Cameo Valuation Plunges at Least 90% in ‘Cramdown’ Funding Round

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Cameo authorized a $28 million round of funding last week that will drastically reduce its valuation, the company told shareholders, reflecting a big slowdown in the celebrity video shoutout app’s business.

The funding, led by existing investor Valor Equity Partners, would value the company at less than $100 million, measured after the investment, an investor said. That would represent at least a 90% drop from its previous value. Its $1 billion peak valuation dates back to a funding round in March 2021, after its platform for personalized videos from athletes and actors took off during the pandemic.

The Takeaway

Cameo valuation will plummet to less than $100 million in ‘cramdown’ funding round
New $28 million funding round is being led by existing investor Valor Equity Partners
Company spokesperson says new funds ‘will sustain the business indefinitely’

Sales, however, slowed after lockdowns eased. The latest financing would be part of a wave of so-called “cramdown” funding rounds for struggling startups. In these financings, existing investors who don’t participate are heavily diluted by the new shares issued at a sharp discount to previous valuation. Older investors also lose any protections tied to their shares.

Other startups once valued at more than $1 billion that have raised steep down rounds in recent months include Q&A site Quora, pharmacy startup Truepill, electric motor systems maker Turntide Technologies and agriculture tech startup Indigo Ag.

CEO and co-founder Steven Galanis and venture capital firm Kleiner Perkins, an existing investor, are also participating in the round, the company told shareholders. Other firms that invested as the company rose to prominence included SoftBank’s Vision Fund, Lightspeed Venture Partners and celebrities like Tony Hawk. It’s unclear whether those investors will participate in the round.

Investors in the new round are paying $11.35 for new shares, while reducing the per-share price of previous shares to 1% of their previous value. That implies a 96% drop in the price of each share.

A Cameo spokesperson confirmed the round but wouldn’t comment on valuation. “The business has been profitable and growing. The team is excited for this new round. These funds will sustain the business indefinitely,” the spokesperson said.

Cameo has struggled in the aftermath of a pandemic-induced surge in demand for digital gifts. The Chicago-based company has since slashed its workforce to one-tenth of its peak size, conducting another deep round of layoffs last summer after an unsuccessful effort to raise new cash.

The company also lost a high-profile ambassador last year. Earvin “Magic” Johnson left Cameo’s board, and he’s no longer available to book on the service. (It’s not clear why Johnson backed away from the company.)

In October, The Information reported Cameo had been trying to raise at least $10 million in new funding.

At the time, Galanis wrote on LinkedIn that the business grew revenue year-over-year for the first time in “over two years,” but he didn’t share further details. He also said the number of new talent available to book has more than tripled year-over-year. “It’s no secret it’s been a painful couple years at Cameo,” Galanis wrote. “That said, I’m super proud of our team for fighting through adversity and never losing focus on executing against our mission and vision.”

Cameo saw a boost late last year from ousted congressman George Santos joining the service, which Galanis told Semafor was among the platform’s best launches ever. The startup also benefited from actors joining the service during the Hollywood strike.

Cory Weinberg is deputy bureau chief responsible for finance coverage at The Information. He covers the business of AI, defense and space, and is based in Los Angeles. He has an MBA from Columbia Business School. He can be found on X @coryweinberg. You can reach him on Signal at +1 (561) 818 3915.

Kaya Yurieff is Team Leader of creator economy coverage at The Information. She previously worked at CNN. Based in New York, she can be reached at [email protected] or on Twitter at @kyurieff