we’ve hashed out a bit more in a follow up to this story. See our original story below.

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Is the Color horror story reaching its conclusion?

A source within the company tells us that the Color’s shareholders and board voted last week to shut the business down.

Here’s an excerpt from the email sent by Color finance vice president Andrew Urushima last night:

 I hope is all well with you.  As you may or may not have heard, Color is going through a number of changes.  Last week, the Board and major shareholders voted to wind down the company.

We ask that you politely cancel any existing commitments stating we are closing our [redacted] program.

Built on a photo-sharing app, Color became a notorious example of the freewheeling nature of Silicon Valley funding and hype when it raised $40 million last year. The problem? Hardly anyone actually used the service. It only has 440,000 monthly active users, according to AppData.

That struggle continued even as Color rebranded itself as a video-sharing app last September. Not even attaching itself to Facebook could improve the company’s prospects.

That’s clearly been a trend for Color, which also didn’t benefit much from aligning itself with Verizon in May, either.

“You’d think that after you get a partnership with Verizon you’d be all set up, but that wasn’t the case with Color,” our source said.

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Today’s news, of course, might have been expected after co-founder and CEO Bill Nguyen stepped down from his day-to-day duties last month. As TechCrunch then reported,  the Color product was due for a maximum of two revisions before the company planned to try something else out. It looks like shutting things down was that “something else.”

Color’s official line? Color itself hasn’t responded, but a spokesperson for Color investor Sequoia capital told us “Color is not shutting down.”

It’s worth noting, however, that while the Color app is on its last legs, Color as a company still has plenty of cash in the bank, which means that there’s little preventing it from rebranding and launching something else down the line.

Update (3:09 ET) We removed text that said the email was sent to multiple Color employees, which we haven’t been able verify yet. 

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Update (4:15 ET) Added statement from Sequoia spokesperson, and specified the sender of the original email.