Spark’s Dispo Decision: A ‘Precursor of What Is to Come’

For Spark Capital, Dispo must have seemed like a stellar investment opportunity: a photo-sharing app co-founded by a YouTube star, David Dobrik, that had become an overnight sensation with young users. Within days of Dispo’s second launch in February, Spark led a $20 million funding round for the startup at a steep $200 million valuation. Nearly as rapidly, that union fell apart. Spark on Sunday made the unusual move of cutting ties with its new portfolio company after a report alleged that a member of Dobrik’s inner circle sexually assaulted a woman.

Spark’s swift decision to drop Dispo sets a new precedent for how investors can react when startup founders are involved in harmful behavior. These private shareholders can wield tremendous authority over startups, but they have faced criticism in years past when they failed to intervene. The move also shows how policies adopted since the start of Silicon Valley’s #MeToo movement may be beginning to have an impact on the VC industry.

“This is not the routine response of yesterday,” said Pam Kostka, CEO of All Raise, a nonprofit organization focused on promoting women in venture capital. “This is an interesting precursor of what is to come. There are new standards that are emerging.”